Minimum Wage

The Minimum Wage and Magical Thinking

Defying the law of demand never works


Minimum Wage 15

If all other factors remain equal, the higher the price of a good, the less people will demand it. That's the law of demand, a fundamental idea in economics. And yet there is no shortage of politicians, pundits, policy wonks, and members of the public who insist that raising the price of labor will not have the effect of lessening the demand for workers. In his 2014 State of the Union Address, for example, President Barack Obama called on Congress to raise the national minimum wage from $7.25 to $10.10 an hour. He argued that increasing the minimum wage would "grow the economy for everyone" by giving "businesses customers with more spending money."

A January 2015 working paper by two economists, Robert Pollin and Jeanette Wicks-Lim at the Political Economy Research Institute at the University of Massachusetts Amherst, claims that raising the minimum wage of fast food workers to $15 per hour over a four-year transition period would not necessarily result in "shedding jobs." The two acknowledge that the "raising the price of anything will reduce demand for that thing, all else equal." But they believe they've found a way to "relax" the all-else-being-equal part, at least as far as the wages of fast food workers go. Pollin and Wicks-Lim argue that "the fast-food industry could fully absorb these wage bill increases through a combination of turnover reductions; trend increases in sales growth; and modest annual price increases over the four-year period." They further claim that a $15/hour minimum wage would not result in lower profits or the reallocation of funds away from other operations, such as marketing. Amazing.

Pollin and Wicks-Lim calculate that doubling the minimum wage for 2.5 million fast food workers would cost the industry an additional $33 billion annually. They further calculate that reduced turnover will lower costs by $5.2 billion annually and that three years of sales growth at 2.5 percent per year and price hikes at 3 percent per year will yield $30 billion in extra revenues.

Let's consider turnover first. Pollin and Wicks-Lim claim that an increased minimum wage will substantially reduce the costs of employee turnover, saving money that can now go to pay higher wages. The two fail to grapple with, much less refute, a devastating response to this idea from no less a liberal than the Nobel-winning economist and New York Times columnist Paul Krugman. In his review of Pollin's 1998 book The Living Wage, Krugman wrote: "The obvious economist's reply is, if paying higher wages is such a good idea, why aren't companies doing it voluntarily?" (That question goes unaddressed in the current study.) Krugman continues, "But in any case there is a fundamental flaw in the argument: Surely the benefits of low turnover and high morale in your work force come not from paying a high wage, but from paying a high wage 'compared with other companies'—and that is precisely what mandating an increase in the minimum wage for all companies cannot accomplish." So scratch $5.2 billion.

What about Pollin and Wicks-Lim's sales growth projections? Well, sales don't always grow. McDonalds reported a sales decrease of one percent in 2014. Some analysts think that fast food sales may have peaked in the United States.

But there's a deeper problem. In the absence of the higher minimum wage, employers would generally hire more workers to meet any increased demand for fast food. Boosting the minimum wage means that the revenues that would have otherwise been used to hire new workers is not available. The end result: fewer jobs created and more folks unemployed.

Pollin and Wicks-Lim recognize that raising the price means that people will eat fewer hamburgers and fries. They calculate that a 3 percent per year price increase results in a 1.5 percent per year decline in what sales would have been, which means that revenues would increase by 1.5 percent. Then they assume that the price increases won't affect the underlying 2.5 percent annual sales growth rate. (Rising prices never slow sales, apparently.) Pollin and Wicks-Lim roughly generate the revenues they want to cover the higher wages by calculating that a three-year increase in prices and sales growth will net $10.6 billion and $19.8 billion, respectively. Adding these to the postulated turnover savings of $5.2 billion yields $35.6 billion, which handily covers the extra wage costs of $33 billion. Voila.

Since all companies would have to pay the new minimum wage, they argue that all fast food joints wouldn't have to fear that competitors would try to lure their customers away by lowering their prices. In this scenario, the restaurants get to sell fewer burgers than they would otherwise have done while making more money which they then fork over as higher wages. Aficionados of cheap tacos, hot dogs, and burgers are the big losers. But doesn't selling fewer burgers imply a need for fewer employees? Never mind.

Going through the artful assumptions in this scenario brings to mind the hoary old joke where a physicist, a chemist, and an economist are stranded on an island with just a can of soup to eat. The physicist says, "Let's smash the can open with a rock." The chemist says, "Let's build a fire and heat the can first." The economist says, "Let's assume that we have a can-opener…"

Meanwhile, two new studies by economists using actual wage and employment data have just been published. Both find that in the real world, the law of demand still applies to labor.

In the first paper, Andrew Hanson of Marquette University and Zack Hawley of Texas Christian University analyzed how low wage employment would be affected in each state by the imposition of a national $10.10 per hour minimum wage supported by President Obama. The Hanson/Hawley study takes into account how wages relate to the varying cost-of-living levels among the states. First they report the number of workers in a state that earn less $10.10 per hour. Next they apply the widely agreed upon formula that for every 10 percent increase in wages there is a corresponding 1 to 2 percent decrease in demand for labor. They then straightforwardly estimate that boosting the federal minimum wage from $7.25 per hour to $10.10 per hour would result the loss of between 550,000 and 1.5 million jobs. States with higher numbers of workers making less than $10.10 per hour would lose the most jobs. Georgia, for example, would lose 51,000; Illinois would lose 65,000; Texas would lose 31,000; and Wisconsin would lose 34,000.

The second study, published in December by Jeffrey Clemens and Michael Wither of the University of California, San Diego, parses how the actual increase of the federal minimum wage from $5.15 to $7.25 per hour between July 2007 and July 2009 affected the employment rates of low-skilled workers. Using U.S. Census employment data, they can focus specifically on how low-skilled workers fared when the minimum wage rose as the Great Recession proceeded. They compare what happened to the employment rates of low-skilled workers in states where they were generally earning below the new minimum wage versus those where low-skilled wages were already higher. They refer to the first set of 27 states as being "bound" by the increase and the second set as being "unbound" by it.

The minimum wage, they show, exacerbated unemployment. Their analysis starts in December 2006, when the employment-to-population ratio—defined as the portion of working-age Americans (ages to 16 to 64) in the labor market—stood at 63.4 percent and ends in December 2012 when it had dropped to 58.6 percent. They estimate that by the second year following the $7.25 minimum's implementation, the employment rates of low-skilled workers "had fallen by 6 percentage points more in bound than in unbound states." In other words, job losses were considerably higher in states where unskilled workers had been earning less than the new minimum. Overall, they estimate that the minimum wage increase "reduced the employment-to-population ratio of working age adults by 0.7 percentage points." That would have boosted the 2012 employment-to-population ratio from 58.6 to 59.3, which implies that there were 1.4 million fewer jobs than there would have been had the minimum not been increased.

The conclusion is clear. Defying the law of demand will end up harming lots of the people minimum wage proponents aim to help.

NEXT: Scott Shackford on Reason-Rupe's Pension Reform Poll

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  1. Remember, increasing the price of something only reduces demand for it if it is an abortion. Price has no effect on anything else including labor.

    1. Raising the tax on cigarettes is supposed to reduce demand, too.

      1. No it is not. It is supposed to raise the money to pay for the costs to society of smoking. If they reduced demand, where would the money come from?

        1. I thought it was to control behavior via taxation…

          1. No. It is take money from people we don’t like. The last thing they want is for people to stop smoking. It would end the money.

            1. The average smoker makes less money than the average person. So cigarette taxes are in effext a tax on the poor.

              Where I live, the cigarette tax went to fund health initiatives that had nothing to do with smoking or lung, mouth, throat, or other related cancers and disease.

        2. If they reduced demand, where would the money come from?

          They don’t think that far ahead.

        3. They claim it does. (And it really does to some extent). I don’t think they bother to be consistent about the conflict between that and the dependence on the tax revenue from tobacco. They must expect that the last smoker in the world will be willing to pay $1 million per pack in tax.

          1. Or buy illegal cigs… to help the ter’rists win!

            1. After 9/11, as a matter of principle, I made sure all my heroin came from Colombia instead of Afghanistan. Buy ‘murican! Or South ‘Murican at least.

