Minimum Wage

Minimum Wage and Magical Thinking

No one can defy the law of demand.

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If all other factors remain equal, the higher the price of a good, the fewer 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 reducing 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 Jeannette Wicks-Lim of 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 "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-per-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 combined with 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 make employees less likely to leave their jobs, saving fast food companies money that can now go to pay higher wages. New York Times columnist Paul Krugman convincingly refuted this argument 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 that $5.2 billion.

What about Pollin and Wicks-Lim's sales growth projections? Well, sales don't always grow. McDonald's reported a sales decrease of 1 percent in 2014. Some analysts think fast food sales may have already peaked in the United States.

MDGovPics/Flickr

But there's a deeper problem. In the absence of the higher minimum wage, employers would generally hire more workers to meet an 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 acknowledge 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. With this statistical sleight of hand, Pollin and Wicks-Lim roughly generate enough revenues to cover the higher wages by calculating that a three-year increase in prices and three years of 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. 

Meanwhile, two new studies by economists that are much better grounded in 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, published in the December 2014 issue of the Journal of Labor Research, 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 the 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 who earn less than $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 in the loss of between 550,000 and 1.5 million jobs.

The second study, authored by Jeffrey Clemens and Michael Wither of the University of California, San Diego and published by the National Bureau of Economic Research in December, 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 employment rates. Using U.S. Census employment data, they focus specifically on how low-skilled workers fared when the minimum wage rose as the Great Recession proceeded. The authors compare what happened to the employment rates of such employees in states where they started out generally earning below the new minimum wage versus in states where low-skilled wages were already higher than $7.25. 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, Clemens and Wither 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) who are in the labor market-stood at 63.4 percent. It ends in December 2012, when that ratio had dropped to 58.6 percent. They estimate that by the second year following the implementation of the higher minimum wage, 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 and employers were now forced to pay more. Overall, the authors estimate that the minimum wage increase "reduced the employment-to-population ratio of working age adults by 0.7 percentage points." Stated otherwise, not raising the minimum wage would have boosted the 2012 employment-to-population ratio from 58.6 to 59.3, which implies that we actually had 1.4 million fewer jobs than we otherwise would have had.

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

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  1. They then straightforwardly estimate that boosting the federal minimum wage from $7.25 per hour to $10.10 per hour would result in the loss of between 550,000 and 1.5 million jobs.

    Those would all be lowing pay jobs lost, so good. No more low paying jobs, substandard insurance policies. Man, we are progressing.

    1. This is why most of those low paying jobs will be replaced by robots in the near future. They’re just hastening the process. So, progress.

      Well, it is progress, it’s just not what the politicians intend. Their only intent is to get re-elected, but sometimes they accidentally cause things beyond their understanding. Occasionally, by mere random luck, they cause good things to happen.

      1. I’ve already started a Robot Union. Our slogan: “More oil, less toil.”

        1. I think it’s discriminatory to call it a union. You and your robot can be married.

          1. You’ve clearly not studied what Leviticus has to say about robots. Although, if we assume that robots are golems, and have a roughly humanoid shape, they are made in the image of God and thus have humanness. So perhaps you may be able to marry a robot after all.

        2. Do the union robots really hate FIFO buffers? It seems that they would be antithetical to their entire union.

        3. ‘I am Bender. Please insert booze.’

      2. I wouldn’t count the replacement of workers with robots, due to market distortions caused by the state, as a good thing.

        Now, the replacement of workers with robots, as a result of market forces, sure.

        1. Well, companies are going to start doing it anyway. It’s just that all this minimum wage rage is going to make them do it faster.

        2. I agree. I think it is particularly bad for young people. If you have to pay low or no-skill employees a so called “living wage” no one will want to take a risk on an inexperienced 16 year old. Raising the minimum wage beyond market rates is going to lead to young people being even more poorly prepared for the job market than they already are.
          It’s just stupid to declare that every job should pay enough to support a family. Many jobs just aren’t worth that much. And many people, particularly teenagers, just don’t bring that much value. At least when they are starting out.

          1. The problem is worse than most people realize. Many entry level jobs today require some post-high school education. A few days ago I saw job postings for Lowe’s sale associates where they were looking for people with business/management associate degrees.I know from personal experience – at Lowe’s in particular – that an associate degree is not required to be a sales associate.

            Where this really becomes burdensome for young adults is that many associate and baccalaureate programs require some type of internship work. Often this internship has to be somewhere where you don’t already work. So, even if you are working, you still need to find another part-time job for a semester. Then there is the bonus of many internships being “unpaid”.

            I don’t have a degree, and I was only able to land my current job because of my work history. If I was just graduating high school today and wanted to skip school and go to work I wouldn’t stand a chance.

        3. It’s definitely bad for young people starting out, and it can even be bad for entire neighborhoods.

          I recently got together with some old drinking buddies at one guy’s house by the north Oakland/Berkeley border. The host works in some lofty consulting position for a huge multinational, where I don’t think he actually sees how money goes in and out, he just submits billable hours and gets his nice paycheck. He had just done a dramatic and clearly very expensive remodeling of his house and back yard. We were in that luxurious back yard, having a great time, laughing up a storm, smoking cigars and drinking aged bourbon, when the conversation changed.

          One of the other guys there, who has always been a reliable lefty, surprised me by saying that he was unhappy that Oakland had just raised its minimum wage to $12. He worried that some of the up-and-coming neighborhoods in Oakland — neighborhoods that had long been impoverished — would be really hurt, in that small businesses, restaurants, boutiques, etc (i.e. low-revenue, low-margin) would be unable to shoulder the extra hundreds of dollars a week in wages, and would either have to lay people off or close.

          A very on-target assessment, of course — but it made our host go into a rage. “Income inequality! The 1%!” he yelled. People tried to point out that the average shop owner was not Bill Gates, but he would have none of it.
          (continued)

          1. I asked the host “What if tomorrow, everything stayed the same regarding prices and cost of living, but everyone in the USA’s income doubled. Wouldn’t that be great? No more poverty — but, of course, realize that the very rich’s income would double as well. What do you think?”

            This really made him fly off the handle. It was clear that the whole problem with income inequality to him was that some people just make too much money. Perhaps that’s defined as any income larger than he can expect to make, I don’t know.

            He was close to shutting the evening down and throwing us all out (and remember, all except me there were liberals). Someone suggested “why don’t we just change the subject?” and that’s what we did. But the laughter didn’t really return like it had been before, and it was not long after that everyone called it a night and went home.

            What stood out to me, and I think it’s true of many progs, is that they don’t care much about anything more than trying to take down people richer than they are. They’ll couch it as wanting to help the poor, but I think they’d rather have all the rich brought down to their level, and the poor to be better off, but still well below them.

