I don't understand why people still tip if they make 15 per hour. As it writes in the article they have tip credit but the employer would still have to cough that 15 bucks if they didn't make enough in tips.
Less tip = more cost employer = higher prices. One way or the other you're roughly paying the same, only in a way that does not incentivise good service as much.
It's very similar to a tip. It's incentive based pay for doing your job well. It does come from the customer, but it goes through a middleman (your employer) first.
Still gonna join the disagreeing group. When I worked delivery upwards of 80% of my revenue was tips. That alone makes it very different. It's not a bonus to your income, it's get tips or die.
Tipped minimum wage is much lower than standard minimum wage. It was under $4 at the time in the state I lived in.
You technically have to be compensated up to regular minimum wage if tips don't make it but that's a great way to get your hours reduced due to "scheduling changes"
It's not that uncommon in white collar jobs though. I have a few friends that work in engineering, banking, and sales that rely mostly on an annual bonus. It makes up 50% or more of their total take home pay.
Most countries have restaurant tips, but afaik only the US has it as a standardized part of the prices and actually a part of the staffs pay.
I get good service in restaurants because it's their job, but I can tip 0-10% if the service is beyond what I expect.
The important thing isn't that the pay is guaranteed for staff that doesn't provide good service, what's important is that their pay is guaranteed even if there are no customers. Bringing in customers isn't the job of waiting staff (apart from providing good service) - so their pay should never depend on it.
Just like the cashier in the grocery store, or the sales assistant in the department store, or the counter clerk in the bookstore. None of whom depend on tips, as far as I'm aware.
I think that map at least very few countries have it as something unknown/surprising/frowned upon.
I do consider the “round up bill/not expected” we have where I live as definitely “having restaurant tip”
Because other jobs have better mechanisms for this, because they rely on very repeated transactions. Eating in a restoraunt or drinking in a bar is often a one-off transaction, so there's no way for a mechanism of reputation to kick in.
It is. People keep getting offended by the notion that money incentivises people to do a better job. Most jobs where this has proven to work do exactly that (bonuses, raises, etc.).
All else being equal you will get better service from a person that is directly rewarded by offering that better service. Should it work that way? No. Does it? Obviously. And yes we can all think of outliers and yes some culturing differences play into this (Japan has a no tipping culture and on average has excellent service) but I live in Amsterdam and the service on average is absolutely less customer focused here than what I experience in the US. It's worth pointing out I also prefer it that way (not a huge fan of constantly being asked if I need anything and less than genuine niceties but that's a subjective thing)
I don't mean this in a bad way, but are you american? It does seem a very US viewpoint that goodwill etc. don't really exist (or matter? something else?), and that people need concrete incentives to treat others decently.
Sure money's an motivator but perhaps a bigger one is to have a client treat you with decency. Sure money helps but to have a client just make you feel OK instead of crap, that would matter a lot more to most people. A big tip wouldn't negate bad attitude, even if it got staff to pretend to give a damn about you.
Exactly. I’ve been to plenty of places where I’m charged an upfront price in a restaurant and the waiter/waitress is beyond polite to me.
Edit: To be clear, in my experience I don’t find the service of an average U.S. waiter/waitress better than that of an average waiter/waitress in a country without a tipping culture.
In my experience, the dining experience is worse in the US than other countries I have visited. I don't know if it's the tips, or something else, but American wait staff (at least at mid-priced restaurants) are always in my face asking if everything is ok. I much prefer the European norm - they take my order, deliver my food, and wait for me to ask if I need something else. I'm not dining someplace to make a new friend, I'm there to be social with my existing friends or family.
> American wait staff (at least at mid-priced restaurants) are always in my face asking if everything is ok.
Ah yes, now that you bring it up, I’m definitely not a fan of that either.
Another way tipping can add toxicity is when a guest isn’t aware of the tipping culture / not sure how much to tip, ends up not tipping or undertipping, and in those cases sometimes you’d notice nasty looks or other forms of visible grumpiness. (Checks don’t always include recommended tip amounts.)
> American wait staff (at least at mid-priced restaurants) are always in my face asking if everything is ok
They do this because they were instructed by their manager to do this. And the reason that managers want it done, is because they want the customers to finish their food and quickly vacate the table, freeing it up for the next customers. Of course they won’t tell you outright to leave, but they think they can psychologically obtain the same effect just by bugging you and making it hard for you and your fellow diner(s) to have a peaceful, leisurely conversation.
This can happen in Europe, too. At a couple of cafes in my town, as soon as you drink the last drop in your glass, the waitress will rush over and ask if you would like to order anything else. Owners do not like customers who occupy a table for a long time on just one single purchase.
Makes sense, but in my experience, this starts well before we've finished our meals. It's unpleasant enough that I generally avoid all mid-priced restaurants in the US. Instead, I either eat at less expensive ethnic joints (which tend to have limited table service) or higher-priced options.
I'm not no. I'm from Europe and I strongly disliking tipping as a concept because, as you point out, good services should be the default and any cost for that good service should be factored into the prices.
That said, I flipped on this recently. The above utopian perspective simply doesn't align with reality anymore. Higher tips simply do result in on average better service (be it genuine or otherwise) and do incentivise waiters to work for the customer rather than their employer. The latter has value too. Which waiter do you want in a case where the owner of a dodgy establishment is asking their waiters to push the fish that's about to go bad? A waiter living off of tips from (return) customers or the one that just gets wage from that employer?
> As it writes in the article they have tip credit but the employer would still have to cough that 15 bucks if they didn't make enough in tips.
If you have to tell your employer to cough up the remainder, you're going to suddenly find yourself getting scheduled only an hour or two a week, if at all.
I'm not familiar with US employment laws, but the amount of hours is not in your contract? The number of hours and the nature of the schedule is not something the employer is allowed to change in Europe. Zero-hour contracts are explicitly illegal, even for the self-employed.
Not sure where you are in Europe, but in Switzerland this is perfectly legal. I was employed on a Zero-hour contract as a bartender for much of my time in higher education.
See my answer bit up. I owned a business in Hungary.
"Zero-hours contracts are NOT permitted in: Austria, Belgium, Czech Republic, Denmark, France, Germany, Hungary, Italy, Poland and Spain. There is an uncertainty as to their validity in Sweden. Generally they are not permitted under Swedish law but may be agreed by collective bargaining."
https://www.igloballaw.com/zero-hours-contracts/
Generally, hourly workers (who aren't skilled laborers or part of a union) don't have contracts with fixed hours. They are scheduled weekly however management sees fit.
Further complicating the issue, at 30 hours, many employees become eligible for benefits, so there's a disincentive to increasing an employee past 29 hours/week.
Then, in the restaurant industry, there is a separate, lower minimum wage which assumes the employee makes up the difference in tips. If they don't make up the difference, they can request the employer cover the gap, but the employer will just cut their hours or fire them for being a poor employee.
> I'm not familiar with US employment laws, but the amount of hours is not in your contract?
Hah, good one, but not if you're marginalized. The majority of the states in the US are "right-to-work," which means you can be fired at any time for almost any reason. For the other states, there are varying levels of protection. I can't really speak to what is stipulated in their contracts, but I can tell you the following: if you're working two+ jobs, commuting 2hrs + because you can't afford to live in the city, and have to cook and clean your apartment on top of that, you don't have time to inform the Department of Labor (that's likely not even the right place to call--better spend some more time finding out what is) that you're being exploited.
> Zero-hour contracts are explicitly illegal, even for the self-employed.
By referring to getting scheduled at all, I was indicating you would likely just be outright fired the next time you dropped a glass, were 1 minute late, or any other minor, human-prone error happened.
As someone who put themselves through college on pizza delivery...
> but the employer would still have to cough that 15 bucks if they didn't make enough in tips.
This gets you fired. You'll get your requested increased compensation in your next check, and the following week you're reduced to about 5 hours of work total. The following week after that you're let go for poor performance because if you're the only employee asking for tip compensation you're basically admitting you don't get tipped as well as other employees.
Not that I agree earning low tips is synonymous with poor performance, but try convincing a stereotypical crappy manager that.
It's also one of those situations where the people getting screwed over don't really have the means to defend themselves. If $400 in missing wages is a big deal (as it should be), one isn't really able to hire a lawyer to take care of the case for them.
Also people lie. I worked at Burger King as a teen and the manager would lie to everyone, saying if he found out they were applying for other jobs they would be fired. Super illegal, and he has no way of even knowing outside of reference calls. But pretty much every older employee believed him and didn't want to risk homelessness because they tried switching jobs. I remember telling him something along the lines of "Fuck off, I'm 16 and live with my parents"(he thought I was older), but it didn't hit me until years later that he was basically keeping the other employees his prisoners.
Depends on the location and industry, but it looks like for NYC 11+ employee companies it's $12.50 cash wage / $2.50 tip credit for hospitality service, $10/$5 for food service.
There may be a careful analysis of the effect of a $15 minimum wage on the restaurant industry in New York but this isn’t it. It doesn’t mention whether entry of low skilled workers into the industry decreased, the effect of the change on hours worked, substitution away from labour or decreases in non-pecuniary compensation.
It could be that every single one of these points to the minimum wage hike having small to non-existent effects but the article reads like a brief, not an analysis.
Compared to the Seattle minimum wage study. They had an objective study set up and when they didn’t like the results they got some political hacks to re-analyze the data and release their results beforehand.
> Two weeks. Two studies on minimum wage. Two very different results.
> Last week, a report out of the University of California—Berkeley found “Seattle’s minimum wage ordinance has raised wages for low-paid workers, without negatively affecting employment,” in the words of the Mayor’s Office. That report, produced by the Center on Wage and Employment Dynamics at Berkeley, was picked up far and wide as proof that the doomsday scenarios predicted by skeptics of the plan were failing to materialize.
> And while another study that came out Monday from researchers at the University of Washington doesn’t exactly spell doomsday either, it wasn’t exactly rosy. “UW study finds Seattle’s minimum wage is costing jobs,” read the Seattle Times headline Monday morning. The study found that while wages for low-earners rose by 3 percent since the law went into effect, hours for those workers dropped by 9 percent. The average worker making less than $19 an hour in Seattle has seen a total loss of $125 a month since the law went into effect.
> business owners ... say the extra money comes with an unforeseen cost: higher good prices, fewer working hours and layoffs.
> “Many people working in the restaurant industry wanted to work overtime hours, but due to the increase, many restaurants have cut back or totally eliminated any overtime work,” Andrew Riggie, executive director of the New York City Hospitality Alliance, told Fox News. “There’s only so much consumers are willing to pay for a burger or a bowl of pasta.”
> Roughly 77 percent of NYC restaurants have slashed employee hours. Thirty-six percent said they had to layoff employees and 90 percent had to increase prices following the minimum wage hike, according to a NYC Hospitality Alliance survey taken just one month after the bill took effect.
I guess some studies don’t actually focus on what matters )hours worked/take home pay) but would rather build s narrative even if the on the ground effects of the narrative are counter what they say they are and actually adversely affect those they presumably want to help.
I don’t think high minimum wages really hurt employment as much as small/family business ownership rates since this just increases the startup capital and operating cost needed to run a business. So for some cities the trade off is probably worth it, but this is also why you see the same chains all over and a lot of unique/niche stores dying out.
Nonsense. Of course increased operational costs for businesses most sensitive to labor costs has an adverse effect on small business. That such increases occur at the same time price competition shrinks margin - such as price competition from the volume sellers you mention - simply exacerbates the problem.
Since real dollar wages are stagnant or declining for decades, with recent changes in minimum wage laws either barely correcting or not correcting this disparity, how can this be nonsense? How can decreasing real dollar operational costs (wages) be an increased cost?
"Roughly 77 percent of NYC restaurants have slashed employee hours. Thirty-six percent said they had to layoff employees and 90 percent had to increase prices following the minimum wage hike"
That is the biggest problem these days even here in Canada.
A few years ago at my old job I finally got a big raise from $14 to $24/hour. Then almost immediately reduced to part-time from full-time but the same duties. I toughed it out hoping for a reversal but one day I was abruptly laid off without notice. Then three people were hired to do my job.
It seems business have no realistic view of employees. You're merely an "FT" or "PT" in manager parlance.
Working minimum wage is more difficult than it was years ago due to it being stuck at a specific rate for decades. But hours worked is just as important and the trend to cut everyone to part-time was an even bigger disaster.
Even the Fight for Fifteen group has been fighting for $15 for many years. They should be adjusting the rate for inflation, by now it should probably be $17.
> Then almost immediately reduced to part-time from full-time but the same duties.
This means the same job could have been performed in less amount of time? If so, why not employers are incentivised to increase the efficiency and raise the pay at the same time?
No it meant management didn't have a clue. Just a few of my tasks took hours. Compliance duties where compliance officers picked away at options while I had to sit there. Escort vendors into the server room often for an entire shift if not longer. Preventive maintenance on equipment that could take a month. Those three tasks plus a couple of dozen other duties. Add to that other departments asking for help.
This place was notorious for reducing employee benefits to nothing. Employee reviews but the employee is at max pay rate so no bonus but still reviewed. No holiday parties. Overtime change from over 8 hours to only over 40. And on and on.
It was just a terribly run organization and I'm glad I'm out of it. There was a big exodus of long term staff in a short period of time just after I was laid off.
> In July 2015, the magazine published an article by Maria Butina advocating improved relations between the Russian Federation and a future US Republican Presidential administration.[1] In 2018, Butina was arrested by the FBI and charged with conspiring to act as an unregistered Russian agent.[2][3]
I totally forgot about this scandal/conspiracy against the US until looking up the source. The leadership is also almost entirely famous neocons you've seen on trial.
Besides that, there are plenty of problems with the isolated statistics presented in the article, as they are worded to be deceptive.
The comments on these types of articles always hurt my brain. Blaming minimum wage increases for McDonald's, Walmart, pretty much everybody bringing in automated tellers for instance.
I'm always bemused by the arguments against minimum wages, they almost always boil down to "My business can't survive unless my employees are living in poverty." which, in reality for a lot of businesses, is "I won't be as profitable if I have to pay a living wage".
If people really believed this, there would be staged minimum wages: Walmart pays $25 minimum while small, struggling restaurants pay $15.
When businesses won't be as profitable as desired by the owners, they are less likely to be started or to choose to make that expansion.
If labor was plentiful and cost $1/hr, we probably wouldn't see nearly as many automated checkout stations or ordering kiosks. If low-skilled labor costs $100/hr, you can bet there's going to be a lot more automation in place.
It seems like most people can grasp the general slope of this demand curve, but seem to be unable (and I think in a lot of cases it's rather unwilling) to reason about whether the curve has a fundamentally different slope/shape in the $8-20/hr range.
Sure, but $1/hour is not a living wage, so in terms of benefit for workers, it's not obviously better than $100/hour. (And if you have obligations like taking care of your family, you might actively prefer to live off welfare/unemployment/voluntary private charity from the goodness of John Galt's heart/whatever than work a $1/hour job for most of your day.)
The curve that's actually interesting is the expected value to an individual worker of the minimum wage, i.e., the wage multiplied by "how likely am I to be employed fully" (approximately 100% at $1/hour, quite a bit less at $100/hour). Obviously, that curve starts at zero, goes up linearly for a bit, then heads back towards zero in the limit. The question is where "a bit" is and what the argmax is.
No, it isn't. But neither is $0/hour because you don't have a job, and society doesn't get the product that the $1/hour job produces.
Ideally, the system would pay the workers the marginal value of their input for the work done, and the government would "top up" the wages to whatever the living wage is. Everyone wins. Of course, this is hard to measure and apply.