        4. Of course, with actual socialized healthcare in place, a slew of other taxes on things that are bad for you gets implemented. To keep your self inflicted, society-wrecking health problems to a minimum.

          For the greater good, naturally.

        5. And save the schools, if you’re in Philadelphia.

    2. What about increasing taxes on deep dish pizza?

      1. OMG! Are you serious? (Send the drones to CE’s house)

    3. Nah. It works on smoking, alcohol and fuel too. You are a monster for even suggesting that a medical procedure like abortion should even have a price.

      1. What if I want to abort my deep dish pizza?

    4. But, there is no labor when you have an abortion.

      1. But if there’s no abortion, AND no C-section, then there’s LOTS of WAY-painful labor on the part of the new Mom! The doctors & nurses and attendants all make WAY more than the min wage, and new Mom get’s NADA, other than a BIG fat bill! WHERE is the so-called FAIRNESS and equal application of min-wage labor-laws here?!?!

  2. While they at least admit that raising prices reduces demand, they then make the entirely ridiculous assumption that the profitability of the businesses is such that the owners will give up the profits to pay the wages.
    No, they won’t. No more than the two idjits who wrote it would give up 25% of their income to pay the M/W labor.

    1. They are incapable of comprehending marginal effects or the cumulative effects of something. They invent some plausible fairy tale that supports their view and pretend that is the entire truth of the matter. Of course raisin the minimum wage won’t end every job. And of course in some cases employers will not be able to pass on the cost to customers and will be able to just eat the cost and make less. That of course is not the entire story.

      They refuse to understand that just because sometimes this will work out well for the employee doesn’t mean other times it won’t. They can’t grasp the idea of a business not hiring a new employee because of the increased cost or cutting an employee because of it. Only hypotheticals that support the narrative are to be considered.

      And of course it never fucking occurs to them that some people work for extra money and not because they rely on that one job to support themselves.

      1. Mm mm…raisin wage. *drool*

        1. Three paragraphs of text and the only thing you find worthy of comment is a missing “g”.

          1. Sorry John I didn’t mean to offend you. I was just funin’.

            1. I was too. Forgot the sarc tags.

              1. *taps sarcometer on side*
                Damn humidity!

          2. I gotta admit, it was the first thing I noticed in the whole three paragraphs …

        2. “Mm mm…raisin wage. *drool*”

          I missed that wrinkle.

      2. Grape observation, John.

      3. Damn you all. Is Friday officially Punday around here and I just missed it all these years?

        1. When it’s John, every day is Punday.

          1. Do unintentional puns count?


            2. When it’s John, definitely.

          2. Punday, bloody Punday.

        2. Yes, your Timon is a little off …

          1. “Entropy Void”? Who is that?
            I’m drawing a blank.

            Maybe it’ll come to me, but I just don’t have the energy to put into figuring it out anymore.

            1. Um …

              not quite sure what you are asking there, Brother CE …

              there is another Entropy (something-or-other) that posts about as often as I do, but I have had this handle since way before registration.

            2. The Void That Binds

        3. It’s our raisin d’etre…

      4. I like it!

      5. In the case you mentioned where it “works out,” is actually doesn’t work out. Because the company ends up with less profit due to increased labor costs, that means the company has less capital to invest in things that would grow the business. Things like hiring new employees. That means that some other poor bastard ends up taking the hit so that the established employees can see a nice pay increase. The people who are really harmed by minimum wage laws pretty much mostly come from the group these bleeding heart liberals think they are helping.

  3. And of course, even if they’re right – especially if they’re right – the wage increase provides no benefit to the workers who will be purchasing the now-more-expensive products created with the now-more-expensive labor, purchasing the exact same amount of goods for more dollars.

    1. The entire socialist experiment from Marx through to today has been one long exercise in seeking to deny the basic fact that there is no free lunch. At the heart of everything they do, from the most mundane up though the most monstrous acts of evil they have committed has been in one form an another to find a way around that fact.

      This is no different. The whole thing boils down to them pretending that we can somehow increase people’s real pay without there being a corresponding cost to that.

      1. The entire socialist experiment from Marx through to today has been one long exercise in seeking to deny the basic fact that there is no free lunch basic economics and human nature.


        1. The entire socialist experiment from Marx through to today has been one long exercise in seeking to deny the basic fact that there is no free lunch deny basic economics and human nature.


        2. There is that too. But it is also the desire to get around the basic fact that nothing comes for free.

      2. Good point. That is it in a nutshell.

  4. Is this a man’s or woman’s minimum wage? Because I’m am constantly told women have to work twice as hard to make half of what a man makes.

    1. Idk, but they do use the ‘most (~60%) min wage employees are women’ argument we should care extra about raising the min wage. I suppose the fact that men are 85% of homeless then means we should not care too much about that problem.

      1. Men are also 90% of US prisoners and represent nearly 99% of those killed by US police.

        1. Sexist police and DA’ s! I want my equality too!

  5. Andrew Hanson of Marquette University and Zack Hawley of Texas Christian University analyzed how low wage employment would be affected in each state by the imposition of a national $10.10 per hour minimum wage supported by President Obama.

    Andrew Hanson needs to be removed from campus and have his tenure revoked, because his conservative views on minimum wage clearly constitute a threat to campus safety.

    1. Oh my God, you’re right! Quick, to!

      1. Pfft, amateur! Draft a petition.

        1. wait, are those things different?!

    2. that’s their token diversity… duh. they aren’t monolithic; look, they’ve got someone who thinks all crazy.

  6. I went to a Taco Bell last month, and the signage was encouraging using the App to order your food in store instead of using the cashier. They called it 2 ways to pay or some such. I’m not sure if this is a nationwide initiative by the Bell. The state in which the Taco Bell was located has the highest minimum wage in the country.

    1. Automated ordering is coming, to be followed by automated food preparation. Thanks, minimum wage advocates!

      1. I think that’s awesome. All the humans do is get it wrong anyway.

        1. Exactly. Real food, sure, gonna need human chefs for a while. Fast food? Coffee? Nah, automate that shit. And no effing tips at the counter, either.

          1. Oh, I’d be more likely to tip the nice, courtesy robot.

            1. That, of course, is totally up to you.

        2. All the humans do is get it wrong anyway.

          Without fail, every time I order a hamburger at McDonald’s, they put cheese on it. Every. Single. Time.

          I welcome the robot overlords if they can make hamburgers without cheese.

          1. Jokes on you. That stuff is as much cheese as the “shakes” they serve.

            1. How is the joke on me? I don’t eat either of those things.

            2. You will eat your extruded yellow organic acid square and you will like it!

          2. sarcasmic|2.6.15 @ 2:08PM|#
            …”Without fail, every time I order a hamburger at McDonald’s, they put cheese on it. Every. Single. Time.”

            Well, no wonder. Among the entire population of the earth, there are exactly two of us who DO NOT WANT CHEESE ON THE DAMN BURGER, DO YOU HEAR ME?!

        3. Robots don’t spit in your salad either.

          Thanks, Jesse.

        4. Spit and shit isn’t going to fling itself onto your food, you know. We need people for that!

          1. Nevermind. I see that EV beat me to it, Damn! (makes a note to spit on EV’s food the next time he orders fast food)

            1. What drive thru do you work at, Jimbo?

              I’ll be sure to patronize it as much as possible.

      2. And the real tragedy is that McDonald’s must invest capital in developing technology to replace workers rather than finding easier, cheaper, and faster methods to put fish sandwiches in my mouth.

        It’s a crime.

      3. Hey, I’ve gotten used to self-checkout at the grocery store thanks to minimum wage. Maybe I’ll find I make a nice Mexican Pizza too! Self-cook taco bell kitchen.

    2. Nationwide, I think? It’s here in CA.

      Unless you’re in CA, too. 😀

      Chili’s is switching to table top tablets for ordering and paying. They’ll need a smaller wait staff with that.

      Nope, nothing to do with the minimum wage!

      1. Chili’s isn’t the only one. I’ve seen them in at least half a dozen sit-down places. A lot of times the servers don’t use them, though.