            1. We need to get another bay area reason meet up.

            2. In an area I own some property the local council passed a law saying no homes could be built that were larger than 1800 sf. This is a very, very far left area that has elected the first Green politician in North America.

              I met with one of the council members who voted for it. I asked him why 1800 sf was the magic number and he said ‘no one needs more than 1800 sf, that is a perfectly good sized home’. I said, what about if you have 3 or 4 kids, can you have a larger one? He said, ‘people should not be allowed to have 3 kids.’ I then asked…and here is the nub of it all….how big is your home? Why, amazingly it was 1800 sf!! And, of course he had no kids, and wouldn’t be having any.

              What he has is reasonable, anything more is greedy and shouldn’t be allowed.

              1. Your argument is a little weak. I grew up in a town where most of the houses were just around 950 sq ft, and many families had 3 or 4 or even 5 kids. 1800 sq ft is enough for any family (unless you’re the family from “Yours, Mine, and Ours”)

            3. I don’t have the link but someone did a study on who really cares about income inequality in this country – turns out it isn’t the poor or middle class, it is UMC lefties (like your host).

            4. North Oakland/Berkeley border????? The place is a fucking ghetto. It makes you wonder why such an enlightened man would build such a palace in a poor neighborhood. Because income inequality.

              Whereabouts was this? Near the Safeway?

              1. Near the Claremont Hotel, off Tunnel Road/Ashby. I don’t think it’s a very ghetto-like area, it’s a lot of very pricey homes. I think you are thinking of College Avenue, a bit farther away and heavily traveled — but even that’s been gentrifying a lot if you get a few paces off the main drag.

                1. I knew that neighborhood was doomed when a place called “Noodle Theory” opened up.

                2. Near the Claremont? That’s not even remotely ghetto-like. Down by Spenger’s, now that’s pretty ghetto.

            5. People like that get really pissy when I say “Jealousy is a very ugly emotion. Have you considered talking to a mental health professional about this issue of yours?”

              -jcr

              1. People like that get really pissy when I say “Jealousy is a very ugly emotion. Have you considered talking to a mental health professional about this issue of yours?”

                And that, of course, is why I say that to those people as well. My thought on it is that enough people tell them that they’re bitter, spiteful people, maybe they’ll eventually figure it out and ask if maybe they aren’t living wrong. And if not, then at least I get to ruin their day and watch a fun rant ensue.

              2. That’s brilliant, will have too try it out soon

            6. That’s pretty sad coming from someone who is supposedly “educated”.

              1. His house is worth over a million dollars and he is talking about income inequality? Sounds like a classic Bay Area lefty. He could do his part by downsizing and moving to East Oakland to a more equal house and using the profit to donate to a housing non profit.

            7. They’ll couch it as wanting to help the poor

              They do that because it allows them to be smug and holier-than-thou with their thinly disguised envy. They just want fairness! You’re the greedy one!

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  2. If all other factors remain equal, the higher the price of a good, the fewer people will demand it.

    But not all other factors remain equal. Your labor input isn’t merely just another factor of productions. Unlike your land, capital investments, or materials, paying labor a higher proportion of the business’s net income results in more money circulating in the economy. Businesses pay more to produce, but they earn more in revenue. The result of a living wage is higher profits.

    /derp

    1. Maybe, under some circumstances. Those circumstances are usually best seized by the wage payer. A minimum wage hike assumes that the State knows the economics of, say, fast food jobs better than the people who actually work in the industry. And, frankly, there ain’t a whole lot of evidence for that.

      1. He was joking. That’s why he put “/derp” at the end.

        1. I am, but that point gets bandied about a lot. It’s worth taking seriously if only to trash it.

      2. Plus, if the proportion of consumption vs. savings vs. debt service hold true, and workers don’t immediately blow their new earnings on more stuff (which seems especially likely in terms of food), then even accepting the premise that more earnings = more consumption, fast food joints would not only be worse off but probably worst off under the new paradigm.

    2. But, in order for that to be a viable explanation, you would have to assume that all those business are simply run by stupid people leaving . . .

      Oh yeah, you *do* assume that.

    3. “paying labor a higher proportion of the business’s net income results in more money circulating in the economy.”

      The money is already circulating in the economy, increasing MW just alters where it flows. Then there is lag and price increases. Rising prices due to increased MW eats up the increased wages.

      1. Yes and those price increases are born by the middle class pushing them closer to the incomes of the poor which is of course the goal. Unfortunately it isn’t even a zero sum game because there is also less economic activity as business investments that made sense in a lower cost environment now no longer make sense. So there is less economic activity, the middle class are poorer and proggies feel good about themselves.

        What isn’t to like?

    4. I realize you’re parodying what we all hear…but, to answer it; How is there more money in the system? Exact same amount of money. It has just been redistributed. Since all money turns over a # of times anyway, nothing more was added. It just went to the dishwasher rather than a good manager, or a good business owner.

      1. Exact same amount of money. It has just been redistributed.

        The proggy assumption is that the Scrooge McDucks take their money, convert it to gold coins, and store it in a swimming pool where they get naked and roll in it by the light of the full moon, while orphans serve them champagne (that they’ve produced themselves).

        That reminds me, full moon tonight. Must make sure the orphan supply is adequate.

        1. That makes a good point. When I brew beer for sale (looks like mid-July), it counts toward GDP. When I homebrew, it doesnt. Well, the ingredient purchases do, but not the full value of the final product.

          Its not even a gray market, its an uncounted white market.

          1. Speaking of racism…

          2. Will you make a witbier and name it “Privilege”?

            1. *[considers narrowing gaze, decides to applaud instead]*

            2. Pride might be an even worse name.

          3. Look up imputed rent and be disgusted.

        2. Scrooge doesn’t use orphans. He has nephews. Grandnephews, even.

          Kevin R

    5. Unlike your land, capital investments, or materials, paying labor

      Of course those “materials” are made by laborers, who also qualify for the new minimum wage, so cost of materials rise as well. And laborers also make the equipment the “capital investments” get spent on. While existing businesses may not see increased costs until they have to replace equipment, new businesses get clobbered. (If they can open at all.)

      But there is a silver lining. Regardless of other effects, when wages go up income and social security tax receipts rise. Price increases raise sales tax receipts. So government makes out like a bandit. (Analogy intended.)

  3. Ah, but tiuassume that the pwoplw working to raise the minimum wage INTEND to help low wage workers and the unemployed.

    Is there really any evidence of this, other than their own assertions?

    1. Assertions and intentions – no that is all they’ve got.

  4. The cities where living wage has the most traction are nearly all ones that have very high taxes, and often very high regressive taxes like gas and sin taxes. If they really wanted to help the people they say they do then cut those taxes first and foremost.