Yes. The thing opponents of a living wage don't realize is that the gov't has to make up the gap. The gov't indirectly subsidizes businesses who pay under a living wage, which actually incentivizes them to do so. Enforcing a living wage actually means fewer subsidies and a more efficient and level market.
Is the question whether it's possible to reduce the cost of living / why the cost of living is so high?
That's largely because the basic necessities of living (housing, clothing, food, transportation) are needed in roughly the same amount by all people, and don't scale with class/income/wealth. I live in a 1-bedroom apartment and eat about three meals a day and wear jeans that cost about $50. I have friends who make an order of magnitude more and less than I do. They don't live in a 10-bedroom or 0.1-bedroom place, respectively. They don't eat 30 or 0.3 meals a day, respectively, and their meal themselves don't cost ten times more or less - maybe there's a factor of two or three. The ones who make ten times more than I do might occasionally buy $500 jeans, but even they won't wear it for everyday use, and the ones who make ten times less generally don't buy $5 jeans either.
So, demand is roughly the same from everyone / doesn't scale very much, and the rich can afford to pay quite a bit more. So a market that has rich people in it will have a higher cost of living.
If you want to stop this, the obvious solution is to prevent income inequality (in all its forms - Paul Graham points out, correctly, that this would require us to rethink the very idea of for-profit unicorns - see https://twitter.com/paulg/status/886953410356011008 and https://twitter.com/paulg/status/645343476662427648). Useful tools include extremely high wealth and income taxes. (And, as someone who by any objective standard makes a lot of money, this is why I'm personally in favor of my own marginal tax bracket being 90% or higher - because it means that people who make even more money than I do can't as trivially outbid me for housing, etc.)
> Ideally, the system would pay the workers the marginal value of their input for the work done,
I strongly agree with this, but this requires altruistic employers, or unions to accomplish. And this results in jealousy and hostility towards workers in high-margin industries. Workers in general have no idea what their value-add to the company really is.
>they are less likely to be started or to choose to make that expansion.
You just showed us a counter example. The structure of the market changes toward automation or away from it but the businesses are still being started as usual.
We don’t allow for slums like what you see in Brazil or India, so there is a high floor where wages essentially are less productive than not working.
So when you push the value of labor to a leave where people cannot afford to live, folks in the US either end up on social services, social security disability, or are incarcerated.
Whenever there are changes to minimum wage, the parade of chamber of commerce types bemoan the horrors that will befall them. Yet somehow burgers get flipped and shelves get stocked.
> We don’t allow for slums like what you see in Brazil or India
Many on the left are supporting open borders. Which is guaranteed to attract a huge amount of low skilled labor. Which guarantees low wages (simple supply-demand). And if you artificially control wages, it will result in unemployment of the unskilled. Why do you think we have tent towns all over California?
> Which is guaranteed to attract a huge amount of low skilled labor. Which guarantees low wages (simple supply-demand). And if you artificially control wages, it will result in unemployment of the unskilled.
Right now, the government is artificially suppressing wages by threatening to deport immigrants. Employers take advantage of government enforcement by promising to hide the worker in exchange for poor wages and living conditions.
Giving immigrant workers visas, thus rights is a solution to this. No more artificially suppressed wages because the workers don't fear the government
> Why do you think we have tent towns all over California?
Because they won't allow for enough housing to be built.
Just quickly looking at this link, I don't see anywhere it says open borders.It does however say "Decriminalize illegal border crossings" which is not the same as open borders.
They only started charging people with a crime for crossing the border in 2005 under the Bush administration. I don't think you would say that we had open borders before then, and a return to that previous policy is what people mean by decriminalization.
Anyone arguing that businesses are “entitled” to cheap labor are arguing the case backwards.
Some jobs that certain humans perform are not worth very much money to an employer. If the state tells the employer they can’t pay someone that meager a sum, then they simply won’t hire a person to perform just that job. They will hire someone for more money to do that job plus something additional to make it worth hiring the person, or they will find a way to automate out or contract out that portion of the work.
Yes, if a business is not successful in managing around a government wage minimum then they will lose money. Companies are mismanaged all the time. But the general economic theory is based on rational actors, and at the macro level that is the effect that has been observed.
I think you are looking at it backwards.
For a business to be successful they should not have to burden themselves with the livelihood of their employees. Truly businesses should be able to have people working and living close to the working facility as well as eating there. Dorms will be owned by the businesses and employee will either pay for them or have their wages reduced for the cost of living, same for food. If they fall sick they should pay for the missing hours, no hollidays of course or breaks since those are just wasteful idle time spent. Relationships are forbidden as they put productivity at risk. In an ideal world there will no silly government regulation and the market will sort it out, if the people were unhappy with this model it should be possible to import workers from countries with lesser opportunities who would be more than happy to fill the gap.
This is how it is going in most productive electronic facilities in china and why USA is falling behind with all those silly regulations killing businesses.
Any thoughts at why production in the western world is becoming again competitive in sectors where production is automated to agree to make labor a negligible factor?
Also, I thought intended servitude was abolished quite a while ago.
There is a reason they don't exist anymore. They were the quickiest to build but did not survive a downturn most closed up shop after the mine was closed.
Towns built with various piblic/private spaces/businesses can survive one part of the economy doing poorly.
Don't pine for a made in China solution until you could actually live one. If you were in that situation (the average Chinese factory worker) now you wouldn't be on the internet writing this you would be working your 7 day 16 hour shift.
Or they might hire an employee after all if they're not allowed to run for the bottom of the wage barrel. An employer understating the value of labour for their own profit is the default.
Are you sure it's not because customers are choosing the self checkouts more and they need to meet demand?
I saw in my grocery store how, even when they had all available staff working the registers, the longest line would tend to the self checkout. This past summer they doubled the self-serve area.
The interesting thing is even though all full-service registers were in use, the deepest queue in any of them was two waiters. That means shoppers' perception of too long a line has shifted because of self-serve. They were choosing self-serve based on the belief it would be quicker, even if it means standing in the longest line. And that was mostly born out, mostly because the choice also depended on how many items were being purchased. People buying many things went to full-serve, which makes waiting in the longer, which drives people with hand baskets or half-full buggies to the self-serve.
The upshot being stores are installing more self-service checkouts because customers want them. It's not like adding those self-service lanes comes at no cost to the business. In the above grocery store, they had to remove part of the floor they previously used to display products. If they didn't think it was necessary they wouldn't have done away with that selling space.
I mean, that was what one of the managers told me, and I can see that they don't have a whole lot of staff at times that it would make sense to have more staff.
Also, the lanes they added were in addition to the ~12 basket self checkouts. The new lanes are setup for people pushing carts.
This to me means they're also selling more pre-packaged items with scanable bar codes rather than they are items like fresh produce which requires a lookup and weight check at checkout.
Everybody, everywhere is moving to self-checkouts. It's about entirely eliminating staff, not that staff is now a few percentages more expensive in some places.
If a business owner decides to pay his workers considerably higher than what the market offers, without any payoff for himself (like being able to hire the best of the workers or enjoying the high loyalty and willingess to go above and beyond), he's not running a business, he's running a charity. That's a humane and moral decision to be charitable - but it's immoral to force other people to be charitable wit their own resources. And when company is publicly traded, you can't even make an argument that "owners" of the company are "better off" than the workers and therefore, "need to share": a lot of these "capitalists" are working class, with their savings and pension funds, through a series of financial institutions, invested in publicly traded companies (or even VC-backed SF startups).
>I'm always bemused by the arguments against minimum wages, they almost always boil down to "My business can't survive unless my employees are living in poverty." which, in reality for a lot of businesses, is "I won't be as profitable if I have to pay a living wage".
There are some jobs that don't create $15/hour in value. Why is that hard to imagine? Minimum wage dictates that those jobs and the products they provide will not exist. Whether you think that's a net benefit to society is another question.
"Value" in economics is somewhat arbitrary. When both you and all your competitors have to pay at least $15/hour for a necessary piece work, you'll all pass the cost onto the consumer and suddenly the work will be creating $15/hour in value.
No, because all of the people who were marginal customers will just forgo your product or service. You can pass on all of an increase in costs for goods with price inelastic demand. If demand is elastic you either have to eat the margin or go out of business.
It doesn't work that way either. Consumers are not suddenly going to have more to spend due to hike of minimum wage.
If the inflation keeps low, total amount of money in the economy is relative constant, thus the cake is not getting much bigger, increasing minimum wage is going to reduce the number of jobs in the sector that is paying previous the minimum wage.
This seems to assume that every good purchased is created by a minimum wage work force. That not being the case, the minimum wage work force purchasing power increases for everything else that is imported or produced by a higher wage work force.
>There are some jobs that don't create $15/hour in value. Why is that hard to imagine?
Because those jobs don't disappear when that minimum wage is raised. This has been tested by comparing the job differences across state borders where the minimum wage has been raised on one side but not the other (Dube/Lester/Reich and Card/Krueger).
>Minimum wage dictates that those jobs and the products they provide will not exist
The reality is that that it tends to dictate whether cashflow is funneled into profit margins or wages.
>Because those jobs don't disappear when that minimum wage is raised.
Yeah, input costs have no effect on whether a business can operate at the margin...
>This has been tested...
If we suddenly care about what the economic research says, you should do a search for papers that don't confirm your biases.
How the fact that raising labour costs will reduce the demand for labour is controversial is beyond belief, truly. We have social programs here in Canada that do exactly this: subsidize wages of employees in certain industries because the value that the labour of some people doesn't cover the costs. But hey, what do we know up here...
I guess this mentality comes from the new wave of socialism or comes from people who have never run a business in their lives.
>They can but that's obviously a rather different question.
How is this a "different question"? It's the question. If there are businesses that can be economically profitable paying $14/hour, but minimum wage rises to $15/hour, those businesses are no longer viable.
We can argue about how many of those businesses there are, but it's merely a fact that they exist at the margin. If you've ever run a small business yourself, you'll understand how small changes in the cost of labour can be painful. I'm not talking about about McDonald's or Walmart here.
Again, we have social programs in my country to alleviate these issues. And they work.
>Why is it so hard to believe that demand for minimum waged labor is very inelastic?
So businesses optimize for the number of people employed, regardless of prevailing wages? I don't buy that, sorry.
Because most businesses make profits so it's perfectly possible to raise input prices without them closing.
>We can argue about how many of those businesses there are
That's what we were doing. The answer was "not a statistically significant amount".
>If you've ever run a small business yourself, you'll understand how small changes in the cost of labour can be painful.
I understand all too well the kind of caterwauling that happens when you do something that could threaten the profits of any business.
>Again, we have social programs in my country to alleviate these issues.
And a historically high % of profit to GDP, so maybe we can give some of those programs a break and take the money from a sector of the economy that is actually flush with cash.
>So businesses optimize for the number of people employed, regardless of prevailing wages?
My business can't survive unless my employees are living in poverty
Another way of looking at this would be: a job in McDonalds is not supposed to be a means of supporting the family of four. It's a side gig for teenagers, not a "full-scale" job.
But mothering is a full time job. That's kind of the point of the SAHM- a human adult must be around regularly a child below a certain age. At least half a decade. Often closer to a full decade. I don't think leaving for a shift every day or even a shift multiple times a week is feasible for a parent of a child below a certain age.
That is the tragedy of the next couple decades that needs to be solved. What do you do with the increasing share of people that do not have the capabilities to be productive in the economy?
Which profession? All of them? Who pays for that sort of support in school? And given that there are only so many hours in the day, what do we lose? Do we need even more of our soft skills and arts removed as we build a society solely around getting people into a career and keeping them there? Are we OK with people who don't understand history or geography because they don't need really need those skills as plumbers?
And wasn't a high school education good enough 50 years ago for most positions? Companies have been able to force the burden of debt for gaining the skills required for a job onto the individual, through exorbitant college fees and unpaid internships, now you're advocating the government should take on the specialization that the private industries require?
As a college student one is barely able to figure out their interests - there's so much push to start planning well in advance, I have no idea how we can expect a tween to commit to a career path.
It's not true, it's just a trite, condescending right-wing talking point repeated ad nauseum all over the Web whenever a discussion of minimum wage pops up.
I did a very brief dig into historical justifications for the minimum wage. One thing I wanted to check is if "living wage" was a more modern term, but both were in use 100 years ago.
The writing of the time speaks of minimum wage as a worker health and safety issue. The first minimum wage laws in the U.S. only applied to women and children. As part of the labor movement, it was often described as a type of collective bargaining. Where it was seen as providing a living wage was not directly at the minimum wage but because of the inflation effect it would have on more skilled wages. That by raising the wage floor, the industries in which a head of household would be employed in would have to raise their pay accordingly to that of a living wage.
So there's truth that minimum wages weren't introduced to be living wages themselves. At the same time that was 100 years ago and we shouldn't be writing laws for today based on the assumptions of the 1900's.
>Another way of looking at this would be: a job in McDonalds is not supposed to be a means of supporting the family of four.
Supposed by whom? McDonalds will suggest it's best their jobs be seen as side gigs for teenagers because that's the explanation that best supports their profit margins. The reality is that families of four will have to be supported by McDonalds wages if no other jobs are available for the individual in question.
Another way of looking at it is: what percentage of citizens do you think society should artificially inhibit from being able to support children? Is it 5%? 20%?
> It's a side gig for teenagers, not a "full-scale" job.
It would make sense if the minimum wage for "teenagers" jobs had kept up with the cost of college tuition, or even the increases in costs of a used car or insurance over the last 10 years.
Some teenagers in impoverished areas are helping their parents make ends meet too; others are emancipated and need a living wage.
- What is the average age of a McDonald's employee?
- The average age of an 'hourly-paid' employee is 20. You might like to know that we employ 120,000 people of all ages, from school leaving age to people in their 80s. We're also one of the biggest providers of first-time jobs in the U.K.
I'm on mobile, so I can't go looking up the exact quote. But, per FDR - the greatest President and greatest American - any business that relies on paying less than a living wage has no right to exist in this country. And a living wage isn't just basic subsistence, but the wages of a decent living.
> "My business can't survive unless my employees are living in poverty." which, in reality for a lot of businesses, is "I won't be as profitable if I have to pay a living wage".
I really like the way Nick Hanauer puts this particular topic. It has a certain logic to it, and appears to be supported by some historic data and trends.
I won't do it justice, but in effect the message is that if my employees can afford my product, it's better for the economy and business. Using restaurants as an example, if all service workers can afford to eat at a restaurant, then restaurants as an industry do better, and the economy grows, and individual businesses do better.
My take on it is, without public policy, such as a minimum wage, it's hard for a business to be an outlier. If one business pays a living wage, but non of the competitors do, that business doesn't necessarily have enough of an advantage to stay ahead of lower priced alternatives. It's only when we create rules through policy, do we create a level field for competitors to operate in, with effects such as increasing the customer base by increasing the purchasing power of a class of citizens.
This of course doesn't mean the rich should be eliminated, or everything should be equal of course, but the attitude that "I won't be as profitable if I have to pay a living wage" isn't necessarily correct, and it's possible for businesses to thrive once the shocks of rapid changes work themselves out. It also depends a great deal on other elements of policy, such as international trade, but those are other topics for other days.
There's a good argument against a high minimum wage, and it all boils down to spending power. I'm not an economist, so I'm sure I'll butcher the explanation, but I once read an articulate version of it that struck a chord. It's something like this: The minimum wage is what determines spending power for the middle class. Let's say the minimum wage is $10/hr - that means a "middle class" worker that makes say $1k/week has the spending power of 100 "minimum wage hours". Now let's say that is doubled to $20/hr. The spending power of the middle class person is halved. The person that was making 2x minimum wage is now making minimum wage. At first, the folks on the bottom of the rung will certainly feel the benefits of their new influx of cash, but it's inevitable that costs of goods and services will increase after the initial adjustment period and due to inflation. The end result is that the entire middle class becomes poorer. The "1%ers" feel no impact. Now, I don't know how real this phenomenon is, but increasing the minimum wage is certainly not a redistribution of wealth from the mega wealthy to the poor and the middle class, so does it really solve the problem? I don't know.