        And don’t forget the self-checkout lines at the grocery store. Pretty soon we won’t need any cashiers or baggers.

      2. “Nope, nothing to do with the minimum wage!”

        They were going to do that anyway, ’cause KORPARASHUNS!

      3. Wait staff at your typical restaurant don’t make minimum wage anyway so I think there’s probably another reason. Probably because any waiter you do away with is instantly higher profit.

      4. Chipotle has an app for ordering. it beats waiting in line for forty minutes.

    3. So what is the minimum wage for an app?

    4. Wawa has been doing it right for years. You walk up to the deli counter and order your food on a touchscreen. Then you pay while they assemble your sandwich/pizza/wrap. It works great. And not having to say anything other than “Thank you!” is an added bonus, especially before I’ve had my coffee.

      And Wawa is a gas station. Why does a gas station do fast food better than all the fast food joints?

      1. Sheetz does this.

        1. Yeah very similar places. Wawa is better though.

          1. Baba Wawa?

    5. What do you need an ap for anyway?

      Just have automated checkouts. All the cashier does it push buttons anyway.
      I’m pretty sure I can push the button with a picture of a hamburger on it myself.

      All you need is a swanky Ipad touchscreen thing with some pictures on it. Push button. Finish and Pay.

      1. No! Because I’ll be the one in line behind the techno-illiterate who can’t read well enough to make basic choices. It’s bad enough being behind this schmuck in the drive through. If I were behind him inside, I might actually try to strangle him.
        Or they’ll shop the app design out to some BRIC country for the lowest rate, and ordering anything unusual (like a burger with no cheese, to pull an example from nowhere) will be insanely difficult. Then *I* will look like the schmuck, because I’m *not* going to order my burger with lettuce or pickles.

        1. Pet peeve: people who get in the self-checkout line at the grocery store and have NO FUCKING IDEA how to actually use the thing.

          1. Related pet peeve: People who get in the self-checkout and lollygag in the bagging area, followed by people who start scanning before I’ve finished bagging.

            Yes, I am a curmudgeon, and no, I don’t want you to stand on my lawn.

          2. And as well with salad bars.

            I was at a Souplantation/Sweet Tomatoes the other day, and 50ish hillbilly clan-elder woman was in front of me in line. She would examine every item on the salad bar, first visually, and then back up to read the name of the item on the sneeze cart. Then she would pause, consider whether she wanted the item, and finally grab the things she wanted. When she nevertheless managed to outpace her slower readin’ kinfolk ahead of her, during the lulls she would pick random vegetables from her plate and dip them into her salad dressing before eating them. Cauliflower, croutons, whatever… all stuffed into her nasty maw by her bony fingers tipped with raggedy, painted nails. This probably led to saliva and mouth germs on her fingers, which she then used to grab the tongs for each new item. It was really fucking gross. And slow. And of course, she was confused when asked about a drink by the cashier. And as a finale, had coupons.

            When I later went to get some soup, I saw the same woman. She was carrying a cup of ice cream. And — surprise — she stuck her finger into the ice cream and tasted it. Because the wait to get to the table is just too damn long for some people.

            1. I may never be able to eat again after having read that. Thanks for sharing.

              1. I spent quite a few years working in management at a fast food place, and as part of my job I was occasionally required to attend classes in food safety/sanitation.

                I will not eat at any sort of buffet or salad bar. Ever.

                Because remember that woman dipping her fingers in the ice cream? She probably didn’t wash her hands the last time she used the bathroom, either.

        2. Still better than the alternative. There is a grocery store in my home town that, in order to keep from just shutting it’s doors, had to lay off half the checkers. Then, they set up a self sacking station next to the door. So, the checker takes the groceries out of your cart, scans them, and then places them into another cart. You then take the second cart over to the bagging table and put the cart of groceries into bags yourself and place them back into the cart. Doubt that place will be around much longer.

  7. Another group of people will be harmed by this that progs claim to be all about helping: people on fixed incomes. They will be subject to the increased prices w/o getting any of the increased income. How will seniors be able to survive if cat food prices go through the roof?

    1. Those people don’t work and due their duty for the collective anymore. The Progs are working on getting them to die sooner.

      1. they took Boxer to the glue factory.

        1. Only the little people have a duty to die for the collective when they can no longer contribute.

        2. That explains what she’s been sniffing all these years.

          1. Underrated post.

        3. Not yet. She may not be seeking reelection but her term doesn’t expire until January 2017.

    2. Well, obviously we need to raise Social Security payments to allow seniors to afford their human food instead of Alpo.

      /end prog

  8. Hocus Pocus was the only movie where Sarah Jessica Parker was attractive to me.

    Other than that- this is all stuff I know and agree with- so well done Ron.

    1. Zoolander was the only movie where Will Ferrell turned in a performance I enjoyed.

      1. yeah. stranger than fiction and old school, too, for me.

      2. I hated zoolander the first time I sawit. Now I love it. Same thing with cable guy.

      3. The minimum wage must be… at least three times bigger!

        He’s absolutely right! /R. Reich.

    2. Her performance in Secretariat is underrated.

  9. With no minimum wage unskilled workers could find meaningful work that is currently beyond their grasp. There is a lot of work that is not worth paying 7$ for that could be done by people with low skill sets, youth with no experience, people affected by disabilities, both mental and physical.

    If these people are in poverty then top them up with social assistance. Those in poverty are a cost to society regardless.

    1. Sure, but the notion that people with a low social value should be encouraged to remain people with a low social value is in and of itself asinine.

      Progs love pushing for greater post-secondary subsidies and loan guarantees while with the other hand pushing those of little social utility to stagnate. A lesser mind than these geniuses might call it a thoroughly execrable classist mentality.

      1. No, it’s perfectly logical ? on the one hand they’re funding the welfare-warfare state and on the other hand, they’re guaranteeing votes.

        If you subsidize college for the upper lower class, they’ll pull themselves up out of poverty and join the ranks of the middle class that is paying for the welfare-warfare state.

        Then, if you cause the lower classes to stagnate and be dependent upon government aid, you have a permanent class of voters for any politician who calls for increases in government aid.

        So, you have two seemingly contradictory goals actually aimed one more complex goal: one set of programs is to fund the other programs to guarantee electoral victory.

  10. Me: So… If you raise the price of something like cigarettes through taxation, then presumably young people will be less likely to become addicted, right?

    Prog: Of course. Taxes are a wonderful tool to force people to make the right economic decisions.

    Me: I assume that applies to energy as well. When regulations cause the price of coal to go up, which then causes the price of electricity to go up, people will use less electricity.

    Prog: Yep. This is how we will save the planet from global climate change. By raising the price of energy, we can force people to use less of it.

    Me: So you agree that using government to raise the price of something forces people to buy less of it.

    Prog: Yes. Force is wonderful.

    Me: So what about minimum wage? Is that not the price employers pay for young and unskilled labor? By forcing employers to pay more, is that not also forcing them to purchase less? As in hire fewer young and unskilled workers?

    Prog: Fuck you! That’s not the intention! That couldn’t possibly be true! Raising minimum wage gives the poor a raise! It’s sticking it to the rich business owners! They’ll have to cut profits or something! They’ll never hire fewer people! They can’t! It’s not our intention! Aaaaaaauuuuugggghhhhh!

    1. Do you work for the NSA? Because that is almost verbatim the conversation I had with a coworker the other day.

      1. I’ve had the same conversation with several people. It’s just part of the leftist doublethink. Raising the price of something causes less demand, except when that’s not the intention.

        1. They can widdle in one hand and wish in the other and see which fills up fastest.

          1. They can widdle in one hand and wish in the other and see which fills up fastest.

            I told that to my kid one time, tho I used spit instead of “widdle”.

            He hocked a big ole lugie into the palm of his left hand and then started staring at his right.

            I walked away so he couldn’t see me snicker …

            1. Well, in the original version my family never use “widdle”. I’m new around here and wasn’t certain about colorful language.

              After, I read the analysis of gender-based cussing over on ENB’s bathroom article. And the question of policy was utterly resolved.

              1. Well, in the original version my family never use “widdle”. I’m new around here and wasn’t certain about colorful language.