    1. Why do you blaspheme?

    2. But, but, but – taxes are the price we pay for *civilization*!

      1. “Taxes are a good thing, it’s how we pay for the things we want.”

        -my coworker who almost induced vomiting.

        1. Induced herself? Because her mouth was full of horseshit?

        2. “Taxes are a good thing, it’s how we OTHERS pay for the things we want.”

          FIFH

          1. “Taxes are a good thing, it’s how we OTHERS pay for the things we THEY want.”

            FITM

      2. “Taxes are the price we pay for a civilized society” in which “three generations of imbeciles are enough”.

    3. Yes,cities like sf, NYC, Chicago, dc,etc. Real bastions of republican inequality, in other words.

  5. What gubmint econ smarty pants cyphered up $10.10 an hour as a living wage? Why not $25 an hour? $50? Hell, $100?

    1. More to the point, how/why/when did “living wage” become a benchmark? Why should a 16 year old bussing tables be paid enough to support a family of four? (the fact that a huge number of minimum wage earners ARE youngsters from financially secure families is ignored by the Lefties).

      1. And paying these kids, and anyone else who might just be taking a job just to get out of the house or earn a little pocket money, minimum wage prevents their employers from negotiating wages with everyone else on the payroll, say, someone who is a single mom trying to support a couple kids, who is more skilled and therefore may be worth more than $10.10 an hour.

      2. Since when has the logic of the thing ever been an issue for the left? Minimum wage legislation is targeted at there middle-class and affluent lefties. It’s purely cultural signaling. Whether it helps or hurts its actual recipients, that’s either a side benefit to be trumpeted (if it ever happened) or politely ignored (when it does).

        1. there=other

          I’m othering there.

  6. If congress can magically improve the lives of minimum wage workers by doubling their wages why not improve the lives of all workers by doubling everyone’s wages? It’s all so simple, so very simple, that even an economist could understand it.

    1. Because the leftists don’t want to improve everyone’s lives. The leftists just want to improve the lives of THEIR voters. The other side can become worse off.

      Of course it doesn’t work that way, because the average Dem congress critter knows less about economics than my 15-year old nephew who sells pet rabbits and goats.

    2. “It’s the law of demand. We’ll just amend it.”

  7. The minimum wage issue is, in my opinion, Exhibit A for the charge that socialist policies are infantile. One can see that an employee is making $10.10 per hour. But one cannot see that Joe Blow is unemployed as a direct result of a mandated minimum wage — that would require a minimal level of sophistication and understanding. But the Left is unfamiliar with that — they see only what’s under their noses — they know only their emotions, and they let their emotions be their guide.

    1. Joe Blow would never be unemployed because of minimum wage laws. Joe Blow would be unemployed because greedy business owners 1. refuse to pay fair wages 2. are sitting on their profits rather than re-investing them in wages 3. buy things made in China, when everyone knows people would be buying shirts for $50 made in the good ole US of A rather than one of equal or better quality sold for $20 made in China, if they had the chance. Because that is what good patriots do 4. aren’t taxed nearly enough….etc. etc. etc..

      Those that move their businesses to Nevada or Texas are evil. Mom and Pops put out of business were poor business people….and so on.

    2. socialist policies are infantile.

      Given the eugenics movement origins of the minimum wage, I would classify this one as malicious, rather than infantile.

      -jcr

      1. there are a few new old left policies with roots in eugenics (im lookin at you planned parenthood). the minimum wage is not one of them, and its a bit hysterical to suggest otherwise.

        1. im lookin at you planned parenthood).

          Even if true, Sanger;s involvement with eugenics was over 70 years ago and it was not really disgraced until Hitler. Racists like the Klan were big on eugenics.

          1. Bring out the whitewash!

          2. The Klan……and Khan (Noonian Singh).

        2. JCR is correct, jay_dubya is incorrect:

          “The operation of the minimum wage requirement would merely extend the definition of defectives to embrace all individuals, who even after having received special training, remain incapable of adequate self-support?If we are to maintain a race that is to be made of up of capable, efficient and independent individuals and family groups we must courageously cut off lines of heredity that have been proved to be undesirable by isolation or sterilization?.” ? Henry Rogers Seager, professor of economics at Columbia University and future president of the American Economics Association

  8. After over 17 trillion of debt, all the programs and subsidies to help the poor, and control of the money supply, and manipulation of market and economy you would think folks could live on less money.

    1. How many “poor” exist today? Divide that number into the zillions of dollars that have been spent in the WAR ON POVERTY (thanks, LBJ!) and I think we could abolish half of the current government — the abolishment of which would greatly relieve the threat of global warming!

    2. Don’t forget that affordable and comprehensive healthcare that Obama gave us!

      /progderp

      1. Medical care should be a free market or regulated like a public utility instead of allowing the doctors’ labor union (the AMA) to control the supply and erect huge barriers to entry, such as not allowing pharmacists to prescribe, limiting the number of admissions to medical school, and authoring “suggested” medical legislation for Congress.

  9. Someone here needs to take credit for pointing out that the immediate result of a higher ‘minimum wage’ for a large number of people is a new occupation doing nothing for the *real* minimum wage of $0.00/hr.
    Like the person who suggested calling the school system what it is (government schools), it’s one of the lessons I’ve learned here.

  10. Taking Econ classes at UMASS was an epic waste of time. What a bunch of Bozos ! If only I could get some of those hours back….would been better off shooting pool.

    1. Serves you right for going to UmAss.

      1. Blaming the victim? We have camps for people like you.

  11. It’s not about “living wages” or anything like that. These people don’t give a flying fuck about actual jobs or wages or anything. If they did, they would look at evidence or situations where this has been enacted in the past. They would try and see if it helped people. Note that they don’t do that. Because they do not fucking care. At all.

    This is, as always, about hate and envy. They want to force the people they hate (business owners, who are all “fatcats” even if they totally aren’t) to pay more, because they had to work for a mean boss once. Because they hated and envied the rich kids in high school. Because it drives them crazy if anyone, anywhere, has even a little more than them.

    If these people gave the slightest shit about what they claim to care about, they would look at the results of this action. But they won’t. Because they do. Not. Care. They care that they hurt some esoteric class of people that they collectively hate. And that’s all that matters to them. If you try and logic or reason this with them, you are utterly wasting your time. Because it’s about hate, envy, and jealousy. It has nothing to do with workers.

    1. Get off my lawn!

    2. I have definitely found this to be true. I remember when I worked in food service there were always a few bitter middle-aged people who always blamed everyone else for their crappy station in life and how poorly they were treated by management in every job. I didn’t say so but I always thought “Well, considering a monkey could do this job…” Of course, every job has exceptions. In some establishments you can make a lot of money doing food service. But you have to make that happen. Other people aren’t going to hand it to you.