It solves the problem of the poor living in poverty. It will, of course, cause some other problems.
But, the middle-class problem doesn't hold in practice. Raising minimum wage has the effect of bumping other salaries up as employers have to compete with the new minimum.
You are missing the point. Minimum wage increases don’t harm all businesses, but they harm all employees. Businesses compensate for minimum wage increases by reducing hours or staff. This in turn increases labor supply and competition for the remaining available jobs.
Fun comparisons around a $1.60 minimum wage in 1968:
- An hour of labor would buy ~4.7 gallons of gasoline. If minimum wage had kept pace, it would be $12.32.
- Average home could be bought with ~15k hours of minimum-wage labor (around 8 years). Had minimum wage kept pace, it would be $14.96.
- Average car price was $2,822. Using this as the sole deflator would put an equivalent minimum wage at $20.89 today.
- The average public university tuition + room & board cost $1,143, which could be earned in 714 hours at minimum wage (this could be physically accomplished in a summer of hard work). If minimum wage had kept pace with these fees, it would be $27.28 per hour. (There are not enough clock hours in a summer break, assuming no sleep, to earn enough at minimum wage to pay for a year of the average public university.)
I think that's a common problem when discussing things with one's parents. "You make twice the amount I did at that age!", "Yes, but tuition is twenty times as high!".
The average cost of tuition at public universities in 1970 was $470. In 2017, it was $9,970.
Health spending was $355 per person in 1970 ($1,797 if you adjust to 2017 dollars). In 2017 it was $10,735.
The median price of a home in 1970 was $23,600, and last april it was $339,000.
We have less than half the number of pensions in the US than we did then. Contributions to retirement plans have grown by more than 10x and we have a lot less financial security now despite this.
1,000% is a fantasy. We're well above that on many aspects.
The only positive argument that is ever made for minimum wage is that sometimes it does not have a perceivable adverse effect in a strong economy. There is never an attempt to explain the cases where there is a minor or major adverse effect.
Even when it doesn't noticeably hurt, a minimum wage doesn't actually make anything better. It doesn't improve poverty rates. It doesn't improve employment rates. It doesn't lift anybody out of poverty. It has no beneficial, measurable side-effect. And there is plenty of economic research that shows it hurts more than it helps. Just like rent control, it is popular with progressives because it 'feels' right.
>In fact, some people — including those from the Economic Policy Institute — have posited that a minimum-wage increase will actually lead to an increase in employment because of the effects of giving low-wage workers a raise. Other advantages to restaurants may include lower turnover rates and better job performance.
Why are we still speculating about this??? We've been studying the impact of minimum wage laws for decades. This is just hopeful thinking by progressives activists.
Someone didn't do his homework today. Maybe you should go back to school if you skipped history lessons:
> Minimum wage legislation emerged at the end of the nineteenth century from the desire to end sweated labor which had developed in the wake of industrialization.[19] Sweatshops employed large numbers of women and young workers, paying them what were considered nonliving wages that did not allow workers to afford the necessaries of life.[20]
Source: Wikipedia
And to respond to your question: We've been studying the impact of minimum wage laws for decades. Its clear that it imroves everyone's life substantially (even people who earn lot more). Why are we still discussing this? These comments are just hopeful thinking of regressive activists.
Just because a policy emerged to fight specific conditions, doesn't mean that a) it was actually a good policy to do that and b) that those conditions still apply. So I'm not sure what that reference to sweatshops in the 1800s has to do with anything.
>Its clear that it improves everyone's life substantially (even people who earn lot more)
Ok. You know how to use search-and-replace. But I am serious. Since you're fond of Wikipedia, feel free to actually read the article on minimum wage[1], you'll see that it mirrors what I argued: in most cases, the minimum wage has detrimental effects (especially for low-income and young workers, employment rates in general, and small businesses), occasionally it has no perceptible detrimental effects.
No evidence that shows it actually IMPROVES anything.
As a business owner if I am required to pay my workers at minimum 15$ an hour I will need to off set the impact to my bottom line. This can be done by:
That's what I said about the flaming pond of gasoline in my front yard.
(My point being, it'd be a lot more interesting if you listed some specific reasons you think minimum wage is bad regulation, rather than just protesting it in general terms)
> As a business owner if I am required to pay my workers at minimum 15$ an hour I will need to off set the impact to my bottom line.
Honest question, if you're still profitable (and I read this as implying you are), why do you need to offset it, or offset it aggressively? Sure, if it becomes extremely tight to not-profitable, that isn't good and would need rectified, but again, your comment doesn't come off like that.
Because if it doesn't bring the profit he's used to, or if he can't have the same quality of life, he might as well fire everybody and close rather than putting more hours in a restaurant, which by experience I can tell you is one of the most stressful business. In fact, there are studies that confirm my personal experience anecdote.
Being profitable is not the same as leading a decent business, and decent quality of life.
I'm not a business owner but wouldn't anyone feel that way? If the government put out a web developer tax that took 30% of my salary, yeah it'd still be fairly high but I would move to embedded development or something else that pays more after the tax.
As a thought, profitable can have a lot of variance. If my "profit" means I only make minimum wage when all is said and done, why would I bother owning a business? The staffing costs account for a lot of a businesses expense (#1 or #2 depending on rent costs), so an increase in staff costs could changes "make healthy living" to "barely make more than the workers".
I would hope that the business owner is making more than the workers, that is the person taking the risk on the business, and most likely putting in a lot more time/effort to keep it profitable.
Money is the fuel that feeds the evolution of your business it allows your to expand, grow, change, and hire different caliber of workers. As the business grows it allows you to have more capital to pay your employees and hire more people.
If you have costs that you can't offset...
Your workers are your responsibility, they feed their families with the pay check they are provided. (Speaking from a holistic view) If you can't offset costs, that means you possibly can't provide them the same pay check or bonus they've been getting. Essentially, this ends up being one of those good of the many outweighs the good of the few.
Running a business often means longer hours, more financial risk, and other additional burdens compared to being employed by someone. If the returns aren't commensurate, why do it? Better to quit, go to a 9-5 and get some of your life back.
Because even if you have to work longer and have the other burdens, the job is nicer than being the guy who has to wash dishes or make fries. Not everything is about getting more money. It's the same argument in regard to "why get a graduate degree if you don't make that much more money afterwards?"
So who gets to decide how much profit this person is allowed to make? Maybe he wants to save for his kids college or against a recession? He is taking the risks (leases, capital tie up, etc.) he should be allowed to decide his payout. Most restaurants run super lean and have high failure rates. The long term effect of these laws is yet to be seen.
It is also unclear to me why we expect an unskilled worker at McDonald's putting fries into a basket to make a "living wage". These jobs are largely for students, retirees and other temporary workers. A high minimum wage isn't the way to end poverty, no taxes under $60K, needs based UBI and other tax incentives are much better options.
The issue is that business that employ unskilled labor will tend to raise prices but rich people don't shop at WalMart; poor people do. So great, they make more but their buying power may have actually gone down. This is the conundrum. Everyone wants $40/hour unskilled manufacturing jobs making throwaway products that they can buy at the dollar store. You can't have it both ways. People really want buying power, not necessarily higher wages.
> It is also unclear to me why we expect an unskilled worker at McDonald's putting fries into a basket to make a "living wage". These jobs are largely for students, retirees and other temporary workers.
This is utter nonsense and insulting. Go talk to people who actually work those jobs. These people are adults, just like you are, and they deserve to be treated with dignity. If you don't pay them a living wage, then the government will have to make up the gap. Is that your goal?
I'm not insulting anyone. I actually worked these jobs in the past. I know the people personally. And yes, if you read what I posted, I explicitly stated that the government needs to make up the gap. We can tax high wage earners and redistribute the money to them directly without immediately raising the prices at the stores they use. So I'm saying I'll personally pay more taxes to help raise these people out of poverty. I think that is treating people with dignity, apparently you disagree.
You really don't see how saying one's job is "for students, retirees, and other temporary workers" and that their work doesn't deserve a living wage could be insulting to someone who does not fall into one of those categories but has chosen to work that job?
Honestly, no. There are opportunities at all the fast food chains (convenience stores, etc.) to move up into manager or assistant manager. These jobs usually pay $40K+ and benefits. This is a living wage in most areas. But they invested in themselves and are no longer unskilled. All I am saying is that dumping fries into a basket doesn't create enough economic value for it to pay a living wage. Not all jobs are designed to have a career path. We have much better tools to help those in poverty than minimum wage hikes. I think anyone under some X * federal poverty should pay no state or federal taxes. Trivial to implement and their take home would match a hike to $15/hour mw.
I mean, if a "living wage" means that you're not able to provide a net value for your employer, or at least that other options like investing in automation is substantially more profitable for them, it just doesn't work out. Why would you "deserve" for someone to pay you more than what your labor is worth? They just won't hire you then.
I agree that everyone _does_ deserve to live a dignified life and afford all their basic needs, no matter where they work. I'm not sure that the solution is to force employers to pay more than what they get out of you. I don't think I've ever heard of a solution that's entirely convinced me (it seems to me to be a very hard problem), but I'm leaning towards an UBI.
That's not quite true. Customers get to decide if they accept the profit margin that the business wants. If the business thinks the risks far outweigh the payoff, they decide by closing the business.
> For those that aren't aware typical rent in NYC on a corner lot for a restaurant is about 18k per month
The reason the rent is so high is because market conditions are allowing money that should be going towards labor to go towards rent. If there aren't 1000k small restaurants paying minimum wage, demand for space goes down, rent goes down, possibly to the point that being a landlord is no longer profitable.
Assuming that the min. wage increase has been great for NYC, I fear this would be used as "evidence" that a such a minimum wage would work everywhere in America. NYC is one of the most expensive places in the US to live and work.
Meanwhile there are entire diners in America that make $30/hr. They do just fine because they pay $200/mo in rent. A minimum wage of $15/hr would be silly.
If anything, we need less centralization on this kind of thing, and more deferral to lower jurisdictions. Trying to pass a national standard in the USA is going to be inappropriate almost everywhere. If New York City needs a minimum wage of $20, fine, as long as Jackson, Mississippi can have a $7.50 wage, if that is appropriate there.
The problem with minimum wages is that displaced workers who can't perform minimum wage work still need the little money they could get from a less than minimum wage job. The government would have to offer a job guarantee that is below minimum wage to cover these people on a case by case basis.
Is the author really in Buffalo? That’s the other side of the state.
From my personal experience in nyc, and from talking to neighbors who own restaurants, small and family owned businesses are absolutely hurting. They’ve reduced staff, and owners are making up lost hours themselves. Delivery has been mostly outsourced. The price of everything on the menu has gone up. A number of lower-cost restaurants have closed completely. Whatever reported numbers the author based this upon do not tell a complete story.
I feel like that is more of a side effect of delivery apps getting popular.
But in my opinion if your restaurant cant afford to pay $15 an hour, which still isn't really a livable wage in NYC, then maybe it shouldn't be operating.
Sure and that's fine for you and me, but it also is more cost on those who are likely making $15/hr and get a lot of their meals out and about - which means their cost just rose with their paycheck.
Remember, making food at home in a nice kitchen is a luxury.
I think you have this backwards, paying others to make food for you is a luxury. If you can afford a $50 microwave that you can then use to make meals that cost less than a dollar, that is the standard. You don't need a 'nice kitchen' to eat at home. Not to mention, their wage is double the $7.25 national minimum wage, but food prices at these restaurants do not double in response, so they still come out ahead.
You can't live off of microwave noodles and instant rice. Cooking meals not only requires a way to heat food but ingredients which go bad quickly (eg time to go grocery shopping) and time to assemble and cook ingredients (dried beans are cheap but take 12 hours, instant beans still take 10 minutes or so). Then remember food has to be palatable, which is an additional challenge with kids.
I'm lucky that I'm in a place now where I can make nice food from relatively raw ingredients and much of that stems from my (relative) wealth.
I am from Europe and I always find it confusing to deal with prices in the US. First the prices don't contain the taxes, and then I have to add tipping. The price of a meal shows up on the menu as 9.95 and I end up paying around 15.
The original point of a tip was to optionaly pay when service goes over and above what they need to do.
At some point, it morphed into passing part of the service staff wage to the customer and pretending this was somehow a good thing. It's so entrenched in culture now people just assume even for crap service you tip. At the end of the day, it really gives management an easy out by putting the customer against the service staff for labor rates while the restaurant decides fixed meal costs.
Its absolutely ridiculous. Its now to a point where 15-18% is expected even for bad service, and 25% and up for good services. There is no way I'm paying an extra quarter of my bill in tips because the restaurant owner is too cheap and offloads the staff costs directly to their customers.
Its gotten ridiculous, I just wish that we could move away from the tipping culture that we have here in the US.
I almost always tip 20%. I even tip 15% for poor service--I figure that there are likely things going on in the kitchen or with other service staff that I'm not aware of, and that tips are often split between everyone so the my tip for poor service is help the other employees busing tables too. My wife often tips 25% or more.
Why can't restaurants charge us more, pay their staff better, and then the staff could treat us like we were customers of the restaurant and not expecting us to directly compensate them. For the answer, see my last paragraph.
Even for pick up service, say when I place a to-go order for cup of coffee with my Starbucks app and then pick it up from a bin on the counter myself, the app prompts for a tip. At other server-less restaurants, I'm forced to make the choice of tip when I place the order.
So why the culture around tipping here in the US. I believe that it's related to why movie theaters can charge so much for popcorn. From Stanford.edu:
"The findings empirically answer the age-old question of whether it's better to charge more for a primary product (in this case, the movie ticket) or a secondary product (the popcorn). Putting the premium on the "frill" items, it turns out, indeed opens up the possibility for price-sensitive people to see films. That means more customers coming to theaters in general, and a nice profit from those who are willing to fork it over for the Gummy Bears." [1]
In the case of tipping in restaurants, the restaurants are naturally willing to charge more to customers like myself and my wife for the wine+food+service while still making a profit from price sensitive customers that pay less by tipping less for the same wine+food+service.
Yes. There are many cheap food options in NYC and if they need to charge a bit more to pay a fair wage then so be it. Providing even cheaper prepared food off the backs of staff not getting paid a living wage is not ok.
Restaurants have long been subsidized by workers stuck in a position where they will work for _any_ wage. As that changes, which is demonstrably a good thing, so will prices rise to match costs.
It’s similar to the way Uber/Lyft prices will need to rise when their subsidies change terms.
Anecdotally I have to agree. Having lived in Manhattan for the past decade, I have seen more restaurants close in the last two years than the previous eight. Most of lower Manhattan's retail footprint is filled with chains (Starbucks etc) rather than neighborhood restaurants.
Quote: "During this period, New York City has seen a strong economic expansion of the restaurant industry, outpacing national growth in employment, annual wages, and the number of both limited- and full-service restaurant establishments."
Perhaps the disagreement you see is because this study focuses on the workers, instead of the business owners. Food service worker wages and employment rates are up relative to overall growth. This article is dispelling the notion that increasing worker wages will lead to worse outcomes for those workers, which is a common objection to increasing the minimum wage.
> Roughly 77 percent of NYC restaurants have slashed employee hours. Thirty-six percent said they had to layoff employees and 90 percent had to increase prices following the minimum wage hike, according to a NYC Hospitality Alliance survey taken just one month after the bill took effect.