                So very new around here, then.

              2. I’m new around here and wasn’t certain about colorful language.

                Welcome! Fuck you, cut spending!

                1. I lul’ed.

          2. There was an MSNBC clip going around where the host actually admits that the congressional OBM report said that raising the minimum wage to $10.10 could cost up to 1 million jobs, but they just dismissed that or tried to sell it as “up to” means that it could be far less, while accentuating the other point that the OMB made. That it could raise 700,000 out of poverty. The dishonesty of it. That means, according to the figures they promote, that raising the minimum wage is, at best, a wash, and more likely going to cause more people harm than it will help. But that didn’t stop the tards from ThinkProgress from applauding the idea of raising the minimum wage or trotting out the incorrect post hoc rationalization that forcing companies to raise their wages is good for them. But but but….Old Navy raised their wages. durp

        2. Raising the price of something causes less demand, except when that’s not the intention.

          What is it again that the road to Hell is paved with?

          1. Shovel-ready jobs?

        3. Maybe you guys are just two personalities in the same schizo? You’re like the anti-Mary.

          1. You’re like the anti-Mary.

            Seeing as I joined right at the apex of the Crazy Mary comment-storm, I will take that as the Supreme Gilded Reason Compliment.

      2. You work for the NSA?

    2. Unfortunately, the progs don’t really understand elasticity either. Raising the price of electricity doesn’t have a very big impact on demand. It only makes people poorer.

      1. It encourages people to buy more efficient appliances, turn the lights off when they’re not in the room, switch to natural gas for hot water, things like that. But yes, you’re right.

      2. They do. I had a prog make the elasticity argument with regards to health care back when Obamacare was still being debated. Said that people will pay higher and higher prices to not be dead or ill. Of course, he then said that his grandmother hand refused a treatment because it was too expensive. Soooo, maybe you’re right or he just didn’t see the inconsistency there.

    3. And if you suggest the obvious from their logic: raise the minimum wage to $100 so we’re REALLY better off (you know, the whole “workers have more to spend so everyone benefits”) the standard reply is “That’s ridiculous!”

      1. It’s all about aggregation. They’re ok with screwing over some poor bastards so long as the aggregate accounting number you prefer to measure success by moves in the positive direction. Individuals don’t matter. It’s all for the greater good.

    4. These arguments that you have with that guy in the mirror sure are interesting. You pwned that asshole real good.

      1. The mirror probably makes a better argument that you could. So could other bathroom amenities.

        1. My toilet swallows the shit, it doesn’t spit it out onto the mirror for those of us enjoying arguments there . Hell, better me in the mirror than 85% of the morons out there that think unicorns exist in Socialist Utopia.

  11. I demand a minimum wage of $100 per hour to end poverty. You see all the impoverished will be dead inside of a month from having absolutely no prospects for surviving their legally mandated position of worthlessness.

    1. Double the minimum wage, cut the staff by three-quarters.

    2. From the Comments

      ? August 11, 2014 on 10:09 am
      I’m envisioning a fleet of self-driving pizza trucks, loaded with fresh produce and ingredients cursing town just waiting for hungry customers. Once an order is placed the oven fires up, the robots start spread the dough, loads it up with the specifications and bakes it with perfect timing so that the oven dings as the truck pulls up in front the home. A text is sent from the curb; client’s pays through the app, and steps outside to grab a piping hot fresh baked pizza. Fresher than today’s pizza delivery, cheaper since there isn’t a restaurant build and maintain, very few humans to employ (truck/machinery/robotics maintained for now) and it’s just the tip of the iceberg.

      Why stop at pizza, once the food preparation “robots” get better at cooking, perhaps the delivery truck can bring burritos, steak, salads, ice cream, Chinese? anything and every you could ask for could be delivered fresh, hot, conveniently, inexpensively, reliable, to your door 24/7 without having to worry about the delivery guy having a bad day.

      1. All depends on how expensive the pizza trucks are to purchase and maintain. Just because such a set will at some point be possible, doesn’t mean that it will be more efficient than people. Of course Progs are doing everything they can to ensure people are less efficient and the pizza bot makes sense.

        1. ingredients cursing town

          Was that comment yours?

      2. Google is working on that.

  12. “Pollin and Wicks-Lim claim that an increased minimum wage will substantially reduce the costs of employee turnover”.

    Isn’t most of the cost of employee turnover related to employee training? I can see where there might be some cost savings. But, really, how much does it cost to train someone for a low skilled job? I know it probably sounds like I’m slamming low skilled workers. Which is not my intention at all. We all have to start somewhere you know. And, I myself, started out as a low skilled employee. But, the reason they are called low skilled jobs is they don’t require a lot of skill. And, skills are things that usually comes from training.

    1. These people never flipped a single burger in a fast food joint.

      1. At McDonalds they don’t even flip the patties. They basically use giant George Foreman grills with smooth cooking plates which fry frozen patties on both sides simultaneously for about 50 seconds.

    2. I think you’re equating low-paid with low-skill. For eg; line cooks. They don’t make minimum wage, but that’s certainly a low-paid position which would be affected by a $15 minimum (IME, starting hourly for a line cook is $10-14). A line cook at a sit-down restaurant, though, needs some skill. Not as much as a surgeon, granted, but also certainly not a job any warm body can do well with two training shifts. “Warm body” hires become dishwashers.

      I can’t figure out if the employee turnover figures are accurate either. There’s a fair slice of jobs in that “more than minimum wage, less than $15” spot. My first impression was that the skills set was being skewed a bit in favor of those $13-hour-some-skills jobs, but I might be wrong.

      1. A lot of blue-collar (and more than a few white-collar) jobs start between $10 and $15. A friend of mine who is now a journeyman started his plumbing apprenticeship at $12/hr. I knew a security guard who was making $14/hr, although it was a side-job for him. Shit, entry-level web devs are making sub-$15/hr depending on where they are.

    3. “We all have to start somewhere you know”

      You haven’t been keeping up, have you? Every job needs to be enough that the worker has a living wage so that he/she can marry, pay the rent, and raise two kids.

      1. You forgot the dog.

      2. What no artisanal mayo?

      3. You’re not being inclusive enough: you forgot the Mormons, who have to be able to keep four full-time housewives and 16 kids, including Ivy League college funds, on that minimum wage job.

    4. The truth about employee turnover where minimum wage applies is that those employees are mostly moving on to better jobs. So, by creating a regulation that has the effect of minimizing employee turnover, what actually happens is that those employees no longer need to move on to better jobs to get better pay, so the entry level jobs end up being held by people who no longer have the market incentive to find more productive work. In effect, Atlas Shrugged’s Directive 10-289 minus the bit about not being able to fire people.

  13. The minimum wage, they show, exacerbated unemployment.

    It’s worse than that, though, isn’t it. It’s increasing unemployment exactly on the people who can least afford it. When the minimum gets raised to $10.10, do you think the fast food outlets are cutting Brittany and Colin from the or are they going to let Jamal and Hector go?

    1. One of the reasons the minimum wages and the 40 hour work week went through in the first place was to protect white Anglo-Saxon Protestant union jobs from blacks, Jews, Catholics, Italians, Polish, etc., competition.

      1. Hence the origin of the phrase “You pay peanuts you get monkeys…”

    2. Well, the real bitch of it is that a lot of people pick up minimum wage jobs to make extra money on the side. Housewives/-husbands, teenagers, people who just aren’t making enough at their day jobs take part-time gigs making $8/hr at Starbucks, for example, so they can score some free coffee and make a little bit of extra dough with their free time. Not every job is meant to be a career position.

      1. but but but, if they’re full time job paid a living wage, they wouldn’t need to get these part time side jobs…amiright?

  14. Surely the benefits of low turnover and high morale in your work force come not from paying a high wage, but from paying a high wage ‘compared with other companies’?and that is precisely what mandating an increase in the minimum wage for all companies cannot accomplish.

    That these folks failed to consider one of, if not the, most basic question of economics, “compared to what,” is proof they should never have been given the title in the first place. Apparently “economist” just means “sociologist with math skills.”