      1. oh and I should add that not every older person in that type of job was bitter, but all of the bitter ones were progressive.

        1. There is an astounding correlation between being a poor, older, bitter failure and being a progressive. Just saying. Just like there is an astounding correlation between being a Prius driver and being a terrible, awful driver. Especially if you still have “Obama 2008” stickers on your Prius.

          1. I’ve started asking Prius owners if it’s true that they aren’t supposed to use their turn signals because it’s too much wear on the battery.

            I have yet to see a Prius use a turn signal, even making an unprotected left on a busy highway. Why should they signal? They know which way they are going, and it’s none of your damned business, you in your gas-guzzler.

    3. There’s another group that benefits from the minimum wage hikes (and surprisingly enough, they also tend towards supporting the Democrats).

  12. My friend’s step-aunt makes $70 every hour on the computer . She has been out of a job for seven months but last month her pay was $17651 just working on the computer for a few hours. website link.
    ? ? ? ? LIFETIME OPPORTUNITY ? ? ? ? ?

    ??????? http://www.jobsfish.com

  13. I wish that every time Reason does a story about minimum wage they would at least throw in the mention that the largest single share of minimum-wage earners are kids 16-19 years old

    and that their employment opportunities have been dropping like a rock for nearly 20 years…. going from ~45-50% or so kids having a job, to somewhere in the 20% range now…and falling.

    people always seem to cast this discussion of “minimum wage” in terms of “the poor” – as though there were some actual connection between “minimum wage” and poverty, rather that a more-realistic and tangible connection between that wage and *employment opportunities*

    Forgetting “fast food” for a minute; i (and most people my age i know) worked all through high school, doing dozens of different things. and i *loved it*, and it was probably better ‘training’ than much of what i actually learned in school.

    Most of those kinds of job opportunities are probably gone now – and worse, there’s far lower expectation for kids of that age to even *try* to find work. i think that’s a major social change people should take note of and be concerned about that rises above the mere political and statistical impact of these kinds of Wage policies.

    1. But that’s not how it’s supposed to work anymore.

      Now, you go to a series of decent suburban schools. You’re enrolled in a bevy of extra-curricular activities. Between your many resume-padding hobbies and maintaining consistently high grades, you have no time to work. And then you graduate into the respectable college of your choosing, and for the next four-six years you blow your mind rebelling against your parents’ stuffy religious and philosophical precepts. You rub shoulders with other aspiring bright lights. You learn to be a good left-leaning socially conscientious civically-minded citizen. Eventually you graduate, at which point you’re hired by some trendy startup to work your dream job for $50k+.

      Working through high school is icky poor people stuff.

      1. Eventually you graduate, at which point you’re hired by some trendy startup to work your dream job for $50k+Starbucks to brew coffee for minimum wage while lecturing your customers about all of the stuff you learned about racism in college.

        1. Oh, and did I forget to mention that you’re swimming in debt so you sit around bitching and moaning about how everyone else should just pay off your student loans for you.

          1. It’s funny that people bring up the overwhelmingly leftward slant in academia as a credit to the leftist establishment, as if an ideology pandering to cloistered ingenues who face little by way of competitive pressure and enjoy a great deal of infantilizing latitude is indeed a healthy direction for civilization as a whole.

            1. You mean like the little wizard who commented that Stanford has had a women’s studies program for, like, 50 years, and people who go to Stanford are, like, geniuses, so ipso facto, womens studies is, like, for geniuses, and totally equivalent to SCIENCE!

            2. I seethe as people who need tire irons swung at heir heads with a great deal of force.

      2. $50K? Dream job? Poor thing, you are sooooo behind the times.

        Try turning down $150K starting salary.

        1. They want to be nurtured. Vinamrata Singal, who will intern at Google this summer, says she is going there because there is a strong culture of mentorship there ? a “nurturing environment.”

          They don’t want to be coddled. “I want to feel like I’m valued, but never that I’m being coddled,” says Myles Keating. He wants to work somewhere that has high expectations of him.

          Uh-huh.

        2. Smart people are the stupidest fucks in the world.

          “They only have like three full-time researchers and I feel like I might be able to do more good because it is not really crowded at all,” Taylor says the “primary goal in my career is to do the most good for the world.”

          “We really care about this problem and we want to make the world a better place by solving it.”

          When Miss Teen South Carolina says shit like this, ha ha ha, let’s pick on the dumb blonde chick. Stanford kids say it and it’s something to report on.

      3. You forgot: By the time you get to college, you have no real job experience, and you can’t get a job for $7.50 waiting tables because the minimum wage has made that impossible, but that’s OK, because what you’re really going for is a prestigious internship that pays $0.00 an hour, but looks good on the resume.

    2. This is true, my first job out of the house was delivering newspapers, circa 1965, I made about 5 bucks a week. Also picked weeds in local bean fields for 50 cents an hour, detassled corn for a bit more and babysat for 50 cents an hour. Around our house if you wanted a new bike or baseball glove you better get the coin to but what you wanted.

      I learned about economics at a very young age. Those days are long gone and as a whole society is not better off for it.

  14. 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.

    Forget increasing the wages of low skilled labor. Why aren’t companies raising prices 3 percent if they will get an instant 1.5 percent increase in revenue, all without effecting future growth? Seems like they are not offering enough for the corporate level positions since the people they have now are missing something so simple. Perhaps the CEOs are just too soft-hearted and foregoing this revenue to help out the working poor.

    1. You can tell it’s a shitty proposal because it’s been published by economists rather than historians.

  15. Eventually, in the not too distant future, production of any product will be so efficient, cheap, and human labor free that we won’t have much of a mfg base at all.

    Most people will be unemployable in the near future. There just will not be anything for them to do as they will not have or want to pursue the high tech skill set that will make them employable.

    This is why I’m starting to endorse the elimination of the welfare state… ok, let me rephrase this. I’ve always endorsed ending the welfare state. But since there will not be jobs for many people, I am starting to take seriously some type of universal minimum income. So you eliminate the entire bureaucracy of food stamps, welfare, all of those programs, and just write people a check. Everyone gets the same amount. Then if you want more, you educate yourself and find a way to contribute to a profitable enterprise. Otherwise you take your minimum income, watch TV and drink bud light all day, play video games, whatever, and stay out of trouble.

    I just want to keep the government out of it as much as possible. Hopefully along with making labor jobs obsolete, we can also start making career politics obsolete by taking any incentives out of it, like cronyism.