> Only about 4 percent of survey respondents indicated that none of the above changes took place in their restaurants.
As a former service worker, I'd argue that cutting employee hours was exactly the goal.
Typically, in a restaurant in Philly or places with similarly lower-than-minimum service wages (which still has the $2.75 or whatever minimum for service workers), you'll be scheduled excessively for hours when the restaurant definitely isn't going to have any business. For example, coming in at 330/4 to start prep for the dinner shift.
When labor costs basically nothing, there's no reason not to overschedule them.
This reduced the amount of time I could spend outside of work learning to program (for example... since it's what I did hah) or others could spend improving their skills for basically no money. It's a huge detriment to the employees. You'd stand around cleaning for some nitpicky manager making 0/hour effectively, doing untipped cleaning and prep work. Your paychecks will be $0 if you get even a modest amount of tips for the night (it's all taxed).
Now restaurants will be more particular about how they schedule employees, and the untipped work actually costs money to have done (if a janitor would have to be paid minimum+ to do it, why should a server do it for $2.75/hr)?
Look at it this way. If tips + $2.13 an hour < minimum wage for the hours you worked then your pay check will have whatever amount will get you to minimum wage. I believe it’s per pay period. If you’re in a 2$ an hour state and getting money in your paycheck it’s time to find a new restaurant.
IIRC, whatever the pay period is. I would need to ask an old manager if the week or pay period matters. Could be per week.
It’s so rare in the $2 an hour states. I worked at Chili’s during the worst parts of the recession and never made a paycheck. Once the economy picked up I went to greener pastures.
In my 6+ years in the restaurant industry I’ve never had a manager or owner who didn’t care about over staffing. They were always focused on reducing hours and making sure the opener/closers had enough tables to make it worth it.
I worked in some of the largest (non fast food) groups to single owner restaurants.
I thought the law was hour by hour. So if you get no tips for an hour, you are owed minimum wage for that hour. Actually getting employers to pay up is a whole other battle, but in that case what is needed is enforcement of existing laws.
The slant of that website is, uhhhhh, impressive, but let's set that aside and go to the primary source[1]. First, it's a self-reported survey, not a study. Tellingly, it doesn't list any absolute numbers, just "yes/no" reporting. For example, 77% of businesses reduced hours hours per-employee, but it doesn't say by how much. That doesn't seem at odds with the study being discussed in this thread. That is, hours may be reduced, but overall wages and employment remain up relative to other industries. Actually that's another interesting thing about the survey you link. It cites a 6% to 1% drop in growth rate, but doesn't compare that to other industries, as the study in this thread does. The survey also says that food costs went up (an expected result from the wage increase), but they didn't ask what the impact on revenue was.
The survey you cite seems low quality anecdata compared to actual industry numbers shown in the study being discussed.
As to your first point, no, "the minimum wage hike" did not occur in late 2018. The final increase ($13.50 to $15.00) did indeed take place near the end of this study period, but the overall increase from 2013 to 2018 (from $7.25 in 2013 to $13.50 by late 2018 to $15.00 by end of 2018) reflects a more than doubling of the minimum wage over the study period, so I think it is still a valid reflection of the impact of such a dramatic increase.
There is too much investment on the left of $15 minimum wage being the "right thing to do", that miss information pieces like this Market Watch article are all too common. In reality $15 will be disastrous for small business. A better solution is UBI, which also has the added benefit of starting to recognize work that currently is valued at $0 such as stay at home moms taking care of their babies/toddlers.
The minimum wage went from $7.25 in 2013 to $13.50 last year, finally increasing to $15 last year as well. It didn't all jump last year, so the data of 2013-2018 still appears valid.
At least talking about restaurants with tipped employees, the $15/hr includes a $5/hr tip wage! If a server makes enough in tips, the min wage the restaurant pays is only $10/hr. See appendix figure 1, page 22 of the pdf.
There have been too many times of selective definitions, selective measurements, selective polling, selective measurements... all for reaching an agreed upon conclusion. For example, the CDC used a specific definition of rape (excluding forced penetration, counting it as general sexual assault instead) that excluded the majority of male victims of domestic rape, and then used the now biased results to give high level summary data that was greatly misleading.
If I can't trust the CDC's reporting on an issues as serious as domestic sexual violence, then how can I trust anyone's data? Maybe peer reviewed science in the hard sciences, but social science (including economics) has a similar issue of selective measurements, ignored replication, and biased publishing.
So I guess to start with, what peer review has this undergone? To what extent has it been replicated? What criticisms does it have (and none is a very bad sign)? What is the biases of the group(s) that did the work involved? What is the biases of the group(s) that provided funding?
Yes, it is odd I'm at the point where anecdotes seem to have as much weight as data because anecdotes are understood to be inherently biased whereas data is treated as pure, reliable, and free of bias when it isn't.
Also, please note that someone has already posted a criticism of this data.
I don’t know how you made the leap from restaurant pay to men’s buttholes being forcefully penetrated but based on this data, you must be a real ray of sunshine to be around. Please keep your buttrape statistics to yourself were here to talk about minimum wage and restaurant pay.
Most data doesn't tell us anything though. It is quite hard to find data that is interesting and relevant at the same time.
The minimum wage might well have led to a worse outcome for those workers that is being masked by some other effect. In theory a minimum wage rise will have no impact (good or bad) if the equilibrium wage is high enough.
It strains credulity to think that New York's restaurant scene is thriving because of the minimum wage. There is clearly something else going on.
Why would it strain credulity? That's been the experience with every minimum wage increase, ever (economic boom, not bust).
And the explanation is easy, trivial even: people who eat at restaurants have more money to do so.
US's overall economic picture is so heavily tilted in favor of the wealthy that literally anything that puts money in the hands of the poor is going to cause an economic boost.
^_~ You might not have researched that. There are studies that suggest net-positive impact, but there are also studies that suggest change for the worse.
> And the explanation is easy, trivial even: people who eat at restaurants have more money to do so.
Minimum wage earners aren't going to be investing in increased production capacity. Best case scenario, something that was going to be consumed by the rich gets consumed by a minimum wage earner instead. Middling case scenario, something that was going to be consumed by the middle class isn't produced. Worst case scenario, less investment and we have a little bit less to go around in 10/20 years.
None of those 3 is catastrophic, but it is very unlikely that minimum wage rises are a big-picture win. The idea that even with a minimum wage increase a poor person could out-compete a member of the middle class for any good or service is optimistic.
> are also studies that suggest change for the worse.
There aren't. The literature is surprisingly uniform. I mean, I'm sure you can find something funded by a libertarian thinktank that says otherwise, but nothing by credible researchers doing honest research. Universally and without exception, areas that increase the minimum wage experience economic boosts compared to similar areas that don't.
> Minimum wage earners aren't going to be investing in increased production capacity.
Nobody said they would, or would have to. Restaurant owners do the investing; wage earners do the consuming. Investment follows demand, obviously.
> very unlikely that minimum wage rises are a big-picture win.
Oddly, the literature says the exact opposite.
You seem to think that there's a fixed supply of restaurant meals - only 100 meals, no more, and if Sue wants to eat then Larry doesn't get to. This is... not the case.
It is using New York's official data on the restaurant sector, and other quantifiable studies to make its point. Dismissing it because of "where the author lives" and anecdotes, comes across like you've decided the conclusion and are trying to fit facts to support that preconceived conclusion.
Why not look at the actual data and try to address that? It would be a much stronger argument.
This is true in just about every market in the US, including all the ones without minimum wage increases.
> The price of everything on the menu has gone up
You could say this most years about any restaurant and most years you'd be right. The other years, you'd see smaller servings.
> A number of lower-cost restaurants have closed completely
The average person eats at fewer restaurants in their entire life than the number of restaurants that close in NYC in any given year. Anecdotes aren't a data point.
Studies from the "center of disease control and prevention" haven't shown that. Hardly the best source to pick a study that says "the smoking ban hurt businesses".
Ad-hominen means "directed at the person". I pointed to a source of conflict of interest.
Nonsense means without logic or sense. I made an argument, amounting to that the source has a conflict of interest. You might disagree with it, and it might even not be the case, but it's perfectly logical. Hardly "nonsense". In fact, I find it irrefutable (There is a conflict of interest between the host of study and showing negative results from the smoking bank on businesses. Whether it affected the work is another matter).
It seems that for some reason you expect me to bother debunking it tp provide "deeper criticism", but I have no such intention and have better uses of my time. For me, as I wrote, it is enough of a filter to avoid sources with conflicts of interest. YMMV.
Do you really believe one cannot (or shouldn't) point to a potential conflict of interest, if they don't at the same time give "deeper criticism"?
Note that I didn't even claim that the report is wrong. I literally only wrote who hosts it, and argued that it's "hardly the best source" regarding pro-smoking business interests.
Is that controversial?
Seems to me that a reasonable, limited, and (I'd argue) true, point, was met with hostility and unrelated demands, not to mention the rude "nonsense". Maybe you ought to think about it?
>small and family owned businesses are absolutely hurting
likely because profit = revenue - expenses and expenses (in the form of wages) have gone up more than revenue.
Raising the minimum wage has always been bad for margins. That's why those restaurants (and economists indirectly on their payroll) try to convince us that it's bad for workers too.
>From my personal experience in nyc, and from talking to neighbors who own restaurants, small and family owned businesses are absolutely hurting. They’ve reduced staff, and owners are making up lost hours themselves
Well, if they were hurt with such a raise, perhaps they were not viable businesses and are better closed.
The employees might lose a crappy near-subsistence job, but both the employees and owners can then concentrate their efforts into something better...
Somehow Europe manages to have viable restaurants despite decent minimum wage and not tips-oriented compensation...
What makes the US unique that it needs to forego minimum wage? Unemployment isn't much different from most countries in Europe or other comparable economies.
Really? Really? Take a look at the unemployment in Spain or France and get back to me.
Also, not all countries in Europe have a minimum wage - there's no official minimum wage in Norway (although the de facto minimum wage is a lot higher than in the US).
>Really? Really? Take a look at the unemployment in Spain or France and get back to me.
Really? Really? You think the unemployment in Spain and France is because of the minimum wage? They had the minimum wage decades before they had high unemployment (and inversely for the US).
Not to mention unemployment rate doesn't say much, since in the US it includes all kinds of subsistence semi-jobs that would qualify more like colonial deals in other countries -- among other manipulations:
"The answer lies in the measurement of unemployment. If you have not looked for a job in the last four weeks, you are not counted as being unemployed, because you are not counted as being part of the work force. When there are no jobs to be found, job seekers become discouraged and cease looking for jobs. In other words, the 4.1 percent unemployment rate does not count discouraged workers who cannot find jobs. (...) The US Bureau of Labor Statistics has a second measure of unemployment that includes workers who have been discouraged and out of the labor force for less than one year. This rate of unemployment is 8.2 percent, double the 4.1 percent reported rate. (...) The US government no longer tracks unemployment among discouraged workers who have been out of the work force for more than one year. However, John Williams of shadowstats.com continues to estimate this rate and places it at 22 or 23 percent, a far cry from 4.1 percent. In other words, the 4.1 percent unemployment rate does not count the unemployed who do show up in the declining labor force participation rate." [1]
In any case, even with the given "unemployment rate" as the metric, the US is well below Cambodia, Laos, Thailand, Vietnam, Guatemala, and other places, the same way it is, itself, ahead of France. Does that tell you much?
Funny, in France there's also the same kind of manipulation to reduce the official unemployment. And that for all people who stopped being considered unemployed, only a minority had actually found a job (I saw that figure a few years ago, so it might have changed, but I doubt it).
The relatively high unemployment rate in Spain is not related to the minimum wage, but has been linked to their economy being driven mainly by tourism and construction. In fact, the minimum wage in Spain is neither very high nor very low compared to other European countries.
Are you blaming the higher unemployment ratios in those countries on the minimum wage?
The UK has a minimum wage and low unemployment. At the time it was introduced we were warned it would lead to increased unemployment but that turned out to be wrong.
There are such efficiencies to be have in restaurants. In Japan I went to a curry restauraunt that was run by 2 staff. Two people did the cooking, taking orders, collecting bills, serving food. The whole operation was two staff.
Back home I went to an equivalent size burger joint that had 6 people on staff that I could see.
With good design and prep a curry restaurant was able to serve the same amount of food with 1/3 the staff. They could double the wage of the staff and still have money left over with better prep and design.
Plenty of places drop down staff. Taco bell cuts down to a staff of 2 during the night shit. However, if there is any sort of rush on food, it all breaks down.
> Somehow Europe manages to have viable restaurants despite decent minimum wage and not tips-oriented compensation...
They have a social safety net for all the people who aren't employable at that high wage. That's the difference. You can't massively increase minimum wage without a social safety net to go with it. And if your goal is both you need to start with the safety net, not the minimum wage increase.
actually the social safety net puts a downward pressure on wages. americans need to earn more money to make up for the lack of social services. europeans and most of the free world, the middle class work like they are earning spending money vs americans who work like they are earning money for their health insurance, transportation, etc. this is why americans can't compete with h1b workers as they undercut their american counterpart for wages as they can go home in the end.
minimum wage in the US is on the low end of the first world countries when it comes to minimum wages. they should be at the top end. a proper minimum wage would be well above $20 an hour to make up for the lack of social safety nets. it really should be $25 per hour.
https://en.wikipedia.org/wiki/List_of_minimum_wages_by_count...
My experience in both the UK and Germany was the service is utterly terrible. Some people believe this is a worthy trade-off. I disagree ,and I reject the notion that the only acceptable answer is higher guaranteed wages.
And my experience has a French person is that service in the US is terrible because waiters are ultra invasive (they interrupt me while I talk to say stupid stuff like « how is everything ? »). It’s called « cultural differences »
I agree. Not once in both France or Germany did the waiter come to me and rushed me. I can sit for hours and no one bats an eye. In the US things are always rushed. They come to your table and annoy me _and_ expect a tip of min. 15%. Once, a waiter in NYC actually yelled at us because we didn't tip enough.
> The employees might lose a crappy near-subsistence job, but both the employees and owners can then concentrate their efforts into something better...
Before the hike, both the employee and owners could do that... yet they didn't. Is the existence of a lower paid job make it harder to create something better? That seems really backward, because there will always be lower paying job.
> Somehow Europe manages to have viable restaurants despite decent minimum wage and not tips-oriented compensation...
Where does Europe has an higher minimum wage than $15 USD? That's excluding tipping which can bring that wage MUCH higher.
You can't really compare viability when the wage is actually lower....
The only country in Europe with a minimum wage above $15 an hour is Switzerland.[0][1] Also consider that the tax burden for poor people in Europe is higher, but this does get offset by the better social support structures.
> Gabriela’s isn’t alone. In a survey of 324 full-service restaurants, the New York City Hospitality Alliance found that 76.5 percent of respondents cut staff hours and 36.3 percent eliminated jobs, including whole layers of middle management, in response to mandated wage increases.
> To cope, restaurateurs like the Milners are moving from large-scale restaurants to small spaces. The Milners have Gabriela’s Taqueria at West 44th Street and Eighth Avenue.
It seems unlikely the original article is telling the full story.
Ehhhhh - so, the Post is notoriously anti-minimum wage hikes, and the NYCHA is a restaurant owners association, so it makes sense that they are anti-wage hike.
I would say that from my experience with the restaurant industry here, it definitely puts pressure on restauranteurs with marginal businesses. If you have a labor-intensive restaurant with thin margins, it hurts you. However, the restaurants with strong businesses, it's not really affecting.