    1. The failed to consider a lot of things including whether higher or moral and lower turnover are always worth paying for. Some jobs suck and are never going to be something anyone would want to work long term. If you are an employer hiring people for such a job, lower turnover isn’t much of a factor. Moreover, there is nothing to say that there are not better ways to increase moral than though small increases in pay. People often value things like flexibility or security or working conditions more than they do pay.

      Basically these people are simple minded idiots.

    2. There’s nothing inherently good about “low turnover” in any business.

      Japan is infamous for their “lifetime employment” system, in which a place of work becomes an extended family to the workers. When businesses dries up, the bosses will invent nonsensical jobs to keep their workers in the payroll, instead of layoffs, hiring younger recruits, or adapting to the market.

      So even though place has lightning speed internet and fancy infrastructure Obama drools about, their unemployment rate is always high.

      Americans aren’t taught to be “loyal” or “respectful” to anything – not companies, their elders, traditions, seniority. Nothing. They’ll be revolted by a “low turnover” economy.

  15. I love that fucking study that our lefty trolls keep digging up that shows raising the minimum wage lowers unemployment relative to neighboring counties.

    They build up this whole complicated mathematical model in the paper to make it seem like they’ve accounted for all the variables. But they never bother to show that total employment, and not just the rate, was actually increased. They also conveniently omit any analysis of the change in population over those same time frames.

    It is apparently completely unfathomable to ivory tower economists and their talking-point pushers that people would know when the job market goes south and move accordingly. It’s quite easy to create a simple scenario in which, due to the movement of jobs and population, you can arrive at the outcomes the paper highlighted while in reality everything actually ended up worse.

    1. It is not unfathomable. The people who did that study just lied. Everyone who has had Macro Econ 1 knows the difference between total employment and the unemployment rate. They just ignored the factors you mentioned because they were lying to further the cause.

    2. You mean Krueger et al. It was pretty well debunked here.

      Amazingly Krueger is always able to uniquely find “data” to support his socialism.

      1. Card, Krueger, and Katz are the big ones, along with this Pollin guy. Their studies have all been refuted by Neumark an Washer, largely because they all exclude lag effects (by the time the store is finished installing the self-checkout machine and fires its min wage emmployees, they’ve already long since ended the study and declared dis-employment effects to be a myth).

        Neumark and Washer actually replicated Car+Krueger’s study and got the exact opposite results – because they looked at the actual payroll data, whereas Card and Krueger just surveyed the mangers; in other words the Card and Krueger conclusion was largely just an artifact of survey issues.

  16. It’s interesting how the progs, who claim to love “the little people”, never actually think of them. These analyses always seem to focus on enormous corporations like McDonalds and WalMart with their smug assertions that “hey they can just eat the costs they make zillions of dollars anyway”. It never seems to occur to them that the little family restaurant or the little independent book shop on the corner don’t have that luxury.

    And even for the big corps, the blithe assumptions in the analysis that “heck they can just run their businesses this way, no prob” by people who have never run a business is just breathtaking.

    1. Speaking of independent book stores…
      Beloved SF Bookstore Becomes Casualty Of Minimum Wage Hike.

      From the article:

      “You know, I voted for the measure as well, the minimum wage measure,” customer Edward Vallecillo said. “It’s not something that I thought would affect certain specific small businesses. I feel sad.”

      Well Edward Vallecillo, your tears are delicious, I hope that makes you feel better.

      1. “You know, I voted for the measure as well, the minimum wage measure,” customer Edward Vallecillo said. “It’s not something that I thought would affect certain specific small businesses. I feel sad.”

        You stupid shit, you were told it would do exactly that, and you clung to your ignorant lefty fantasies instead of exercising your brain cells. You are a pathetic excuse for humanity.
        I hope you own a building where one of the laid-off workers lives and you have to subsidize his rent for the rest of your worthless life, you pile of shit.

    2. “You’ll do something, Mr. Rearden!”

  17. “Surely the benefits of low turnover and high morale in your work force come not from paying a high wage, but from paying a high wage ‘compared with other companies’…” – Krugman

    What a load. It’s a simple formula. W(age value) – C(rap my job gives me) x H(ow badly I need money). People quit when any of those factors gets out of sync, or when a better net sum is offered somewhere else.

    1. ” or when a better net sum is offered somewhere else.”

      i.e. ‘compared to other companies’

      1. “Or”. Key word. It’s small, no wonder you missed it.

        He found a factor and stopped there. Which is exactly why paying attention to one factor to the exclusion of the sum makes one mathematically wrong.

        People switch jobs when the pay is more, yes. They also switch jobs when the pay is the same but the working environment is better – the net sum of the job value is higher. People switch jobs when the pay is the same but the benefits and perks are much better. People switch jobs when they don’t care about the pay, really, they just need something that will give them that extra bit of money/keep them occupied.

  18. An independent San Francisco bookstore says it will be closing its doors by March 31, despite having its best year ever in 2014. And it’s pointing at San Francisco’s newly enacted minimum wage law as the reason.…..-Bookstore

    1. “specializes in science fiction and horror”

      Seems appropriate somehow.

    2. If they can’t make enough money to pay a decent wage, they shouldn’t be in business.

      /prog retard

  19. Supporting a Minimum Wage is as regressive as anything the Left accuses its adversaries of doing.

    1. It is just telling poor people that they don’t deserve a chance to work. If you can’t produce more than a given value, then you just are not worth society’s effort and need to give up.

      1. I told one of minimum wage supporting friends that on facebook, he just got confused.

  20. let’s add one more little tidbit to this argument that is enough to make one wonder if these economists ever even studies microeconomics, much less business.

    they speak of a $30bn REVENUE increase as though that can be compared to wages.

    it can’t.

    if they had 100% gross margins it could, but they do not.

    selling more burgers means buying more beef and more rolls etc. it’s also more work which, all else equal, will require more labor.

    assume a 40% gross margin on food. (pretty close for fast food)

    that means that of the additional $30bn in sales, there is only $12bn left to even begin to offset the higher wage costs once you pay for the cost of the goods you sold.

    leaving out this elementary line item that any first year business student would be laughed out of class for missing, and the equation changes.

    these guys are either incompetent or liars.

    1. “these guys are […] incompetent [and] liars.
      I think we’re on to something.

    2. Another good anecdote for the calculation problem.

  21. I assume we’ve all seen this?

    On Tuesday’s edition of The Michael Brown Show on 630 KHOW, Brown floated the idea of a $52.80 minimum wage ? but only for the City and County of Denver. In a previous show, Brown called the idea, “A Mile High Wage for the Mile High City.”

    But what’s most notable about Brown’s proposal is he could conceivably put the question to a popular vote to the citizens of Denver via the petition process, which could put elected officials like Mayor Michael Hancock in a bind. Collecting enough signatures can sometimes be a costly proposition, but in his segment on Tuesday, Brown suggested he would “crowdsource” the funding from conservatives nationwide who have often made the “reductio ad absurdum” argument about the minimum wage.

    “I don’t know how much money I need, maybe 20, 30 thousand dollars. And we’ll get a petition to raise the minimum wage in the City and County of Denver to $52.80,” Brown said. “If the minimum wage helps people live, it creates more jobs, it does all of these wonderful things by itself, then why stop at 15 dollars an hour?”…..b-brownie/

    1. His usage of “reductio ad absurdum” is itself fallacious. If your theory or claim is fundamentally absurd, that cannot be flipped around and used to (somehow) shut down your antagonist.

  22. The logic of the minimum wage (to the extent that there is anything other than emotion behind the effort) is that raising the cost of labor also raises the value of it correspondingly. The fact that no one openly states this point is a good example of how foolish it is.

    1. Well, the real logic is Marxist LTV bullshit.

      Those evil capitalists are by definition paying workers less than the true value of their labor, because otherwise, how do they turn a profit, right? Therefore forcing employers to pay higher wages is only justifiably giving the workers more of their true labor value. That’s how the left sees it.

      Of course, the labor theory of value has been discarded for over 100 years. But obviously, that’s only because of the evil conspiracy by the ruling class to brainwash everyone into supporting capitalism.