    1. This is probably the most serious path we’ll have to shrinking the welfare state in our lifetimes.

      1. The big problem, of course, will be all the people that blow their check the first day they get it (and we see this already with SSI checks. The first few days of the month all ERs are reliably slower than usual. Then about day 5 after check day, we start getting busy with people who used up all their funds for the month on crack, smack, hookers, you name it.) And then we’ll need to have a whole lot of ‘services’ to help these ‘unfortunate’ people get back on track with housing, food stamps, job training, ‘living skills’ classes, etc.

        IOW, if you think giving a minimum income will eliminate any part of the whole world of government social services, you are dreaming. It will, if anything, likely lead to its expansion.

        1. Actually, it might do the trick if it changed the maze of stipulations attached to each kind of service, and codified those into one reasonable set of rules geared towards self-sufficiency. People on SSI are legally compelled to spend their benefits each month, for example – there’s no impetus to be thrifty, which also means they can’t save up enough to relocate if they’re offered a job that meets their accessibility needs, or even to defray the cost of future medical expenses. There are plenty of truly disabled people who aren’t running around with hookers and crack dealers, but also can’t utilize welfare programs to actually move up in the world. The present system traps a lot of people.

          1. Your thoughts are on target. I think you misunderstood my point, however, I wasn’t claiming everyone on SSI is foolish with their funds, quite the contrary — no doubt most people on SSI and disability do all the right things and should have a better chance at self-sufficiency. My point was the inevitable people who will blow that wad in the first couple of days, as we see a subset do now — even though they may be a small percentage of those who will receive some basic income, there will still be an expectation that we can’t just sit back and tsk-tsk that they should have been wiser. Loud voices politically will want to get them taken care of, and we’d soon have the same panoply of social services we have today.

            1. “But muh babee needs shews!”

              Economic spastics don’t suddenly understand long-term planning because we change the way tax payer resources are reallocated to them (especially when they get elected).

              It always goes back to the Politician’s Imperative:

              Something must be done.
              This is something*.
              Therefore, I must do it.

              *Usually spending someone else’s money.

    2. The demand for CNC operators is expected to continue to rise in the forseeable future.

      In otherwords, they need people who will know how to run the human-replacing robots.

      I’m happy I’m interested in STEM and good at it. I’d like to learn machining/CNC eventually, the original “Makers”

    3. Kind of lack a slacker version of Gene Roddenberry’s vision of the future in ‘Star Trek’. Technology was advanced enough that everyone was provided with basic survival and creature comforts. Beyond that, you had to improve yourself and provide a good or service.

  16. I’m gonna have to be the bugboo on a few points here

    //” if paying higher wages is such a good idea, why aren’t companies doing it voluntarily?”

    ehhh… automatic train car couplers and air brakes were also good ideas, but the railroad companies stubbornly refused to start using them for decades. They’d just go through train-coupler-men until they lost too many fingers; you could tell an experienced train coupler by how many fingers he’d lost so far!
    There’s no way that that basic technology was a strong money-saver and that not using it was freaking insane, and yet that’s what the rail businessmen did.

    The point is, the capitalist class is often penny wise and pound foolish, stubbornly refusing to spend money on things that would clearly be much better in the long run… heck, not even the long run, just the longer-than – the – short – run. They irrationally avoid high up front costs but end up repeatedly writing checks for the maintenance costs, using “having to beat competition” as an excuse, and banking on luck that the maintenance won’t be so expensive this quarter.

    HOWEVER, that doesn’t really represent capitalism; WHY on earth are the people stingy accountant-type people in charge of highly technical industries? This is caused by bureaucratic regulation and taxes, along with licensing laws (though the latter isn’t a direct cause, they just effect the culture).

    1. I wouldn’t point to nineteenth-century train companies as emblematic of the free-market, given the de facto regional monopolies, cartelizing to fix quotas and prices, and enjoying lucrative land grants from the feds. If anything, refusing to adopt better customs was the result of restraining productivity to increase freight costs, since they mostly had little competitive advantage from investing in capital.

      1. There’s a reason these businesses are so often declared utilities, or treated as such, and end up corrupt, bloated, inefficient, and widely reviled. It’s not for a surplus of competitive pressure.

      2. (I realize I kinda substantiated your point re: bureaucratized, overregulated, overtaxed, uncompetitive businesses.)

      3. I figured that was part of the problem

        but the fact remains that after the investments were made after mandates in law, the accounting afterwards showed that it saved money quickly enough. The documentary I was watching didn’t mention competition pressures, but you just know any one of those companies probably could have easily made those investments without losing out on the competition aspect (that is, they could have afforded not buying or overhauling a few more railcars or locomotives in exchange for buying the couplers/brakes, and still come out positive with the savings from those techs).
        It’s nuts but the business class in this country is SO damned stingy and they never know anything about the damn business they’re in, from a technical standpoint. My uncle was in charge of a homebuilding company for years, but his entire grasp of reality is tenuous at best, he thinks he invented a free energy machine once and that all the Jews are trying to take over the world. And in this case, it actually did come through in the work; a number of times he held up jobs because he was too damned paranoid to just talk to the township inspectors/people and ask a damned question. And like I was talking about, he was SO stingy about buying the proper material and tools (but it’s the Jews who are cheap, right? pfffff)

        1. sometimes it’s nit capitalism itself but just the mindset of certain people in management. I’ve been at my job for 30 years, and my manager has been with the company for 40. Written instructions? Manuals? Planning meetings? No – PRODUCTION! PRODUCTION! We can’t take time out for those other things. He just views it as unproductive time, even if it cuts future hours.

        2. There are two factors at play beyond greed in decisions of replacing labor with capital.

          The first is that labor costs are flexible, while capital is inflexible and a sunk fixed cost. That may not be much of a factor is a business such as a railroad, but it is a huge factor for small businesses, especially in the service sector.

          Secondly, and more importantly, is that the marginal utility of capital investments always increases over time as incremental improvements in productivity combine with lower prices from increased competition and the durability of capital stock. Put simply, machinery becomes cheaper and better over time. So that an investment that replaces labor with capital equipment may not have made sense twenty, ten or even five years ago but does today or tomorrow.

      4. “Hell on Wheels’ is a good example of how sleazy and corrupt westward train expansion was. Colm Meany’s character always hilariously milking his federal contract to clear the land and lay the tracks.

      5. “Hell on Wheels’ is a good example of how sleazy and corrupt westward train expansion was. Colm Meany’s character always hilariously milking his federal contract to clear the land and lay the tracks.

  17. Seattle’s $15 ph minimum wage law is awesome. I love laws that have actual consequences that people can see. That’s why I liked O’Care. Everybody wants it, Dems anyways, and the immediate effect is $500 a month increases in their own medical costs. I wish everything the government did was as directly impactful as O’Care, and now Seattle’s $15 minimum wage.