A far greater impact on the typical restaurant is delivery, which is an increasing percentage of their business with a lower margin for many traditional restaurants, given the cut that Grubhub/Seamless/etc. take.
Whatever the bias of the publisher, the article from the NY Post contradicts this research backed by data on a couple of fronts:
* "massive layoffs in the restaurant industry are unlikely," but the survey indicated that a large number of restaurants have eliminated jobs or cut hours
* "...because owners need a certain number of staff to operate a full-service kitchen," but at least in the anecdotes from the interview in the NYPost article, restaurant owners are moving to smaller venues that require less staff or moving to "common space" layouts.
To respond to your anecdata: In a capitalist system, isn't it their fault for not being able to compete? Why should we lower wages for thousands of workers because you personally know failing businesses?
Employees who could have been hired by these businesses won’t be now. This creates more competition for the workers because it decreases the supply of jobs. (ECON 101)
Is profit the ultimate objective of every human activity? Isn't it enough that the minimum wage raise has helped employees better their living conditions even if at maybe a cost in employer profits?
Without profit, someone doesn't get paid. If you don't pay the landlord he can kick you out. If you don't pay the electric company, you can't keep the lights on. If you don't pay the gas bill, the gas company can turn off your heater and your stove. If you don't pay your vendors, you can't by food to cook and sell. If you don't pay your Internet Service Provider, you can't run credit cards. If you don't pay the bank you've got a loan with, they can shut your whole operation down.
Restaurants are notoriously low margin and owner-operator endeavors. So more often than not, the first person that doesn't get paid is the owner, who sinks hour after hour into the place to try and keep the doors open. But eventually the owner has to pay their own mortgage, car payment, etc.
So while profit may not be the ultimate objective of every human activity, it is essential if you want to stay in business. And if you don't? Your workers find out the hard way that the real minimum wage is $0.
If raising the minimum wage didn't have an adverse affect on revenue and employment, then clearly it's time to raise the minimum wage again. Right? Why not $50/hr? $100/hr?
If increases wages increases revenue, why have all of these restaurant owners been damaging their business by paying lower wages?
I'm missing something here. Nothing says that the profit didn't get cut by a large amount. Who cares if you make $100K in revenue if you have $120K in costs? Maybe you'd prefer to have $80K in revenue and $75K in costs so you actually have a profit.
Yeah because if we pay a restaurant worker $100 an hour, they will eat 10 as much...right? The reason of why this might be beneficial is likely because restaurant workers aren't just paying for car insurance, rent, health insurance, etc, and can afford a luxury-- like eating out.
I'm surprised that the natural wage in NYC was not that much already ... given how expensive that place is.
I wonder if employment falls as a result of the wage being raised.
I have family that runs a maid service business in San Jose. The minumum wage is much lower than $15 and they are already talking about closing up their business. I assume that if the wage is raised to $15 that the business will surely close. Which is sad because the maid service business is already the only source of employment for the women who work there. They aren't choosing to work there against other options. Its the only flexible hour work they can get, and they are allowed to keep their kids with them when they work ... which other employers don't allow.
I'm sure if given the choice between no work and the maid service work, they'd probably choose the maid service work. But that choice wouldn't be up to them and the employer.
>Even a one-time increase of 10% to 15% is unlikely to dissuade large numbers of customers from dining out. That would amount to an extra $1.20 on a $12 burger.
On the other hand, an extra $1.20 on a $3.50 burger might dissuade large numbers of customers from dining out. A $12.00 burger is pretty high end in most parts of the country.
> On the other hand, an extra $1.20 on a $3.50 burger might dissuade large numbers of customers from dining out.
That's the whole point of the article. The experiment has been performed and they are analyzing the results. The results are that people accept a 10% increase and/or that the buying power of increased wages at the bottom expanded the market enough to make up for your hypothetical lost income.
San Francisco is hurting from this aspect and food delivery partnerships. Didn’t read the article but they all blame the minimum raise hike, high rent, and the amount that food delivery services eat out of their bottom line.
Many have stated they regretted working with food delivery businesses and would have preferred just serving customers in house.
Is SF as a whole hurting, or just restauranteurs? If their businesses are hurting in a capitalist society, maybe they should look at their practices, re-evaluate, and survive the competition, or else bust. I don't have too much sympathy for those entrepeneurs going into a notoriously difficult industry who then complain that paying lower-class wage workers slightly more is killing their investment.
I don't know a ton about the economics but my living experience lines up with this article. At least half of my closest friends are in the service industry. I spent most of my 20s and 30s in NYC before the wage increase. Those friends generally couldn't afford much of anything, outside of rent and a steady supply of cigarettes. It's the reason bartenders tend to "give the bar away" in NYC. Because their friends can't afford much else.
Then I moved to Seattle and noticed something entirely different. Same sort of friends - mostly service industry. And this was before the increase to $15/hr, when it was $12/hr. What was starkly different was that our new friends could actually afford to do things. Nice dinners, bars around town where we didn't know the bartenders, movies, trips to Portland and Vancouver. Same jobs, but with money to spend.
And then there's the side that was close to home. My wife was, for the first 2/3 of our relationship, a bartender. In NYC she had her good weeks, pulling in over $2k and her bad weeks, making somewhere around $100 for the week. Hard to say what was "normal" and impossible to predict. It was impossible to plan around her income so I basically just asked her to give me half and it would essentially even out. Then we moved to Seattle, again at $12/hr minimum (she was making $17-$20 I think) and our whole situation was different. We were already doing fine because I make a good living but now I could finally count on her contribution. We were able to save, plan trips, etc in ways we couldn't before because now we had a baseline amount that she would always make. The tips we're just a cherry on top.
And then we moved to Chicago with a shitty mimimum wage for servers and my wife left the industry entirely. She had gotten used to some stability in her income and now with a low minimum wage for servers, there is none. Even at a nice theater gig, she was making less than any job she had in Seattle and again relying upon the whims of her customers rather than the stability of the industry.
Retail jobs aren't meant to be bread-winner jobs. Any zero-skill job is going to pay whatever the local market minimum is.
There are two ways to raise the minimum market wage. First is minimum wage laws. Second is to increase labor demand or shorten labor supply.
There's clearly a surplus of no-skilled labor in the US, yet we're still importing more of it. Businesses are capitalizing on the market conditions and exploiting the labor surplus, that's why we're seeing the proliferation of so many chain restaurants and and other little-to-no-value businesses.
Unfortunately, most people spend the first 18 years of their life learning not-so-useful things, at least in the US. They might go on to college, spend lots of money, and waste several more years learning not-so-useful things.
Then they work retail jobs for little money. It's their own doing.
For the rest, I'd recommend you spend a half year working in the service industry for half minimum wage plus tips before throwing around phrases like "zero-skill".
I waited tables for minimum wage plus tips prior to moving on to other things. I considered it a zero skill job. Literally no experience necessary, they'll hire anyone.
There are plenty of zero-skill jobs (or maybe we should say zero-value-skill), and they're going to pay zero-skill job wages. You're free to pretend that's not the case, reality proves otherwise.
Why is $15/hr the magic number? Just because it's some round number?
If raising the minimum wage has had nothing but positive effects, why not raise it to $20/hr - or some other number calculated for maximum benefit - who knows what that would be?
Do you think it'd be as snappy if Bernie was up there at the podium asking for $14.79 per hour?
These are arbitrary numbers, when thinking on an economy-wide scale, because $15/hr does a LOT more for someone in a small town than a big city. The point is to pick something reasonably high, a non-starvation wage, that is also easy to market to the masses.
I don't think economists are huge fans of $15/hr across the board, so $20/hr would probably be abhorrent to them. But economists can be totally wrong and still keep their jobs and respect due to the political use of economics these days.
I would be in favor of raising it to $30/hr. Labor would become so valuable, so many people would start their own independent businesses. There would be no way to enrich the middle managers and the useless executives, they'd have to make reasonable salaries.
Of course, we'll have to raise tariffs to keep all the jobs from shifting overseas, but things would level out eventually.
Costs to consumers are up, too. Minimum wage is a way to guarantee a minimum standard of living to employees, but we collectively pay for it through increased prices for goods and services, which disproportionately burdens the poor.
The EITC/UBI is also a way to guarantee a minimum standard of living, and we collectively pay for that through progressive taxes, the burden for which disproportionately falls on the rich.
What? The cost of labor is an input into the production of basically all goods we consume.
You’re right that a lot of employees provide services, but a lot of them work at factories or stores that produce/sell goods also (retail).
Poor people purchase from this value chain, too.
Markets are remarkably good at minimizing the input required to produce a unit output. The reason why labor costs have fallen so dramatically is because markets have minimized the input cost of labor. This is good for ALL consumers. However at the end of the day, labor’s gotta eat. This is where welfare comes in.
> The cost of labor is an input into the production of basically all goods we consume.
True but most products are not produced in America, the products that are made in America, are made by robots, the cost of labor on goods in America is just not significant.
In contrast to services which are all done in America by American people this is huge.
> This is good for ALL consumers. However at the end of the day, labor’s gotta eat. This is where welfare comes in.
You got your classes mixed up the working class are the consumers not the rich. A rise in wages for workers means consumers have more money to spend which is good for consumers and business.
> True but most products are not produced in America, the products that are made in America, are made by robots, the cost of labor on goods in America is just not significant.
> In contrast to services which are all done in America by American people this is huge.
This is becoming less true, as we speak. As standards of living in developing countries increase, the cost of labor also increases, until it more or less matches minimum wage in developed countries[1][2].
> You got your classes mixed up the working class are the consumers not the rich. A rise in wages for workers means consumers have more money to spend which is good for consumers and business.
A rise in CASH for workers means consumers have more money to spend. The disagreement here is in how we deliver that cash to the worker. It's definitely beneficial for workers to have more money, but forcing businesses to pay them inflated wages (i.e. greater than their market worth) simply causes the cost of that business's output to be inflated by a commensurate amount. You're correct that it gives workers more spending power, but it also distorts the market downstream by increasing the price of their output for people that buy the good/service that the worker in question uses their labor to produce.
In contrast, providing workers with some minimum cash (let's say, whatever the desired minimum wage is multiplied by 8 hours of work minus their existing daily wage), will provide workers with the same amount of cash on hand as a minimum wage, which as you say is "good for consumers and business", while still keeping the cost of their own output low, and therefore, accessible to consumers (rich, middle class, and poor).
Today, using minimum wage as a way to ensure workers enjoy a minimum standard of living just so happens to distort the market that impacts the rich in America slightly more than the poor, but that's only temporary. In the long run, it has the same effect of increasing prices across the board. Using welfare/UBI/EITC (paid for by the rich) in lieu of minimum wage achieves the same goal, while avoding the market distortion caused by inflated wage prices, while ensuring that goods/services are cheap for the middle class and the poor, regardless of the state of the labor market in developing/developed countries.
I don't understand why minimum wage isn't just increased somewhat quickly over a few years.
e.g. 7.25 -> 8.25 -> 10.25 -> 13.25
Over a few years to allow businesses to adjust their margins gradually. Increasing the income at the bottom will increase spending, which should be good for businesses like these that are employing low skill/pay workers.
Because a gradual increase had the chance to be neutered by future politicians. It's rare to get the opportunity to actually increase minimum wage, so it makes sense to get several years worth of increases in one go.
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[ 17.7 ms ] story [ 1099 ms ] threadYou technically have to be compensated up to regular minimum wage if tips don't make it but that's a great way to get your hours reduced due to "scheduling changes"
I get good service in restaurants because it's their job, but I can tip 0-10% if the service is beyond what I expect.
The important thing isn't that the pay is guaranteed for staff that doesn't provide good service, what's important is that their pay is guaranteed even if there are no customers. Bringing in customers isn't the job of waiting staff (apart from providing good service) - so their pay should never depend on it.
That is not true. https://en.wikipedia.org/wiki/Gratuity
Why don't we tip for every job then?
All else being equal you will get better service from a person that is directly rewarded by offering that better service. Should it work that way? No. Does it? Obviously. And yes we can all think of outliers and yes some culturing differences play into this (Japan has a no tipping culture and on average has excellent service) but I live in Amsterdam and the service on average is absolutely less customer focused here than what I experience in the US. It's worth pointing out I also prefer it that way (not a huge fan of constantly being asked if I need anything and less than genuine niceties but that's a subjective thing)
I don't mean this in a bad way, but are you american? It does seem a very US viewpoint that goodwill etc. don't really exist (or matter? something else?), and that people need concrete incentives to treat others decently.
Sure money's an motivator but perhaps a bigger one is to have a client treat you with decency. Sure money helps but to have a client just make you feel OK instead of crap, that would matter a lot more to most people. A big tip wouldn't negate bad attitude, even if it got staff to pretend to give a damn about you.
Happened to read this yesterday, not tasteful but relevant <https://theoatmeal.com/comics/tipping_tooting>
Edit: To be clear, in my experience I don’t find the service of an average U.S. waiter/waitress better than that of an average waiter/waitress in a country without a tipping culture.
Ah yes, now that you bring it up, I’m definitely not a fan of that either.
Another way tipping can add toxicity is when a guest isn’t aware of the tipping culture / not sure how much to tip, ends up not tipping or undertipping, and in those cases sometimes you’d notice nasty looks or other forms of visible grumpiness. (Checks don’t always include recommended tip amounts.)
They do this because they were instructed by their manager to do this. And the reason that managers want it done, is because they want the customers to finish their food and quickly vacate the table, freeing it up for the next customers. Of course they won’t tell you outright to leave, but they think they can psychologically obtain the same effect just by bugging you and making it hard for you and your fellow diner(s) to have a peaceful, leisurely conversation.
This can happen in Europe, too. At a couple of cafes in my town, as soon as you drink the last drop in your glass, the waitress will rush over and ask if you would like to order anything else. Owners do not like customers who occupy a table for a long time on just one single purchase.
That said, I flipped on this recently. The above utopian perspective simply doesn't align with reality anymore. Higher tips simply do result in on average better service (be it genuine or otherwise) and do incentivise waiters to work for the customer rather than their employer. The latter has value too. Which waiter do you want in a case where the owner of a dodgy establishment is asking their waiters to push the fish that's about to go bad? A waiter living off of tips from (return) customers or the one that just gets wage from that employer?
If you have to tell your employer to cough up the remainder, you're going to suddenly find yourself getting scheduled only an hour or two a week, if at all.
"Zero-hours contracts are NOT permitted in: Austria, Belgium, Czech Republic, Denmark, France, Germany, Hungary, Italy, Poland and Spain. There is an uncertainty as to their validity in Sweden. Generally they are not permitted under Swedish law but may be agreed by collective bargaining." https://www.igloballaw.com/zero-hours-contracts/
Not sure what "Europe" you're talking about, but in my part of Europe, they aren't...
Austria Belgium Czech Rep Estonia France Lithuania Luxemburg
Since 2016, it has been banned in: Hungary Ireland
Zero-hour employment contracts are heavily regulated in: Germany Italy Netherlands Slovakia
So yeah, it is not banned everywhere (or allowed in certain professions only), but in 70% of the EU.
[1]: https://fullfact.org/law/zero-hours-contracts-uk-europe
Further complicating the issue, at 30 hours, many employees become eligible for benefits, so there's a disincentive to increasing an employee past 29 hours/week.
Then, in the restaurant industry, there is a separate, lower minimum wage which assumes the employee makes up the difference in tips. If they don't make up the difference, they can request the employer cover the gap, but the employer will just cut their hours or fire them for being a poor employee.