    2. Nothing has an inherent value. A thing (or service) is only worth what someone will pay for it. If you don’t add more to the bottom line than what you’re paid … out you go. That’s the real world.

  23. I’m sure this problem will solve itself eventually, given that most of the people advocating high minimum wages are progressive occupy-type dipshits, who generally work at minimum wages jobs because their degree in gender studies isn’t paying off.

    In the near future they will find that their couch space is occupied by an unusually high number of surfers complaining about how the independent bookstore or vegan restaurant closed and now they don’t have a job.

    It’s going to be hard, but at least some of them will learn.

    1. They’ll blame capitalism.

  24. Robert Pollin and Jeanette Wicks-Lim obviously adhere to the “pull the numbers out of our butts” school of economics.

  25. You overlook another element that discredits their argument: the hit to the economy caused by taking the money that pays for the higher wages out of the owner’s pockets. Each dollar that goes to a worker is a dollar that doesn’t go to someone else (in this case, the owner). Increasing the minimum wage doesn’t increase the total supply of money, it merely shuffles it from one person’s pocket to another person’s pocket. And unless you’re going to try to argue that money in a lower-paid person’s pocket is better for the economy than the same amount of money in a higher-compensated person’s pocket, there isn’t a net increase in economic growth as a result of increasing the minimum wage.

  26. “They calculate that a 3 percent per year price increase results in a 1.5 percent per year decline in what sales would have been, which means that revenues would increase by 1.5 percent.”

    Well, heck, McDonalds should just raise their prices by 100%. Even a 50% decline in sales would mean a 50% increase in revenues!

    Heck. They should just sell one really great hamburger per year to Carlos Slim for $100 billion dollars! Think of all the overhead they’d eliminate! What could possibly go wrong?

  27. I heard one of my cousins who visited Australia (Where min wage can be as 15 bucks, apparently) describe the place as “Inflation land”. What passes as a large drink there is smaller than the size of a dixie cup. You don’t refills in some Mcdonalds abroad.

    Mcdonalds is HQ for elderly Asian folks. They get their senior coffee and nurse the heck out of it for hours. They might order some breakfast sandwich. When they go home they raid the napkins and creamers.

    Could you do that in Mcdonalds Japan? Maybe.

  28. I’m amazed we haven’t had a single one of our lefty ignoramuses telling us about multipliers or unicorn farts!
    This IS a basic lefty trope here and one of them should have fallen for the click-bait.

  29. This article reads like a book report by a pretty smart student who has been given the task of taking the “con” position on a paper in a scientific journal. Is it ok if I just take the word of professional economic professors instead of a former staff writer for Forbes, who among other positions that get him the big money, doesn’t think CFCs cause ozone depletion.

    I’ve read some of the papers on minimum wage increases and their effect on employment. The take home lesson I got from an objective analysis is that there might be some level of minimum wage that could affect the unemployment rate, but you won’t see it when it’s raised from $7 to $10/hr. And, oh yeah, none of those papers took into account that those with minimum wage paying jobs would get a nice raise– which is kind of the point in the first place.

    Ron, it was a pretty good jobs report today, no?

    1. The take home lesson I got from an objective analysis is that there might be some level of minimum wage that could affect the unemployment rate, but you won’t see it when it’s raised from $7 to $10/hr.

      Really, please provide citations for the papers which explicitly treat a minimum wage increase of 42%, or from $7 to $10/hr.

      Because I think you’re just remembering a bunch of papers which say essentially “small changes to minimum wage produce no measurable effect on unemployment”, and are pulling it out of your ass that 42%, or $7 to $10, is small enough not to matter.

      So, put your money where your mouth is and provide citations. Or, quit whining about how everyone else but you is apparently making stuff up for not agreeing with your half-baked remembrances of a few papers which agree with your preconceived biases.

    2. Would it be ok for those of us in disagreement to pay the old wage? I mean, you refused to honor your mortgage agreement so why should we honor this crap?

    3. Funny how suddenly you believe “professional economics professors.” What about the two economic papers he cited in his article? What about all the works of Neumark and Wascher? Who have thoroughly critiqued the literature on the subject going back nearly a century? Who compiled a lengthy bibliography of empirical research demonstrating the significant disemployment effects of minimum wage?

      And here’s where the socialist betrays his disociative personality disorder, and suddenly switches from sheepish ‘intellectual elitist’ who invariably defers to the credentialed academic (who happens to agree with him) into the anti-intellectual populist, who sticks his fingers in his ears and shouts incoherently about the Koch brothers once he encounters a credentialed academic who disagrees with him.

      Either way, you confirm the stereotype of your ilk: you are incapable of, like, actually making an argument.

    4. american socialist|2.6.15 @ 8:30PM|#
      …”I’ve read some of the papers on minimum wage increases and their effect on employment. The take home lesson I got from an objective analysis is that there might be some level of minimum wage that could affect the unemployment rate, but you won’t see it when it’s raised from $7 to $10/hr”…

      That’s because you’re a fucking idiot.

    5. american socialist:

      The take home lesson I got from an objective analysis is that there might be some level of minimum wage that could affect the unemployment rate

      I think this is the funniest part. 🙂

      You come here calling the article childish. However, in your socialist fervor, you claim that objective analysis says that it only might be possible that a high enough minimum wage could effect employment? Like, it’s only some theoretical possibility that a $50/hour minimum wage might effect employment?

      Listen, unless you’re completely stupid, then it’s a 100?rtain fact that a high enough minimum wage will effect employment. That’s objective analysis, and anything else is just childish debate making.

      Now, lets us continue with the socialist policy-based evidence making.

      1. From a socialist perspective, since individuals don’t matter, you just aggregate the effects enough to hide the negative consequences. It’s ok in a bunch of people who make $7-$15/hour get fired or new entrants to teh work force can’t find jobs so long as when you look at that group as a whole, they total amount of money they make goes up. Never mind that the before and after picture might not even include the same individuals.

  30. I really really want some State to institute a $15 minimum wage. Hopefully not California, since I actually go there.

    It is radical enough for people to actually see the effects first hand, and yet not so radical that it destroys anything. It will just change things pretty quickly. You never know, this is one stupid idea that might actually cause people to start to move away from state intervention.

    1. $15, bah! Let’s got for $153.00 per hour min wage, since min wages are SOOOO great!!!

  31. A lot depends upon the nature of the business. The demand for goods and services is not the same over the entire economy. For example, the demand for gasoline is relatively inelastic. The same thing is true of medical services. If the price of gasoline, medical services, rises, people make “cuts” in things that are of less importance to them. Fast food is “convenient”, but people can buy food in supermarkets and prepare it at home. So the effect of a rise in the minimum wage will vary according to the nature of the enterprise in question. For things that people have a hard time doing without, they will pay the higher price, but they will make “cuts” in things that they can do without or find substitutes for. So the clerk at the gas station will still have a job, but the clerk behind the cash register at the fast food restaurant might be replaced with a “do it yourself” system where you punch in your order and pay for it with a credit or debit card.

    1. The clerk at the gas station might still have a job, but the janitor won’t, and get who’s going to be cleaning the toilets now that they can’t afford to keep the janitor on? The employee’s marginal utility will be forced up to the minimum wage or that employee will have to be let go.

  32. It basically boils down to, what level of harm are “progressives” willing to inflict on the workers with the fewest alternatives, all in order to make themselves feel good?

    1. They would nuke that village from orbit just to be sure. That they saved it y’know. And then they’d all go drink craft microbrews downtown in celebration of this victory over oppression.

  33. It’s very easy to see the effects of increasing the minimum wage from $5.15 to $7.25.

    It’s the PRICES you stupid idiots. Just look at the price increases at every business that employs people at minimum wage or starts them at minimum then quickly gives them a raise to keep them working there or gives them the boot if they’re lousy workers.

    Then there’s the effect on every wage between the old minimum and the new minimum. All of those employees will expect a commensurate pay *above* the new minimum.

    Raising the minimum wage doesn’t just bite a business on the lowest paid, it chomps them at multiple pay grades above it.