    When all the low paying jobs leave Seattle, with all the attendant businesses, Seattle will have declining tax revenues big time. Make a 30% vacancy rate happen in commercial retail real estate and watch what happens to sales in that area.

    A huge increase in minimum wages will be a boon to Southern California because there will be 1000 robotic start-ups there.

    And, the big one for me personally? I’m a residential landlord!! Wahoo. Watch rents jump probably an equal amount percent wise. If wages are bumped 25%, rents will go up by the same amount. Since my mortgage remains the same it is as if my mortgage will have been discounted by 25%. A big score for landlords. (I’m not a Seattle landlord, unfortunately).

    All in all, I wish wars were fought in the same way. “You are in favour of the Iraq war? Terrific. You are a wonderful patriot. Hang on a sec…..okay, your share is $200 pm x 4, for you, your wife, and your two kids. So, that’ll be $800 pm and we’ll take a pre-authorized payment on your Visa or automatic debit from your bank account. What? You’re withdrawing your support? But, but….”

    1. lulz. Shit’s crazy.
      I always say only the southern sun belt states, especially Texas, have a future. You know I’m right. Eventually all the blue populated states are going to be like Detroit. The fucking pols in these states keep pushing what they think is progress but is just a timebomb

    2. Watch rents jump probably an equal amount percent wise. If wages are bumped 25%, rents will go up by the same amount.

      Time for rent control!

      1. That would be the next step, no doubt.

  18. ///If all other factors remain equal, the higher the price of a good, the fewer people will demand it. That’s the law of demand, a fundamental idea in economics

    That’s all well and good, but most low paying jobs nowadays are in the service sector; they’re mostly clerical jobs. And the demand for those jobs are based on the supply curve of the good or service being produced, which is based on/ is the same thing as the production curve for that job. Now the positive supply curve/diminishing marginal production model worked in the late 19th and early 20th century, when there were a lot of factory jobs, but those models don’t work quite so well for starbucks and mcdonalds and wal mart and secretaries. With jobs like these there is no diminishing marginal production. Maybe, MAYBE if you REALLY pack a kitchen in a KFC, that last guy will be slightly less useful, but not really. And indeed on the demand/supply curve of the good being produced, the elasticities in the middle (near the equilibirum point) drop to pretty low; changes in price points won’t create huge changes in demand or supply.

    So the classical economic demand/supply curve is faulty with our modern screwed up economy. Relatively small changes in the minimum wage in the short term may not largely change employment. A couple of studies of service industry jobs (like fast food) have shown this to be true.

    1. HOWEVER, this is all in the SHORT TERM. And also, this is largely because our betters decided that factories, that actually producing things, is icky, and so there are no more factories anymore and hardly any factory jobs.
      Also, I’m not so sure $15/hr is a small change, it seems like a pretty big change to me.

      1. Part of the problem with all this is that our political class doesn’t CARE if they cause unemployment, because in their mind, nobody should be doing that work anyway. They think everyone can “do better than that”.

        In a world with tons of social services/welfare, they prefer to see young people work part time and go to school, and learn a skill and make more money later.

        Yet another “choice” they want to enforce on the people.

      2. this is largely because our betters decided that factories, that actually producing things, is icky, and so there are no more factories anymore and hardly any factory jobs.

        Despite popular misconceptions, US manufacturing output has increased threefold since the 1970s. The jobs have disappeared due to automation.

        Oh, and then there’s the fact that most services have to be done where the purchaser is located, while manufacturing can be done 10,000 miles from the purchaser, wherever is cheapest.

        1. Right. US steel production is the same percentage of the world total as it was 30 years ago, but with 25% of the labor force.

    2. Edwin,

      I do a lot of IoT monitoring stuff for QSR’s (quick serve restaurants). I personally love it when the min wage goes up because that means that a lot of people who weren’t interested in monitoring their drive thru times/coolers/fryers are now interested in hearing what they can do.

      There will be a lot of advances in robotics that will begin replacing entry workers, but that is in the future. With remote monitoring what I’ve seen is more of a move to remove middle management.

      You don’t need an assistant manager to chase kids around the store and make them actually filter the cooking oil each shift if you have remote monitoring. You can also have one manager use a set of dashboard tools on a web site to manage several stores.

      So, I don’t think you will see much change in entry level jobs. What you will see are fewer managers and asst managers.

  19. A January 2015 working paper by two economists, Robert Pollin and Jeannette Wicks-Lim of 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 “raising the price of anything will reduce demand for that thing, all else equal.”

    You left out the quotation marks around “economists”, since they are positing nonsense.

    1. Scare quotes are utterly unnecessary when writing about economists talking nonsense.

  20. 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.

    What they are really saying is that the actual people who run these companies don’t know how to maximize profitability, since if you can get higher revenues despite selling fewer goods, that will increase your bottom line. Clearly a couple of “economists” who don’t run any businesses, know better than CEOs and small business owners who are constantly trying to maximize profits, what the profit-maximizing price for their products are!

  21. You know what’s the craziest thing about all this? Every last on of those politicians and economists will say they believe in Liberty while advocating all this central planning of wages and everything else…..and never see anything wrong with it.

    Amazing ain’t it?

  22. Episiarch|4.4.15 @ 12:57PM|#

    It’s not about “living wages” or anything like that. These people don’t give a flying fuck about actual jobs or wages or anything. If they did, they would look at evidence or situations where this has been enacted in the past. They would try and see if it helped people. Note that they don’t do that. Because they do not fucking care. At all.

    That’s not necessarily true. My GF is a leftist, and when we had the minimum wage discussion, it turns out that she was economically ignorant. She just believed that the price of labor was somehow fundamentally different than the price of cars or corn chips or whatever, because people have feelings and she cared about their feelings, whereas she could emotionally detach from Jalapeno greek yogurt dip and admit, yeah, if you raised the price of that 50% she might choose to spend her money on something else.

    1. So, good head is evidently that hard to find where you call home?

    2. I think a leftist would gladly kill 20 people to save 10 people if you just showed them a few sentimental pictures of the 10 people they are saving with their friends and families, at picnics and their kids graduations and such.

  23. The minimum wage debate is going the way of gay marriage debate. One side has already pretty much won. Even voters in red states are voting in favor of it. I don’t know if voters ever rejected a hike in minimum wage when it got on a ballot.

    You eventually get tired of going to bat for people who would rape freedom at every given moment. The big corporations are ran by progressives (loyal dem donors), and the hyperventilating crowd that accuses them of discrimination are progressives. When a bank wants to disinvest in Israel or gun companies for thin skinned reasons, I lose interest in fighting against minimum wage hikes and mandatory health coverage.