Hah, good one, but not if you're marginalized. The majority of the states in the US are "right-to-work," which means you can be fired at any time for almost any reason. For the other states, there are varying levels of protection. I can't really speak to what is stipulated in their contracts, but I can tell you the following: if you're working two+ jobs, commuting 2hrs + because you can't afford to live in the city, and have to cook and clean your apartment on top of that, you don't have time to inform the Department of Labor (that's likely not even the right place to call--better spend some more time finding out what is) that you're being exploited.
> Zero-hour contracts are explicitly illegal, even for the self-employed.
By referring to getting scheduled at all, I was indicating you would likely just be outright fired the next time you dropped a glass, were 1 minute late, or any other minor, human-prone error happened.
> but the employer would still have to cough that 15 bucks if they didn't make enough in tips.
This gets you fired. You'll get your requested increased compensation in your next check, and the following week you're reduced to about 5 hours of work total. The following week after that you're let go for poor performance because if you're the only employee asking for tip compensation you're basically admitting you don't get tipped as well as other employees.
Not that I agree earning low tips is synonymous with poor performance, but try convincing a stereotypical crappy manager that.
It's also one of those situations where the people getting screwed over don't really have the means to defend themselves. If $400 in missing wages is a big deal (as it should be), one isn't really able to hire a lawyer to take care of the case for them.
Also people lie. I worked at Burger King as a teen and the manager would lie to everyone, saying if he found out they were applying for other jobs they would be fired. Super illegal, and he has no way of even knowing outside of reference calls. But pretty much every older employee believed him and didn't want to risk homelessness because they tried switching jobs. I remember telling him something along the lines of "Fuck off, I'm 16 and live with my parents"(he thought I was older), but it didn't hit me until years later that he was basically keeping the other employees his prisoners.
Or does the law only give $15 if there aren’t tips?
https://labor.ny.gov/formsdocs/factsheets/pdfs/p717.pdf
It could be that every single one of these points to the minimum wage hike having small to non-existent effects but the article reads like a brief, not an analysis.
Compared to the Seattle minimum wage study. They had an objective study set up and when they didn’t like the results they got some political hacks to re-analyze the data and release their results beforehand.
http://www.seattleweekly.com/news/seattle-is-getting-an-obje...
> Two weeks. Two studies on minimum wage. Two very different results.
> Last week, a report out of the University of California—Berkeley found “Seattle’s minimum wage ordinance has raised wages for low-paid workers, without negatively affecting employment,” in the words of the Mayor’s Office. That report, produced by the Center on Wage and Employment Dynamics at Berkeley, was picked up far and wide as proof that the doomsday scenarios predicted by skeptics of the plan were failing to materialize.
> And while another study that came out Monday from researchers at the University of Washington doesn’t exactly spell doomsday either, it wasn’t exactly rosy. “UW study finds Seattle’s minimum wage is costing jobs,” read the Seattle Times headline Monday morning. The study found that while wages for low-earners rose by 3 percent since the law went into effect, hours for those workers dropped by 9 percent. The average worker making less than $19 an hour in Seattle has seen a total loss of $125 a month since the law went into effect.
Edit: RickJWagner points out
https://news.ycombinator.com/item?id=21386070
> business owners ... say the extra money comes with an unforeseen cost: higher good prices, fewer working hours and layoffs.
> “Many people working in the restaurant industry wanted to work overtime hours, but due to the increase, many restaurants have cut back or totally eliminated any overtime work,” Andrew Riggie, executive director of the New York City Hospitality Alliance, told Fox News. “There’s only so much consumers are willing to pay for a burger or a bowl of pasta.”
> Roughly 77 percent of NYC restaurants have slashed employee hours. Thirty-six percent said they had to layoff employees and 90 percent had to increase prices following the minimum wage hike, according to a NYC Hospitality Alliance survey taken just one month after the bill took effect.
https://nationalinterest.org/blog/buzz/new-york-city’s-15-mi...
"Roughly 77 percent of NYC restaurants have slashed employee hours. Thirty-six percent said they had to layoff employees and 90 percent had to increase prices following the minimum wage hike"
https://nationalinterest.org/blog/buzz/new-york-city%E2%80%9...
A few years ago at my old job I finally got a big raise from $14 to $24/hour. Then almost immediately reduced to part-time from full-time but the same duties. I toughed it out hoping for a reversal but one day I was abruptly laid off without notice. Then three people were hired to do my job.
It seems business have no realistic view of employees. You're merely an "FT" or "PT" in manager parlance.
Working minimum wage is more difficult than it was years ago due to it being stuck at a specific rate for decades. But hours worked is just as important and the trend to cut everyone to part-time was an even bigger disaster.
Even the Fight for Fifteen group has been fighting for $15 for many years. They should be adjusting the rate for inflation, by now it should probably be $17.
This means the same job could have been performed in less amount of time? If so, why not employers are incentivised to increase the efficiency and raise the pay at the same time?
This place was notorious for reducing employee benefits to nothing. Employee reviews but the employee is at max pay rate so no bonus but still reviewed. No holiday parties. Overtime change from over 8 hours to only over 40. And on and on.
It was just a terribly run organization and I'm glad I'm out of it. There was a big exodus of long term staff in a short period of time just after I was laid off.
https://en.wikipedia.org/wiki/The_National_Interest
I totally forgot about this scandal/conspiracy against the US until looking up the source. The leadership is also almost entirely famous neocons you've seen on trial.
Besides that, there are plenty of problems with the isolated statistics presented in the article, as they are worded to be deceptive.
I'm always bemused by the arguments against minimum wages, they almost always boil down to "My business can't survive unless my employees are living in poverty." which, in reality for a lot of businesses, is "I won't be as profitable if I have to pay a living wage".
If people really believed this, there would be staged minimum wages: Walmart pays $25 minimum while small, struggling restaurants pay $15.
If labor was plentiful and cost $1/hr, we probably wouldn't see nearly as many automated checkout stations or ordering kiosks. If low-skilled labor costs $100/hr, you can bet there's going to be a lot more automation in place.
It seems like most people can grasp the general slope of this demand curve, but seem to be unable (and I think in a lot of cases it's rather unwilling) to reason about whether the curve has a fundamentally different slope/shape in the $8-20/hr range.
The curve that's actually interesting is the expected value to an individual worker of the minimum wage, i.e., the wage multiplied by "how likely am I to be employed fully" (approximately 100% at $1/hour, quite a bit less at $100/hour). Obviously, that curve starts at zero, goes up linearly for a bit, then heads back towards zero in the limit. The question is where "a bit" is and what the argmax is.
No, it isn't. But neither is $0/hour because you don't have a job, and society doesn't get the product that the $1/hour job produces.
Ideally, the system would pay the workers the marginal value of their input for the work done, and the government would "top up" the wages to whatever the living wage is. Everyone wins. Of course, this is hard to measure and apply.
For the vast majority of the world, outside of ultra-expensive first world metropolises, $15 an hour is beyond a comfortable living wage.
That's largely because the basic necessities of living (housing, clothing, food, transportation) are needed in roughly the same amount by all people, and don't scale with class/income/wealth. I live in a 1-bedroom apartment and eat about three meals a day and wear jeans that cost about $50. I have friends who make an order of magnitude more and less than I do. They don't live in a 10-bedroom or 0.1-bedroom place, respectively. They don't eat 30 or 0.3 meals a day, respectively, and their meal themselves don't cost ten times more or less - maybe there's a factor of two or three. The ones who make ten times more than I do might occasionally buy $500 jeans, but even they won't wear it for everyday use, and the ones who make ten times less generally don't buy $5 jeans either.
So, demand is roughly the same from everyone / doesn't scale very much, and the rich can afford to pay quite a bit more. So a market that has rich people in it will have a higher cost of living.
If you want to stop this, the obvious solution is to prevent income inequality (in all its forms - Paul Graham points out, correctly, that this would require us to rethink the very idea of for-profit unicorns - see https://twitter.com/paulg/status/886953410356011008 and https://twitter.com/paulg/status/645343476662427648). Useful tools include extremely high wealth and income taxes. (And, as someone who by any objective standard makes a lot of money, this is why I'm personally in favor of my own marginal tax bracket being 90% or higher - because it means that people who make even more money than I do can't as trivially outbid me for housing, etc.)
This is some real galaxy-brain level thinking. Enforcing a minimum wage is a more efficient market.
I strongly agree with this, but this requires altruistic employers, or unions to accomplish. And this results in jealousy and hostility towards workers in high-margin industries. Workers in general have no idea what their value-add to the company really is.
Some portion of that marginal value must be retained by the business to pay fixed costs of the business and likely financing costs as well.
You just showed us a counter example. The structure of the market changes toward automation or away from it but the businesses are still being started as usual.
Whether this is possible will depend on the cost of capital and state of technology.
So when you push the value of labor to a leave where people cannot afford to live, folks in the US either end up on social services, social security disability, or are incarcerated.
Whenever there are changes to minimum wage, the parade of chamber of commerce types bemoan the horrors that will befall them. Yet somehow burgers get flipped and shelves get stocked.
Many on the left are supporting open borders. Which is guaranteed to attract a huge amount of low skilled labor. Which guarantees low wages (simple supply-demand). And if you artificially control wages, it will result in unemployment of the unskilled. Why do you think we have tent towns all over California?
No we aren't.
> Which is guaranteed to attract a huge amount of low skilled labor. Which guarantees low wages (simple supply-demand). And if you artificially control wages, it will result in unemployment of the unskilled.
Right now, the government is artificially suppressing wages by threatening to deport immigrants. Employers take advantage of government enforcement by promising to hide the worker in exchange for poor wages and living conditions.
Giving immigrant workers visas, thus rights is a solution to this. No more artificially suppressed wages because the workers don't fear the government
> Why do you think we have tent towns all over California?
Because they won't allow for enough housing to be built.
Yes, you are.
https://www.npr.org/2019/09/12/759442642/immigration-where-2...
Some jobs that certain humans perform are not worth very much money to an employer. If the state tells the employer they can’t pay someone that meager a sum, then they simply won’t hire a person to perform just that job. They will hire someone for more money to do that job plus something additional to make it worth hiring the person, or they will find a way to automate out or contract out that portion of the work.
Yes, if a business is not successful in managing around a government wage minimum then they will lose money. Companies are mismanaged all the time. But the general economic theory is based on rational actors, and at the macro level that is the effect that has been observed.
(none intended)
Also, I thought intended servitude was abolished quite a while ago.
There is a reason they don't exist anymore. They were the quickiest to build but did not survive a downturn most closed up shop after the mine was closed.
Towns built with various piblic/private spaces/businesses can survive one part of the economy doing poorly.
Don't pine for a made in China solution until you could actually live one. If you were in that situation (the average Chinese factory worker) now you wouldn't be on the internet writing this you would be working your 7 day 16 hour shift.
Minimum wage is elastic in (your) theory but in practice it appears the majority of companies opt to take the hit in profits rather than fire people.
I saw in my grocery store how, even when they had all available staff working the registers, the longest line would tend to the self checkout. This past summer they doubled the self-serve area.
The interesting thing is even though all full-service registers were in use, the deepest queue in any of them was two waiters. That means shoppers' perception of too long a line has shifted because of self-serve. They were choosing self-serve based on the belief it would be quicker, even if it means standing in the longest line. And that was mostly born out, mostly because the choice also depended on how many items were being purchased. People buying many things went to full-serve, which makes waiting in the longer, which drives people with hand baskets or half-full buggies to the self-serve.
The upshot being stores are installing more self-service checkouts because customers want them. It's not like adding those self-service lanes comes at no cost to the business. In the above grocery store, they had to remove part of the floor they previously used to display products. If they didn't think it was necessary they wouldn't have done away with that selling space.
Also, the lanes they added were in addition to the ~12 basket self checkouts. The new lanes are setup for people pushing carts.
There are some jobs that don't create $15/hour in value. Why is that hard to imagine? Minimum wage dictates that those jobs and the products they provide will not exist. Whether you think that's a net benefit to society is another question.
If the inflation keeps low, total amount of money in the economy is relative constant, thus the cake is not getting much bigger, increasing minimum wage is going to reduce the number of jobs in the sector that is paying previous the minimum wage.
Because those jobs don't disappear when that minimum wage is raised. This has been tested by comparing the job differences across state borders where the minimum wage has been raised on one side but not the other (Dube/Lester/Reich and Card/Krueger).
>Minimum wage dictates that those jobs and the products they provide will not exist
The reality is that that it tends to dictate whether cashflow is funneled into profit margins or wages.
Yeah, input costs have no effect on whether a business can operate at the margin...
>This has been tested...
If we suddenly care about what the economic research says, you should do a search for papers that don't confirm your biases.
How the fact that raising labour costs will reduce the demand for labour is controversial is beyond belief, truly. We have social programs here in Canada that do exactly this: subsidize wages of employees in certain industries because the value that the labour of some people doesn't cover the costs. But hey, what do we know up here...
I guess this mentality comes from the new wave of socialism or comes from people who have never run a business in their lives.
They can but that's obviously a rather different question.
>If we suddenly care about what the economic research says, you should do a search for papers that don't confirm your biases.
I have.
>How the fact that raising labour costs will reduce the demand for labour is controversial is beyond belief
Why is it so hard to believe that demand for minimum waged labor is very inelastic?
How is this a "different question"? It's the question. If there are businesses that can be economically profitable paying $14/hour, but minimum wage rises to $15/hour, those businesses are no longer viable.
We can argue about how many of those businesses there are, but it's merely a fact that they exist at the margin. If you've ever run a small business yourself, you'll understand how small changes in the cost of labour can be painful. I'm not talking about about McDonald's or Walmart here.
Again, we have social programs in my country to alleviate these issues. And they work.
>Why is it so hard to believe that demand for minimum waged labor is very inelastic?
So businesses optimize for the number of people employed, regardless of prevailing wages? I don't buy that, sorry.
Because most businesses make profits so it's perfectly possible to raise input prices without them closing.
>We can argue about how many of those businesses there are
That's what we were doing. The answer was "not a statistically significant amount".
>If you've ever run a small business yourself, you'll understand how small changes in the cost of labour can be painful.
I understand all too well the kind of caterwauling that happens when you do something that could threaten the profits of any business.
>Again, we have social programs in my country to alleviate these issues.
And a historically high % of profit to GDP, so maybe we can give some of those programs a break and take the money from a sector of the economy that is actually flush with cash.
>So businesses optimize for the number of people employed, regardless of prevailing wages?
Absolutely they do, yes!
Another way of looking at this would be: a job in McDonalds is not supposed to be a means of supporting the family of four. It's a side gig for teenagers, not a "full-scale" job.
And wasn't a high school education good enough 50 years ago for most positions? Companies have been able to force the burden of debt for gaining the skills required for a job onto the individual, through exorbitant college fees and unpaid internships, now you're advocating the government should take on the specialization that the private industries require?
As a college student one is barely able to figure out their interests - there's so much push to start planning well in advance, I have no idea how we can expect a tween to commit to a career path.
Nothing, then import twenty million more of them?
The writing of the time speaks of minimum wage as a worker health and safety issue. The first minimum wage laws in the U.S. only applied to women and children. As part of the labor movement, it was often described as a type of collective bargaining. Where it was seen as providing a living wage was not directly at the minimum wage but because of the inflation effect it would have on more skilled wages. That by raising the wage floor, the industries in which a head of household would be employed in would have to raise their pay accordingly to that of a living wage.
So there's truth that minimum wages weren't introduced to be living wages themselves. At the same time that was 100 years ago and we shouldn't be writing laws for today based on the assumptions of the 1900's.
Supposed by whom? McDonalds will suggest it's best their jobs be seen as side gigs for teenagers because that's the explanation that best supports their profit margins. The reality is that families of four will have to be supported by McDonalds wages if no other jobs are available for the individual in question.