    How do businesses handle an enforced increase in wages across their entire workforce? The easiest is to just raise prices, same as when new taxes or costly regulations are imposed.

    Another way is to cut jobs and expect the remainder to produce more just to keep up.

    Still another is to find ways to use automation to take up the shortfall from the reduced but still costing the same workforce. The electronics industry is still squeezing the automation stone and getting more juice out of it to reduce prices. The food industry is also doing the same with new robot designs able to handle and package such soft and squishy products as pancakes and dinner rolls. Even the traditional handmade foods like cakes now have equipment that can assemble, frost and decorate layer cakes completely automatically.

    1. If none of the above is feasible, quality can be reduced. Make those metal castings a bit thinner or replace them with folded sheet metal or farm out work to a foreign company to make injection molded plastic versions. Could even decide that “nobody uses that feature” of your product and remove it to save a few cents per.

      If you can’t cut jobs, get more work for the higher pay, raise prices, automate and/or make a crappier product, there’s always hanging a Closed, Permanently sign on the door like most of the manufacturing did in the USA in the 70’s and 80’s as labor costs shot upwards.

      Why does this idiotic idea that any piece of an economic system can be meddled with, without effecting 100% of the rest of it, persist?

      It not only trickles down, it *cascades* down, up, sideways, forward, back, left and right – with a larger and larger effect each step of the way.

      This is especially prevalent with the cost of labor. Increase the bottom end and eventually the increase cascades all the way to the top, with that increased cost adding to the cost of a product at every stage of manufacturing.

      That is precisely the reason so many companies went out of business or moved operations out of the USA.

      Now there have been a few cases of “reshoring” where some production has been moved back to the USA due to rising costs of labor elsewhere, including in some cases costing less (and creating better good feelings with customers) to have tech support here.

      1. Once the upward cascade of everyone at a wage between $7.25 and $10.10 or $15 plays out, we’ll be seeing those “reshored” operations going out again to where ever the least expensive labor is, or just being shuttered.

        One end result will likely be Carl’s Jr. having to rename their Six Dollar Burger (which costs nearly $6 now thanks to the last wage increase cascade) to the Ten Dollar Burger with a price of $8.95.

        Just one example of labor screwing itself out of jobs happened when Wal-Mart built a store in Ontario, Oregon. Thanks to no sales tax in Oregon and the store’s location *right on* the border with 6% tax Idaho, it’s one of the companie’s busiest, highest income locations.

        Wal-Mart installed a state of the art meat cutting and packaging facility in that store. Well the meat cutters’ union demanded that Wal-Mart was going to have to hire only union meat cutters, or else. So Wal-Mart just went “out of house” to bring in packaged meats in those vacuum formed packages with the heat sealed plastic film and the meat department equipment sat unused for a long time until the store was remodeled and expanded and that area was repurposed for other things. Does Wal-Mart do in-house butchering anywhere else? If not, the blame lies with Oregon’s unionized meat cutters.

        The lesson? Don’t piss off the largest company on Earth. You will not win because they can always take their ball and go home.

        1. The corporation behind Safeway, Vons, and other supermarkets is one of the few in the world that can out-compete Walmart.

          Where Walmart normally drives their competition out of business, if a Safeway and a Walmart ever end up competing, it’s the grocery section of Walmart that goes away.

          Safeway does have in-house meat cutting, and has no problems remaining competitive with Walmart even there.

  34. One of the main reasons behind a minimum wage hike, more fundamental than all others, is a comparison of what portion of a day’s wages a single loaf of bread represents.

    The $15 wage arises out of this calculation. In the 1950s, people were wealthier than they are today at the same inflation-adjusted income level. That’s despite the overall lower standard of living. Why? Because they could buy the things they needed for a smaller percentage of their income than they can today.

    This left them more disposabl income to either save or spend on things they merely wanted.

    In order to give a present day person the same level of buying power for necessities and luxuries, that person today would need to make a minimum of $15 an hour.

    The problem of increasing wages causing economic problems is a case of blaming the victim. Companies have maximized shareholder profits by not matching cost of living increases with wage raises for decades now. They’ve been doing it so long that everyone thnks it’s just normal business practices. If they had simply paid their workers a fair wage for the work they did all along, this would never have become a problem.

    1. “If they had simply paid their workers a fair wage for the work they did all along, this would never have become a problem.”

      There is no such thing as a ‘fair wage’. Get lost.

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  36. Raising the price of fast food does not imply a decrease in demand for fast food, because demand is fungible. If the price of food rises, people may respond by driving less, if marginal eating is more valuable than marginal driving. Ultimately, raising the price of food drives the demand for everything else down until we consume food and little else, for obvious reasons.

    If markets are not ideally free, if many higher incomes are a consequence of statutory rents and other market constraints while lower wages are correspondingly depressed (on balance) by these constraints, then raising the minimum wage may shift the consumption of higher income earners primarily away from the produce of other higher income earners rather than away from the produce of minimum wage earners.

    Markets are not ideally free. The shift in consumption patterns is not immediate, but a higher minimum wage can ultimately increase the consumption of minimum wage workers without persistently decreasing demand for their labor, and plenty of studies on the other side of this debate reach this conclusion.

    For me, that’s an argument against countless market constraints enriching the state’s most influential constituents; however, minimum wage earners do not (and should not) wait for other reforms before joining their wealthier counterparts in the rent seeking game. Anyone who thinks that minimum wage workers are more influential than other constituents earning far more is out of touch with reality.

    1. Did you have a point, Martin, or did you just show up to exercise your keyboard?

      1. I make several points. Do you have a counterpoint?

    2. Excellent points. I doubt anyone else currently on Reason possesses even the minimal economics knowledge to follow what you are talking about. But good points nonetheless.

    3. Not really. In truth, a higher minimum wage can ultimately increase the consumption of SOME minimum wage workers without persistently decreasing the demand for their labor, while other minimum wage workers lose their jobs and are now at the mercy of welfare programs, or potential workers hoping to enter the market do not have jobs available so they also end up at the mercy of welfare programs. Minimum wage raises the poor on the backs of other poor. Minimum wage workers are obviously not more influential than other constituents. They can only screw over each other, whereas the other constituents you mention can use rents to screw over the relatively poor. It’s not even the minimum wage earners that bring the power to the lobby for this case. It’s rich national labor unions seeking to price out the competition from “right to work” states and rent seeking big businesses looking to price out their smaller competitors.

  37. Why should unskilled job (with plenty of supply) be given a almost 40% wage increase ($7.25-$10.10) when many skilled jobs have seen no or little wage increase the last 5+ years? Instead of arbitrarily raising wages, one should be teaching people how to live within their means.

    First and foremost, we need to stop using a family of four as a basis of argument (not directed at this article obviously) on the need for wage increase. We need to look at how a single person can live at the current minimum wage. And yes, that is entirely possible. And no, you cannot live in NYC (or other similar places) but neither could many other people.

    1. You obviously have no idea what you are talking about. No offense, but no, a person cannot survive on minimum wage for long unless they are incredibly lucky, or supported by someone else.
      Are we also supposed to assume that they will not support their children? What do you suggest they do with them?

      1. Actually you can. It is called living within your means.

        1. Clearly you don’t know what you are talking about on this subject. One can live within your means on the minimum wage up until the point that you are injured, or sick, or lose a job, or the car breaks down, or you are robbed, or their family needs their help, or any number of things that happen to people all the time that are outside their control.
          Once that happens, even once, there is no way to recover at minimum wage without external help.

          1. So they go find someone who wants to help them. Don’t point guns at the rest of us and force us to help them and pretend you’re making a moral argument.

          2. Also, having expenses that rise above your means is a good incentive to go find a higher paying job rather than just stagnate in their minimally productive jobs. Taking up space that someone else who needs an entry level job could fill. It adds to economic stagnation.

          3. Hmm ok. So how is going to $10.10 going to abate those things you just listed? Also you do realize the “poor” in the United states is heck of a lot better off than the poor in 3rd world countries. How do they manage ever to survive?

            How do native tribes in the amazon jungle survive?