    The companies that bravely boycotted Indiana stuff their pocket in the most fascist places on earth. Tim Cook got on his high horse like 3 months after Apple was accused of mistreating workers in China. Everyone’s libertarian when it concerns their own bottom line, I suppose.

    I support economic freedom, but I’m not a corporatist. I’m not turned off by the idea of blue states raising the minimum wage to 20 dollars and hour and forcing the crony capitalists and the sea of unemployed dem voters to do some real soul searching. People change after they suffer.

    1. The minimum wage debate is going the way of gay marriage debate. One side has already pretty much won.

      Not really. That is like saying the debate over the benefits of unionization was won in Detroit — in 1950.

      Legalizing gay marriage doesn’t produce massive undesirable consequences. It’s entirely different than raising the minimum wage to really high levels. When people lose their jobs, or can’t find one, eventually reality intrudes enough so politicians lose their jobs too. The gun-grabbers were on the ascendancy back in the 1990s — not so much any more.

      1. Legalizing gay marriage doesn’t produce massive undesirable consequences.

        We can quibble over ‘massive’ but it’s leading to more govt coercion in the form of anti-discrim laws.

    2. Um, big companies generally do not care either way about minimum wage laws, as long as they are applied equally across the economy.

      They have the necessary size to absorb any increase in labor costs while they slowly raise their prices to compensate and they know that those higher minimum wages act as a significant barrier to new business creation shielding them from competition.

      1. If the national minimum wage went up 15 dollars tomorrow, a lot of those big businesses will mind. If you’re running tech company or real estate business or something, you might be unaffected. But the nation’s economy depends on retail.

        Some Walmart cashiers were already making 9 dollars (or close to it), so that company’s wage hike doesn’t affect 60-70% of their workforce. Mdconalds raised wages only for non franchise locations. A lot of people work for more than minimum wage, so the fact that some businesses raised the minimum wage “$1 above federal minimum wage” doesn’t mean much. I won’t be rushing to some company owned Mcdonalds location to make $8.25 an hour.

        I imagine a good amount of big companies do not wish for a minimum wage raise of any kind. If a company is involved in some volume business that doesn’t sell items with high mark ups (alcohol, furniture), any increase in labor cost is probably bad news.

        1. Of course it is. No change in wage laws has any bearing on the underlying value of that labor. All any of this does is create market distortions.

    3. I would disagree with the claim that companies supporting min wage is because they are really progressive; I think it’s actually self interest. Suppose you’re a companies that sells a good with little demand elasticity; let’s say fast food (which I’m pretending is elastic). Well, if your company uses relatively little min wage labor (say, due to having better technology) compared to the other fast food companies, then when you campaign to increase min wage, you’re driving up the prices for all fast food companies, but for the other companies more than yours (because they are proportionally more dependent on minimum wage labor). As a result, while the industry as a whole may lose some customers, your firm in particular will benefit because many customers of the other fast food restaurants will come to your restaurant instead, due to your restaurant’s relatively small price increase.

      Ergo, companies that use less than average min wage labor with respect to their industry can benefit from raising minimum wages by forcibly jacking up their competitors’ prices.

      I guess Piketty was right about company’s participating in ‘rent-seeking behavior’ only in reality it’s chiefly using leftist causes to screw over their competitors.

      1. MarkLastname|4.4.15 @ 8:51PM|#
        “I would disagree with the claim that companies supporting min wage is because they are really progressive; I think it’s actually self interest.”

        As it always turns out to be…
        Supporters are companies either established enough to ‘weather the storm’ of the new M/W, automated enough that it doesn’t matter (both of which benefit by the lack of new competition) or in a bizz which employs few at M/W and support is good for PR reasons.
        Regardless, it is supported for proggy reasons only by ignoramuses, like the book store it put out of business in SF.

    4. 10 million disadvantaged unemployable teens beg to differ.

  24. Not germane to the points here, but an interesting economic concept is Giffen goods: products for which an increase in price actually does result in an increase in demand. This occurs when there are few substitutes for the product. An example is rice in poor areas of China where rice is a staple. As the price of rice rises the poor have to spend more for food so they have less to spend on expensive foods like meat. So they substitute rice for meat. Their demand for rice rises. This phenomenon is very rare, and there’s no reason to believe it would exist for labor.

    1. That only works in the short term, and if there are no trucks. If the price of rice is 50 cents per serving, and the price of bread would be 75 cents per serving, but no one buys bread because no one can afford it, and then a local drought raises the price of rice per serving to a buck — guess what entrepreneurs will start loading into trucks and driving to that area?

      It might be rice from neighboring areas at 60 cents per serving, so still rice …

    2. Pretty sure the Geffen good is a hypothetical. I can’t recall any actual evidence for it.

    3. Giffen good for labor can be seen in prostitution. A $1,000/hr escort will have high demand relative to $200/hr escort.

      At those rates, part of what you are buying is exclusivety, and higher price serves as way distinguish yourself from others. Like $300 wine vs $20 wine.

      1. That’s not a Giffen good. There are substitutes for $1,000 an hour prostitutes, such as $900 an hour or $800 an hour prostitutes. What you are describing is a marketplace where providers of services have differing levels of ability and the more skillful get paid more than less accomplished competitors.

      2. The grand an hour escort wouldn’t have much of a market where I live or most people live outside of Vegas or similar markets, so given the vastness of the escort market it’s not anywhere close to setting the market overall.

        Sounds like a bullshit arguement outside several selected markets and there are far more dudes out there buying pussy that would overwhelm a few high rollers.

        So, generally, it’s not the case.

    4. Of course there is also the situation where prices rise so rapidly people start hoarding stuff which causes them to ruse further you don’t want to be around when that shit hits the fan.wouldnt apply to fast food or course.

      1. That’s ordinary supply and demand. By itself hoarding behavior causes supply to go down and demand to go up, but the resulting price increases will discourage hoarding.

        Now when people who want the good start threatening boycotts if anyone raises the price in response to supply decreases, then you can have a problem (ahem 22LR ammo ahem).

  25. 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 combined with price hikes at 3 percent per year will yield $30 billion in extra revenues.

    Damn, I wonder why McDonald’s hasn’t hired these geniuses already???

  26. There is a lot of comment above about the effect of increasing the minimum wage on product cost and supply/demand.
    There is another reasonable effect.
    Low level employees get a significant raise. The next higher level employees think they are still worth more than the bottom level employees. They may reasonably demand (request?) a proportional raise. They certainly do not expect to work for a lower wage or the same wage as the less-skilled, less experienced employees.
    Aha… you see where this is going.
    Each level of employee expects more than the next lower level.
    We may reasonably expect a ripple of pay increases through all levels of employees.
    Either every level of employee gets a proportional raise, and nothing is accomplished, or there is significant discontent among the more skilled and experienced workers.