Another way of looking at it is: what percentage of citizens do you think society should artificially inhibit from being able to support children? Is it 5%? 20%?
It would make sense if the minimum wage for "teenagers" jobs had kept up with the cost of college tuition, or even the increases in costs of a used car or insurance over the last 10 years.
Some teenagers in impoverished areas are helping their parents make ends meet too; others are emancipated and need a living wage.
- What is the average age of a McDonald's employee?
- The average age of an 'hourly-paid' employee is 20. You might like to know that we employ 120,000 people of all ages, from school leaving age to people in their 80s. We're also one of the biggest providers of first-time jobs in the U.K.
https://www.mcdonalds.com/gb/en-gb/help/faq/18338-what-is-th...
Secondly, why should teenagers have to work in the first place, instead of studying?
Then make the minimum wage for <18s $8/hr, and the minimum wage for >18s (or maybe >22s) $15/hr.
I really like the way Nick Hanauer puts this particular topic. It has a certain logic to it, and appears to be supported by some historic data and trends.
I won't do it justice, but in effect the message is that if my employees can afford my product, it's better for the economy and business. Using restaurants as an example, if all service workers can afford to eat at a restaurant, then restaurants as an industry do better, and the economy grows, and individual businesses do better.
My take on it is, without public policy, such as a minimum wage, it's hard for a business to be an outlier. If one business pays a living wage, but non of the competitors do, that business doesn't necessarily have enough of an advantage to stay ahead of lower priced alternatives. It's only when we create rules through policy, do we create a level field for competitors to operate in, with effects such as increasing the customer base by increasing the purchasing power of a class of citizens.
This of course doesn't mean the rich should be eliminated, or everything should be equal of course, but the attitude that "I won't be as profitable if I have to pay a living wage" isn't necessarily correct, and it's possible for businesses to thrive once the shocks of rapid changes work themselves out. It also depends a great deal on other elements of policy, such as international trade, but those are other topics for other days.
But, the middle-class problem doesn't hold in practice. Raising minimum wage has the effect of bumping other salaries up as employers have to compete with the new minimum.
The corollary being "You're actually worth LESS to me and my business, but the state won't allow it"
- An hour of labor would buy ~4.7 gallons of gasoline. If minimum wage had kept pace, it would be $12.32.
- Average home could be bought with ~15k hours of minimum-wage labor (around 8 years). Had minimum wage kept pace, it would be $14.96.
- Average car price was $2,822. Using this as the sole deflator would put an equivalent minimum wage at $20.89 today.
- The average public university tuition + room & board cost $1,143, which could be earned in 714 hours at minimum wage (this could be physically accomplished in a summer of hard work). If minimum wage had kept pace with these fees, it would be $27.28 per hour. (There are not enough clock hours in a summer break, assuming no sleep, to earn enough at minimum wage to pay for a year of the average public university.)
I think that's a common problem when discussing things with one's parents. "You make twice the amount I did at that age!", "Yes, but tuition is twenty times as high!".
Health spending was $355 per person in 1970 ($1,797 if you adjust to 2017 dollars). In 2017 it was $10,735.
The median price of a home in 1970 was $23,600, and last april it was $339,000.
We have less than half the number of pensions in the US than we did then. Contributions to retirement plans have grown by more than 10x and we have a lot less financial security now despite this.
1,000% is a fantasy. We're well above that on many aspects.
Even when it doesn't noticeably hurt, a minimum wage doesn't actually make anything better. It doesn't improve poverty rates. It doesn't improve employment rates. It doesn't lift anybody out of poverty. It has no beneficial, measurable side-effect. And there is plenty of economic research that shows it hurts more than it helps. Just like rent control, it is popular with progressives because it 'feels' right.
>In fact, some people — including those from the Economic Policy Institute — have posited that a minimum-wage increase will actually lead to an increase in employment because of the effects of giving low-wage workers a raise. Other advantages to restaurants may include lower turnover rates and better job performance.
Why are we still speculating about this??? We've been studying the impact of minimum wage laws for decades. This is just hopeful thinking by progressives activists.
> Minimum wage legislation emerged at the end of the nineteenth century from the desire to end sweated labor which had developed in the wake of industrialization.[19] Sweatshops employed large numbers of women and young workers, paying them what were considered nonliving wages that did not allow workers to afford the necessaries of life.[20]
Source: Wikipedia
And to respond to your question: We've been studying the impact of minimum wage laws for decades. Its clear that it imroves everyone's life substantially (even people who earn lot more). Why are we still discussing this? These comments are just hopeful thinking of regressive activists.
>Its clear that it improves everyone's life substantially (even people who earn lot more)
Ok. You know how to use search-and-replace. But I am serious. Since you're fond of Wikipedia, feel free to actually read the article on minimum wage[1], you'll see that it mirrors what I argued: in most cases, the minimum wage has detrimental effects (especially for low-income and young workers, employment rates in general, and small businesses), occasionally it has no perceptible detrimental effects.
No evidence that shows it actually IMPROVES anything.
[1] https://en.wikipedia.org/wiki/Minimum_wage#Empirical_studies
Automate whatever can be
https://www.forbes.com/sites/edrensi/2018/07/11/mcdonalds-sa...
Raise the price of goods and services
Outsource to other countries (if cost is cheaper)
For those that aren't aware typical rent in NYC on a corner lot for a restaurant is about 18k per month.
(My point being, it'd be a lot more interesting if you listed some specific reasons you think minimum wage is bad regulation, rather than just protesting it in general terms)
Honest question, if you're still profitable (and I read this as implying you are), why do you need to offset it, or offset it aggressively? Sure, if it becomes extremely tight to not-profitable, that isn't good and would need rectified, but again, your comment doesn't come off like that.
Being profitable is not the same as leading a decent business, and decent quality of life.
Why should we protect employers from this reality while their employees are left to struggle?
I would hope that the business owner is making more than the workers, that is the person taking the risk on the business, and most likely putting in a lot more time/effort to keep it profitable.
If you have costs that you can't offset...
Your workers are your responsibility, they feed their families with the pay check they are provided. (Speaking from a holistic view) If you can't offset costs, that means you possibly can't provide them the same pay check or bonus they've been getting. Essentially, this ends up being one of those good of the many outweighs the good of the few.
It is also unclear to me why we expect an unskilled worker at McDonald's putting fries into a basket to make a "living wage". These jobs are largely for students, retirees and other temporary workers. A high minimum wage isn't the way to end poverty, no taxes under $60K, needs based UBI and other tax incentives are much better options.
The issue is that business that employ unskilled labor will tend to raise prices but rich people don't shop at WalMart; poor people do. So great, they make more but their buying power may have actually gone down. This is the conundrum. Everyone wants $40/hour unskilled manufacturing jobs making throwaway products that they can buy at the dollar store. You can't have it both ways. People really want buying power, not necessarily higher wages.
This is utter nonsense and insulting. Go talk to people who actually work those jobs. These people are adults, just like you are, and they deserve to be treated with dignity. If you don't pay them a living wage, then the government will have to make up the gap. Is that your goal?
I agree that everyone _does_ deserve to live a dignified life and afford all their basic needs, no matter where they work. I'm not sure that the solution is to force employers to pay more than what they get out of you. I don't think I've ever heard of a solution that's entirely convinced me (it seems to me to be a very hard problem), but I'm leaning towards an UBI.
Their customers get to decide that.
The only kind of risk is a capital risk.
Capitalism as religion
I think time is more valuable than money. The whole point of money is to give me the resources to do better things with my time.
The idea that the person who invests money is the only one making an investment (aka taking a risk) is the owner is Capitalism as religion
Given that your competitors are facing the same cost increase you should be able to take this option without losing business.
The reason the rent is so high is because market conditions are allowing money that should be going towards labor to go towards rent. If there aren't 1000k small restaurants paying minimum wage, demand for space goes down, rent goes down, possibly to the point that being a landlord is no longer profitable.
https://www.padmapper.com/apartments/new-york-ny/l-38104265/...
Meanwhile there are entire diners in America that make $30/hr. They do just fine because they pay $200/mo in rent. A minimum wage of $15/hr would be silly.
From my personal experience in nyc, and from talking to neighbors who own restaurants, small and family owned businesses are absolutely hurting. They’ve reduced staff, and owners are making up lost hours themselves. Delivery has been mostly outsourced. The price of everything on the menu has gone up. A number of lower-cost restaurants have closed completely. Whatever reported numbers the author based this upon do not tell a complete story.
I feel like that is more of a side effect of delivery apps getting popular.
But in my opinion if your restaurant cant afford to pay $15 an hour, which still isn't really a livable wage in NYC, then maybe it shouldn't be operating.
It has already gone up to compensate. I still go out and eat for a few dollars more and people get paid better.
Go explore some rent prices in NYC and you will understand why it is necessary.
Remember, making food at home in a nice kitchen is a luxury.
I'm lucky that I'm in a place now where I can make nice food from relatively raw ingredients and much of that stems from my (relative) wealth.
Did you not know that in most of the world, cooking at home is the norm? How come you're so out of touch with reality?
I am from Europe and I always find it confusing to deal with prices in the US. First the prices don't contain the taxes, and then I have to add tipping. The price of a meal shows up on the menu as 9.95 and I end up paying around 15.
At some point, it morphed into passing part of the service staff wage to the customer and pretending this was somehow a good thing. It's so entrenched in culture now people just assume even for crap service you tip. At the end of the day, it really gives management an easy out by putting the customer against the service staff for labor rates while the restaurant decides fixed meal costs.
I almost always tip 20%. I even tip 15% for poor service--I figure that there are likely things going on in the kitchen or with other service staff that I'm not aware of, and that tips are often split between everyone so the my tip for poor service is help the other employees busing tables too. My wife often tips 25% or more.
Why can't restaurants charge us more, pay their staff better, and then the staff could treat us like we were customers of the restaurant and not expecting us to directly compensate them. For the answer, see my last paragraph.
Even for pick up service, say when I place a to-go order for cup of coffee with my Starbucks app and then pick it up from a bin on the counter myself, the app prompts for a tip. At other server-less restaurants, I'm forced to make the choice of tip when I place the order.
So why the culture around tipping here in the US. I believe that it's related to why movie theaters can charge so much for popcorn. From Stanford.edu:
"The findings empirically answer the age-old question of whether it's better to charge more for a primary product (in this case, the movie ticket) or a secondary product (the popcorn). Putting the premium on the "frill" items, it turns out, indeed opens up the possibility for price-sensitive people to see films. That means more customers coming to theaters in general, and a nice profit from those who are willing to fork it over for the Gummy Bears." [1]
In the case of tipping in restaurants, the restaurants are naturally willing to charge more to customers like myself and my wife for the wine+food+service while still making a profit from price sensitive customers that pay less by tipping less for the same wine+food+service.
[1] https://www.gsb.stanford.edu/insights/why-does-movie-popcorn...
Restaurants have long been subsidized by workers stuck in a position where they will work for _any_ wage. As that changes, which is demonstrably a good thing, so will prices rise to match costs.
It’s similar to the way Uber/Lyft prices will need to rise when their subsidies change terms.
Having some one else prepare and serve you food is a luxury, they deserve to be paid for their work.
If you disagree then do the work yourself no one is stopping you.
That seems to indicate that worker pay isn’t really the issue here.
And it’s well known the reason restaurants are closing shop is almost because of outrageous rents.
Quote: "During this period, New York City has seen a strong economic expansion of the restaurant industry, outpacing national growth in employment, annual wages, and the number of both limited- and full-service restaurant establishments."
Perhaps the disagreement you see is because this study focuses on the workers, instead of the business owners. Food service worker wages and employment rates are up relative to overall growth. This article is dispelling the notion that increasing worker wages will lead to worse outcomes for those workers, which is a common objection to increasing the minimum wage.
The minimum wage hike occurred in late 2018.
> Roughly 77 percent of NYC restaurants have slashed employee hours. Thirty-six percent said they had to layoff employees and 90 percent had to increase prices following the minimum wage hike, according to a NYC Hospitality Alliance survey taken just one month after the bill took effect.
> Only about 4 percent of survey respondents indicated that none of the above changes took place in their restaurants.
https://nationalinterest.org/blog/buzz/new-york-city’s-15-mi...
Typically, in a restaurant in Philly or places with similarly lower-than-minimum service wages (which still has the $2.75 or whatever minimum for service workers), you'll be scheduled excessively for hours when the restaurant definitely isn't going to have any business. For example, coming in at 330/4 to start prep for the dinner shift.
When labor costs basically nothing, there's no reason not to overschedule them.
This reduced the amount of time I could spend outside of work learning to program (for example... since it's what I did hah) or others could spend improving their skills for basically no money. It's a huge detriment to the employees. You'd stand around cleaning for some nitpicky manager making 0/hour effectively, doing untipped cleaning and prep work. Your paychecks will be $0 if you get even a modest amount of tips for the night (it's all taxed).
Now restaurants will be more particular about how they schedule employees, and the untipped work actually costs money to have done (if a janitor would have to be paid minimum+ to do it, why should a server do it for $2.75/hr)?
It’s so rare in the $2 an hour states. I worked at Chili’s during the worst parts of the recession and never made a paycheck. Once the economy picked up I went to greener pastures.
I worked in some of the largest (non fast food) groups to single owner restaurants.
The survey you cite seems low quality anecdata compared to actual industry numbers shown in the study being discussed.
As to your first point, no, "the minimum wage hike" did not occur in late 2018. The final increase ($13.50 to $15.00) did indeed take place near the end of this study period, but the overall increase from 2013 to 2018 (from $7.25 in 2013 to $13.50 by late 2018 to $15.00 by end of 2018) reflects a more than doubling of the minimum wage over the study period, so I think it is still a valid reflection of the impact of such a dramatic increase.
[1] https://thenycalliance.org/assets/documents/informationitems...
http://www.centernyc.org/new-york-citys-15-minimum-wage
actual report:
https://static1.squarespace.com/static/53ee4f0be4b015b9c3690...
At least talking about restaurants with tipped employees, the $15/hr includes a $5/hr tip wage! If a server makes enough in tips, the min wage the restaurant pays is only $10/hr. See appendix figure 1, page 22 of the pdf.
Why should I trust the data?
There have been too many times of selective definitions, selective measurements, selective polling, selective measurements... all for reaching an agreed upon conclusion. For example, the CDC used a specific definition of rape (excluding forced penetration, counting it as general sexual assault instead) that excluded the majority of male victims of domestic rape, and then used the now biased results to give high level summary data that was greatly misleading.
If I can't trust the CDC's reporting on an issues as serious as domestic sexual violence, then how can I trust anyone's data? Maybe peer reviewed science in the hard sciences, but social science (including economics) has a similar issue of selective measurements, ignored replication, and biased publishing.
So I guess to start with, what peer review has this undergone? To what extent has it been replicated? What criticisms does it have (and none is a very bad sign)? What is the biases of the group(s) that did the work involved? What is the biases of the group(s) that provided funding?
Yes, it is odd I'm at the point where anecdotes seem to have as much weight as data because anecdotes are understood to be inherently biased whereas data is treated as pure, reliable, and free of bias when it isn't.
Also, please note that someone has already posted a criticism of this data.
The problem is that there is not much verification going on.
The minimum wage might well have led to a worse outcome for those workers that is being masked by some other effect. In theory a minimum wage rise will have no impact (good or bad) if the equilibrium wage is high enough.
It strains credulity to think that New York's restaurant scene is thriving because of the minimum wage. There is clearly something else going on.
And the explanation is easy, trivial even: people who eat at restaurants have more money to do so.