  38. I love how people just throw up a bunch of numbers as if they can really predict exactly what will happen.

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  40. I would love to see the minimum wage people talk about it including the affects of increased immigration. The larger the labor force the lower the wages. Why would you pay your low skill workers more when there is always a new pool of low skill workers who will accept low pay?

    Also, how come they never talk about what a 40% (ish) raise in wages at the bottom would do to everyone else? It’s a safe bet I won’t get a 40% wage hike. Essentially, this is a policy that would throw another nail in the middle class coffin.

  41. Google pay 97$ per hour my last pay check was $8500 working 1o hours a week online. My younger brother friend has been averaging 12k for months now and he works about 22 hours a week. I cant believe how easy it was once I tried it out.
    This is wha- I do…… ??????

    1. This. All those people who lose jobs because of the minimum wage increase can go to work for Google. I mean, it’s so easy, isn’t it??? 😉

  42. Currently, people making minimum wage can barely survive. Remember, when Clinton boasted of creating lots of jobs, a man said, “Yes, I’ve got three of them.”

    Raising the minimum wage can benefit ALL low-wage workers, if accompanied by a tax and welfare system to redistribute the increased wages among them. Yes, some of their jobs will be lost, but the rest
    will gain so much that redistributing a small fraction of it will compensate those who lost jobs.

    When I say “low-wage workers” I mean everyone in employment whose wage rate tracks changes in the minimum wage.

    There is no reason these welfare or unemployment funds _should_ come mainly from low-wage workers. They will benefit even more if we make the wealthy pay their fair share. However, My point is that EVEN IF
    the redistribution comes only other present low-wage workers, all of the low-wage workers benefit.

    This approach would reach diminishing returns if pushed too far. There is a point at which increases in the minimum wage would eliminate so many jobs that the total income of low wage workers would
    not rise much. The minimum wage should be kept substantially below that point.

    1. So the velvet knife approach. Act like you’re giving low wage workers a bonus and then stab them in the back with the tax knife to help offset the negative aspect of all those who will lose their job. And anyone who pays taxes pays more than their fair share. You’re assuming that taxes paid to the government offer a net benefit, which they don’t. Money extracted from the economy could have been saved or invested in more labor (jobs) or labor saving devices which make people more productive so they can earn higher wages. You’re scheme is merely a zero sum redistribution program that has costs to implement, which means it’s really a negative sum.

  43. Establishment libertarians love to pontificate against the minimum wage, a subject that they are completely ignorant about. I often wonder how much good they could do if they spent that time and effort instead investigating anti-libertarian benefits that the upper middle class receive, something that they have bountiful first hand knowledge of.

    1. Can you please elaborate on this comment? How are they ignorant with respect to this topic? Thanks in advance!!

      1. How are they ignorant on the topic? That’s simple. Most of the people writing articles and commenting on the minimum wage have never had to work for a living. In many cases, they in fact have never worked at all at a real job in the productive private sector.
        Some have had jobs, very good paying jobs, but never had to work for a living.
        Why is that important?
        Because they lack any understanding of the motivations, practices and behavior of people that do.
        The simplistic demand graph with ‘all things being equal’ ‘in a free market system’ is useless when we are discussing the specific increase in minimum wage for $7.25 to $10.10/hour in this specific economic environment, which is a far, far, far cry from anything approximating a free market.
        The deluge of articles from these upper class kids on the minimum wage shows a distressing lack of intellectual vigor, curiosity or even competence.
        They would be far better served investigating and writing articles on things they should know about, which is the million ways in which upper middle class kids are sheltered from the free market by the government, and libertarian solutions to that problem.
        But as Milton Friedman pointed out, it is easier to complain about perceived benefits to others, than consider the myriad of ways in which the state, and statism, benefits yourself and the cost of those benefits to others.

        1. Blind assertion. I can do that too.

          Most of the people writing articles and commenting on the minimum wage have actually had to work for a living. In many cases, they in fact have actually worked at a real job in the productive private sector.

          See. Pulling things out of our asses can be fun.

          On to your point, what you are arguing is that the Law of Demand does not apply. That’s a pretty bold assertion and requires pretty substantial evidence. Laws of economics apply no matter what the economic system happens to be in place. That’s because the principles that those laws were derived from have nothing to do with “in a free market system” as a caveat. “All things being equal” is a tool used to separate the variable we wish to observe from what is otherwise a very dynamic and complicated system. They use it in, say, climate science, to show that increasing carbon dioxide emissions has a positive effect on temperatures via the greenhouse effect. In the case of the minimum wage. it’s settled that minimum wage has a negative effect on unemployment. And when you look at it down the the perspective of individuals, you can see that it just has the effect of robbing poor peter to pay poor paul + the cost of enforcement, which could be money spent on productive means, which means it is a net negative to the economy.

        2. Trying to cast libertarians as upper class non-“workers” is just a red herring and an demagoguery. Even if it holds true, it says nothing of the validity of the argument.

          And the point about perceived benefits. You must not be paying attention. It’s not benefits that libertarians talk about. We talk about the side effects, the unintended consequences, and the downright corruption of the government. We’re more concerned with how minimum wage screws over the poor (hence the argument that min wage harms those the liberals/progressives intend to help) as well as the rest of us (those who’s purchasing power goes down because they don’t get the 42% raise, or because they’re on fixed income).

        3. Gee, Robes Pierre, I worked my share of minimum wage jobs when I was younger, and now, while I make more than minimum, I’ve got to keep increasing my wages over time to keep ahead of the minumum wage.

          And I’m telling you from experience, higher minimum wages means that it’s harder for everyone to get a job, me included, and if you do get the job, you have to work harder to keep it. This I know from my own experiences. So do you *really* want to help low-income workers, or are you being an elitist *a** who’s using counter-psychology to keep the lower classes down?

        4. Can you back up your claim that most people writing on it have never had to work for a living? How do you know this? Aren’t they being paid to write said articles?

          Your comment is very confusing. You say they had jobs but never had to work for a living. Doesn’t make sense.

          How is going to $10.10 all the sudden going to make any problems go away? You have to factor in one’s spending habits.

          Raising the min wage will increase the cost of goods sold thus prices will be increased. How will they be better off now?

          It is just a feel good measure that isn’t based in reality and probably has more adverse effects then benefits.

        5. Robes Pierre, would you be in favor of $20/hr min, what about $50/hr, why not $100?

          I’m curious how $10.10 was arrived at…most likely just above the poverty threshold. Going just by number of dollars over a threshold is a bit disingenous. As time goes on, the dollar does not buy what it used to. Way back in the day my ole grandpa worked all day for a quarter, now you work one hour and make 29X that amount. Guess what? Hamburgers aren’t a nickel anymore.

        6. Well, let’s see … I’ve been homeless (about a year and a half altogether), worked for cash under the table to get any kind of job, pulled myself up and then got hit by a truck. Now mostly disabled and unable to hold a “regular” job.

          But you know what? It’s obvious as all get out that if you raise the price of something you can afford less of it. That true for business owners as well as workers. They may not intend to let people go or change their hiring, but when the bottom line gets added up, good intentions fall before the reality of the costs.

          I’d rather be working at $5 an hour than not working at $10 and I’ve made those choices myself.

  44. Of course, it should be obvious how having a minimum wage and increasing it hurts the economy, but there are other points that could be made in general. How the Federal Reserve’s control over the money supply creates this unnatural and constant inflation that we keep having, devaluing savings and the wages of all workers, although low-income workers and people on fixed incomes, like retirees, are hit hardest by the Fed’s inflation.

    Or how government’s price subsidies and tariffs keep the costs of various goods priced higher than they need to be, especially basic foodstuffs like sugar and milk. Again, low-income people are hit hardest by these government controls and regulations.

    And never mind the complexities of licensing and a myriad of other regulations that raise costs and minimize competition for employment–wouldn’t want those low-income people to start their own companies and grow their way out of poverty, now would we?

    And we musn’t forget Obamacare that makes everyone who doesn’t have health insurance a criminal–that’s a sure way to fight poverty, by making the entire economy worse off!

    In short, if people don’t get the problems with the minimum wage, then there’s any number of ways the government is hurting the lower classes in society, instead of helping them.

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