US's overall economic picture is so heavily tilted in favor of the wealthy that literally anything that puts money in the hands of the poor is going to cause an economic boost.
^_~ You might not have researched that. There are studies that suggest net-positive impact, but there are also studies that suggest change for the worse.
> And the explanation is easy, trivial even: people who eat at restaurants have more money to do so.
Minimum wage earners aren't going to be investing in increased production capacity. Best case scenario, something that was going to be consumed by the rich gets consumed by a minimum wage earner instead. Middling case scenario, something that was going to be consumed by the middle class isn't produced. Worst case scenario, less investment and we have a little bit less to go around in 10/20 years.
None of those 3 is catastrophic, but it is very unlikely that minimum wage rises are a big-picture win. The idea that even with a minimum wage increase a poor person could out-compete a member of the middle class for any good or service is optimistic.
There aren't. The literature is surprisingly uniform. I mean, I'm sure you can find something funded by a libertarian thinktank that says otherwise, but nothing by credible researchers doing honest research. Universally and without exception, areas that increase the minimum wage experience economic boosts compared to similar areas that don't.
> Minimum wage earners aren't going to be investing in increased production capacity.
Nobody said they would, or would have to. Restaurant owners do the investing; wage earners do the consuming. Investment follows demand, obviously.
> very unlikely that minimum wage rises are a big-picture win.
Oddly, the literature says the exact opposite.
You seem to think that there's a fixed supply of restaurant meals - only 100 meals, no more, and if Sue wants to eat then Larry doesn't get to. This is... not the case.
Why not look at the actual data and try to address that? It would be a much stronger argument.
This is true in just about every market in the US, including all the ones without minimum wage increases.
> The price of everything on the menu has gone up
You could say this most years about any restaurant and most years you'd be right. The other years, you'd see smaller servings.
> A number of lower-cost restaurants have closed completely
The average person eats at fewer restaurants in their entire life than the number of restaurants that close in NYC in any given year. Anecdotes aren't a data point.
Nonsense means without logic or sense. I made an argument, amounting to that the source has a conflict of interest. You might disagree with it, and it might even not be the case, but it's perfectly logical. Hardly "nonsense". In fact, I find it irrefutable (There is a conflict of interest between the host of study and showing negative results from the smoking bank on businesses. Whether it affected the work is another matter).
It seems that for some reason you expect me to bother debunking it tp provide "deeper criticism", but I have no such intention and have better uses of my time. For me, as I wrote, it is enough of a filter to avoid sources with conflicts of interest. YMMV.
Do you really believe one cannot (or shouldn't) point to a potential conflict of interest, if they don't at the same time give "deeper criticism"?
Note that I didn't even claim that the report is wrong. I literally only wrote who hosts it, and argued that it's "hardly the best source" regarding pro-smoking business interests.
Is that controversial?
Seems to me that a reasonable, limited, and (I'd argue) true, point, was met with hostility and unrelated demands, not to mention the rude "nonsense". Maybe you ought to think about it?
likely because profit = revenue - expenses and expenses (in the form of wages) have gone up more than revenue.
Raising the minimum wage has always been bad for margins. That's why those restaurants (and economists indirectly on their payroll) try to convince us that it's bad for workers too.
Well, if they were hurt with such a raise, perhaps they were not viable businesses and are better closed.
The employees might lose a crappy near-subsistence job, but both the employees and owners can then concentrate their efforts into something better...
Somehow Europe manages to have viable restaurants despite decent minimum wage and not tips-oriented compensation...
Also, not all countries in Europe have a minimum wage - there's no official minimum wage in Norway (although the de facto minimum wage is a lot higher than in the US).
Really? Really? You think the unemployment in Spain and France is because of the minimum wage? They had the minimum wage decades before they had high unemployment (and inversely for the US).
Not to mention unemployment rate doesn't say much, since in the US it includes all kinds of subsistence semi-jobs that would qualify more like colonial deals in other countries -- among other manipulations:
"The answer lies in the measurement of unemployment. If you have not looked for a job in the last four weeks, you are not counted as being unemployed, because you are not counted as being part of the work force. When there are no jobs to be found, job seekers become discouraged and cease looking for jobs. In other words, the 4.1 percent unemployment rate does not count discouraged workers who cannot find jobs. (...) The US Bureau of Labor Statistics has a second measure of unemployment that includes workers who have been discouraged and out of the labor force for less than one year. This rate of unemployment is 8.2 percent, double the 4.1 percent reported rate. (...) The US government no longer tracks unemployment among discouraged workers who have been out of the work force for more than one year. However, John Williams of shadowstats.com continues to estimate this rate and places it at 22 or 23 percent, a far cry from 4.1 percent. In other words, the 4.1 percent unemployment rate does not count the unemployed who do show up in the declining labor force participation rate." [1]
In any case, even with the given "unemployment rate" as the metric, the US is well below Cambodia, Laos, Thailand, Vietnam, Guatemala, and other places, the same way it is, itself, ahead of France. Does that tell you much?
[1] https://www.foreignpolicyjournal.com/2018/03/08/make-believe...
The relatively high unemployment rate in Spain is not related to the minimum wage, but has been linked to their economy being driven mainly by tourism and construction. In fact, the minimum wage in Spain is neither very high nor very low compared to other European countries.
Are you blaming the higher unemployment ratios in those countries on the minimum wage?
The minimum wages per hour in the UK are:
* Apprentices: £3.90
* Under 18: £4.35
* 18 to 20: £6.15
* 21 to 24: £7.70
* 25 and over: £8.21
This isn't exactly the same type of minimum wage most other countries use. This would probably be considered age discrimination in some countries.
[0] https://www.gov.uk/national-minimum-wage-rates
In which case you should take a long hard look at what's wrong with it instead of using semi-employment under horrible wages as a band aid...
Back home I went to an equivalent size burger joint that had 6 people on staff that I could see.
With good design and prep a curry restaurant was able to serve the same amount of food with 1/3 the staff. They could double the wage of the staff and still have money left over with better prep and design.
They have a social safety net for all the people who aren't employable at that high wage. That's the difference. You can't massively increase minimum wage without a social safety net to go with it. And if your goal is both you need to start with the safety net, not the minimum wage increase.
minimum wage in the US is on the low end of the first world countries when it comes to minimum wages. they should be at the top end. a proper minimum wage would be well above $20 an hour to make up for the lack of social safety nets. it really should be $25 per hour. https://en.wikipedia.org/wiki/List_of_minimum_wages_by_count...
My experience in both the UK and Germany was the service is utterly terrible. Some people believe this is a worthy trade-off. I disagree ,and I reject the notion that the only acceptable answer is higher guaranteed wages.
Before the hike, both the employee and owners could do that... yet they didn't. Is the existence of a lower paid job make it harder to create something better? That seems really backward, because there will always be lower paying job.
> Somehow Europe manages to have viable restaurants despite decent minimum wage and not tips-oriented compensation...
Where does Europe has an higher minimum wage than $15 USD? That's excluding tipping which can bring that wage MUCH higher.
You can't really compare viability when the wage is actually lower....
[0] https://en.wikipedia.org/wiki/List_of_European_countries_by_... [1] https://stats.oecd.org/Index.aspx?DataSetCode=RMW
https://nypost.com/2019/09/29/15-minimum-wage-hike-is-hittin...
> Gabriela’s isn’t alone. In a survey of 324 full-service restaurants, the New York City Hospitality Alliance found that 76.5 percent of respondents cut staff hours and 36.3 percent eliminated jobs, including whole layers of middle management, in response to mandated wage increases.
> To cope, restaurateurs like the Milners are moving from large-scale restaurants to small spaces. The Milners have Gabriela’s Taqueria at West 44th Street and Eighth Avenue.
It seems unlikely the original article is telling the full story.
I would say that from my experience with the restaurant industry here, it definitely puts pressure on restauranteurs with marginal businesses. If you have a labor-intensive restaurant with thin margins, it hurts you. However, the restaurants with strong businesses, it's not really affecting.
A far greater impact on the typical restaurant is delivery, which is an increasing percentage of their business with a lower margin for many traditional restaurants, given the cut that Grubhub/Seamless/etc. take.
* "massive layoffs in the restaurant industry are unlikely," but the survey indicated that a large number of restaurants have eliminated jobs or cut hours
* "...because owners need a certain number of staff to operate a full-service kitchen," but at least in the anecdotes from the interview in the NYPost article, restaurant owners are moving to smaller venues that require less staff or moving to "common space" layouts.
Restaurants are notoriously low margin and owner-operator endeavors. So more often than not, the first person that doesn't get paid is the owner, who sinks hour after hour into the place to try and keep the doors open. But eventually the owner has to pay their own mortgage, car payment, etc.
So while profit may not be the ultimate objective of every human activity, it is essential if you want to stay in business. And if you don't? Your workers find out the hard way that the real minimum wage is $0.
If increases wages increases revenue, why have all of these restaurant owners been damaging their business by paying lower wages?
Because they want that money for them selves?
Ask a dumb question get a dumb answer.
I wonder if employment falls as a result of the wage being raised.
I have family that runs a maid service business in San Jose. The minumum wage is much lower than $15 and they are already talking about closing up their business. I assume that if the wage is raised to $15 that the business will surely close. Which is sad because the maid service business is already the only source of employment for the women who work there. They aren't choosing to work there against other options. Its the only flexible hour work they can get, and they are allowed to keep their kids with them when they work ... which other employers don't allow.
I'm sure if given the choice between no work and the maid service work, they'd probably choose the maid service work. But that choice wouldn't be up to them and the employer.
On the other hand, an extra $1.20 on a $3.50 burger might dissuade large numbers of customers from dining out. A $12.00 burger is pretty high end in most parts of the country.
That's the whole point of the article. The experiment has been performed and they are analyzing the results. The results are that people accept a 10% increase and/or that the buying power of increased wages at the bottom expanded the market enough to make up for your hypothetical lost income.
Many have stated they regretted working with food delivery businesses and would have preferred just serving customers in house.
Then I moved to Seattle and noticed something entirely different. Same sort of friends - mostly service industry. And this was before the increase to $15/hr, when it was $12/hr. What was starkly different was that our new friends could actually afford to do things. Nice dinners, bars around town where we didn't know the bartenders, movies, trips to Portland and Vancouver. Same jobs, but with money to spend.
And then there's the side that was close to home. My wife was, for the first 2/3 of our relationship, a bartender. In NYC she had her good weeks, pulling in over $2k and her bad weeks, making somewhere around $100 for the week. Hard to say what was "normal" and impossible to predict. It was impossible to plan around her income so I basically just asked her to give me half and it would essentially even out. Then we moved to Seattle, again at $12/hr minimum (she was making $17-$20 I think) and our whole situation was different. We were already doing fine because I make a good living but now I could finally count on her contribution. We were able to save, plan trips, etc in ways we couldn't before because now we had a baseline amount that she would always make. The tips we're just a cherry on top.
And then we moved to Chicago with a shitty mimimum wage for servers and my wife left the industry entirely. She had gotten used to some stability in her income and now with a low minimum wage for servers, there is none. Even at a nice theater gig, she was making less than any job she had in Seattle and again relying upon the whims of her customers rather than the stability of the industry.
There are two ways to raise the minimum market wage. First is minimum wage laws. Second is to increase labor demand or shorten labor supply.
There's clearly a surplus of no-skilled labor in the US, yet we're still importing more of it. Businesses are capitalizing on the market conditions and exploiting the labor surplus, that's why we're seeing the proliferation of so many chain restaurants and and other little-to-no-value businesses.
And yet they are. Should people suffer degradation for it?
Then they work retail jobs for little money. It's their own doing.
For the rest, I'd recommend you spend a half year working in the service industry for half minimum wage plus tips before throwing around phrases like "zero-skill".
There are plenty of zero-skill jobs (or maybe we should say zero-value-skill), and they're going to pay zero-skill job wages. You're free to pretend that's not the case, reality proves otherwise.
Says who ? Why is your tech job supposed to be a bread winner job ?
If raising the minimum wage has had nothing but positive effects, why not raise it to $20/hr - or some other number calculated for maximum benefit - who knows what that would be?
These are arbitrary numbers, when thinking on an economy-wide scale, because $15/hr does a LOT more for someone in a small town than a big city. The point is to pick something reasonably high, a non-starvation wage, that is also easy to market to the masses.
I don't think economists are huge fans of $15/hr across the board, so $20/hr would probably be abhorrent to them. But economists can be totally wrong and still keep their jobs and respect due to the political use of economics these days.
Of course, we'll have to raise tariffs to keep all the jobs from shifting overseas, but things would level out eventually.
The EITC/UBI is also a way to guarantee a minimum standard of living, and we collectively pay for that through progressive taxes, the burden for which disproportionately falls on the rich.
Employees provide services not goods, so the cost of services goes up, but the cost of goods such as food stays the same.
The rich disproportionately use services over the poor who cant afford to pay some one else and just do the work themselves.
Example:
The rich go to restaurants while the poor cook at home.
You’re right that a lot of employees provide services, but a lot of them work at factories or stores that produce/sell goods also (retail).
Poor people purchase from this value chain, too.
Markets are remarkably good at minimizing the input required to produce a unit output. The reason why labor costs have fallen so dramatically is because markets have minimized the input cost of labor. This is good for ALL consumers. However at the end of the day, labor’s gotta eat. This is where welfare comes in.
True but most products are not produced in America, the products that are made in America, are made by robots, the cost of labor on goods in America is just not significant.
In contrast to services which are all done in America by American people this is huge.
> This is good for ALL consumers. However at the end of the day, labor’s gotta eat. This is where welfare comes in.
You got your classes mixed up the working class are the consumers not the rich. A rise in wages for workers means consumers have more money to spend which is good for consumers and business.
> In contrast to services which are all done in America by American people this is huge.
This is becoming less true, as we speak. As standards of living in developing countries increase, the cost of labor also increases, until it more or less matches minimum wage in developed countries[1][2].
> You got your classes mixed up the working class are the consumers not the rich. A rise in wages for workers means consumers have more money to spend which is good for consumers and business.
A rise in CASH for workers means consumers have more money to spend. The disagreement here is in how we deliver that cash to the worker. It's definitely beneficial for workers to have more money, but forcing businesses to pay them inflated wages (i.e. greater than their market worth) simply causes the cost of that business's output to be inflated by a commensurate amount. You're correct that it gives workers more spending power, but it also distorts the market downstream by increasing the price of their output for people that buy the good/service that the worker in question uses their labor to produce.
In contrast, providing workers with some minimum cash (let's say, whatever the desired minimum wage is multiplied by 8 hours of work minus their existing daily wage), will provide workers with the same amount of cash on hand as a minimum wage, which as you say is "good for consumers and business", while still keeping the cost of their own output low, and therefore, accessible to consumers (rich, middle class, and poor).
Today, using minimum wage as a way to ensure workers enjoy a minimum standard of living just so happens to distort the market that impacts the rich in America slightly more than the poor, but that's only temporary. In the long run, it has the same effect of increasing prices across the board. Using welfare/UBI/EITC (paid for by the rich) in lieu of minimum wage achieves the same goal, while avoding the market distortion caused by inflated wage prices, while ensuring that goods/services are cheap for the middle class and the poor, regardless of the state of the labor market in developing/developed countries.
[1] https://tradingeconomics.com/china/wages-in-manufacturing
[2] https://www.cnbc.com/2017/02/27/chinese-wages-rise-made-in-c...
e.g. 7.25 -> 8.25 -> 10.25 -> 13.25
Over a few years to allow businesses to adjust their margins gradually. Increasing the income at the bottom will increase spending, which should be good for businesses like these that are employing low skill/pay workers.