    1. “or there is significant discontent among the more skilled and experienced workers.”

      That is much more likely the case.

      1. “Minimum wage” is a fiction if the unit of account, like our Federal Reserve Note dollar, floats. When a 10% MW rise turns $10/hr into $11/hr, how soon before cumulative inflation wipes out the purchasing power of the raise? According to http://www.usinflationcalculator.com/ an item purchased for $10 in 2010 would cost $10.76 today, cumulative rate of 7.6%. I’m old enough to remember double-digit annual inflation. There’s no structural impediment to that returning, and while I won’t predict when, eventually some dolt will try to monetize at least some of our massive debt.

        Those further up the pay scale will push to maintain the gap between themselves and the new hires. Who will actually have pricing power? Consumer goods companies don’t seem to, nowadays.

        Kevin R

  27. Baisically this is trending towards everyone whose parents make below a certain amount will have their room and board, health care, college paid for plus some beer and party pocket cash by the other parents who now won’t be able to afford any of those things for their own kids because of the necessary taxes. The other peoples kids they will be supporting instead won’t be working anyways until they have their degree and maybe not even then. every parent making above that amoumt because they worked for it is screwed. Moral of the story is that doing all the things you were taught you ahould do to get ahead will always be counteracted by government policy so you subsidize all the people who ignore or are too lazy or stupid to do those things. Rant over.

    1. Sort of like all those people who did their homework and responsibility bought a house they could afford gets to bail out everyone who acted irresponsibly

      1. “From each according to his ability, to each according to his need.” Didn’t George Washington or Jesus say that?

    2. Democracy is 99 grasshoppers and an ant deciding how much the ant has to share.

  28. Here’s the thing.

    The fast food industry might very well be able to absorb the cost of raising their minimum wage to $15 per hour.

    They would be able to do so by attracting a muh higher quality of worker and replacing almost their entire existing workforce with a smaller number of those higher quality workers.

    The problem is the jobs that those higher quality workers would be pulled from would not be suitable for entry level positions of teenagers and the part time needs of students/secondary wage earners/and the elderly.

    So basically yeah, upping fast food employees to $15 per hour might be a break even for McDonalds but the current McDonalds employees would not benefit from the higher wages and they would now be in a world of massively reduced job opportunities.

    1. Exactly. That’s it in a nutshell really.

    2. The fast food industry might very well be able to absorb the cost of raising their minimum wage to $15 per hour.

      They would be able to do so by attracting a muh higher quality of worker and replacing almost their entire existing workforce with a smaller number of those higher quality workers.

      If that made economic sense, one of the many fast food chains in this incredibly competitive industry would be doing so and taking market share away.

      My current employer did something like that, where they had really high turnover, and so they raised the base pay before commission by $2 an hour — then fired a bunch of low performing people to drop the number of sales reps from 150 to 120 — and got basically the same output. But making sales isn’t something anyone can do, and requires a less common skill set than the ability to flip fast food burgers — which I’ve also done.

      1. I suspect the result of the $15 an hour minimum wage in Seattle will be this — companies with low skilled labor on the edge of the city will relocate just outside the city limits. Companies closer to the city center might still have customers who don’t want to drive outside the city limits just to get a burger or whatnot — but some will go out of business, some will automate as much labor as possible, and some will hire much higher quality workers who are more productive and better at customer service, but fewer such employees, while raising prices to reflect that it’s just not worth driving outside city limits from the city center for * some * goods and services even at the higher prices.

        Result — fewer jobs in Seattle, and higher prices.

        1. The well-to-do prigs will love that. They love exclusivity. My Marxist aunt even today, was waxing nostalgic over how great flying was when before deregulation. When the great unwashed could not afford to fly. Thats always the way it is with prigs like her. Always going on about equality, but working towards a system where the average person can’t afford much of anything.

  29. I’m a retired person living in the Seattle area (not Seattle itself); and I know that my reaction to $15/hour for waitresses and food delivery people would be no tip.

    I am also working at pizza delivery to supplement my pension (3-4 hours a night at minimum wage plus tips); $15/hour would actually be a drop in income of at least $2-3 an hour (some nights even better). From what I can see, this is a job done by a lot of retired people and college kids with access to cars. Hopefully the Seattle college kids get the message from the fall in tips – if they don’t simply lose their jobs.

  30. kayp:

    Since, in WA, waitroids and pizza drivers are included in the MW, then that’s fair. In most of the USA, employers can pay a sub-minimum, with tips making up the difference, or even more.

    Kevin R

  31. Only a moron fails to understand that the value of things cannot be determined by decree. That includes labor.

  32. just before I looked at the draft that said $5410 , I did not believe …that…my mom in-law realy receiving money part-time from their computer. . there friend brother had bean doing this 4 only 11 months and as of now paid for the debts on their house and purchased a great new Land Rover Defender .

    visit………. http://WWW.JOBS-FASHION.COM

  33. Do the math. Higher wages means selling less stuff.
    Selling less stuff means you need fewer workers.
    So you lay some off.
    It may be true that more workers gain than lose. But …
    The biggest losers are always the bottom of the labor market,
    Young, black males. The systemic racism of Barack Obama.

    1. ‘He’s just a soul whose intentions are good, oh lord, please don’t let him be misunderstood.’

      What song is that from? I’m asking seriously, I forgot what the name is.

      1. Eric Burden? The Animals? Don’t recall the song title. “Don’t let me be misunderstood”

        And, it’s “I’m just a soul . . . . let me be misunderstood.”

        1. “Don’t Let Me Be Misunderstood” is the title. The Animals, 1965.

    2. Simple math, 7th grade level

  34. All this talk of corporate fast food, the righteous law makers probably would be happy to see McDs hurt, but the sad thing is, mom & pops (often, with much better food) will be fewer and further between.

    1. Good! That’ll be less bigots out there denying pizza parties to gay people.
      /progtard

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

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

    There, fixed that for ya.

  36. Inquiring minds will be sniffing around suitable pad site for restaurants just outside Seattle.

  37. The headline is misleading. When it said Bailey was going to talk about the Minimum Eage and Magical Thinking, I thought Man Made Global Warming was gonna come up after he got done discussing labor.

    1. Denier.

      1. Thank you for those kind words.

        1. Well, a kind word anyway.

          1. Why do your children hate science?

            1. Because science has been dead for at least a decade.

              1. It’s just resting. Biding its time in the deep oceans until we can accept it once mor… ph’nglui mglw’nafh Cthulhu R’lyeh wgah’nagl fhtagn!

  38. Someone’s writing or math is way off.

    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

    So $33BB/yr and $5.2BB/yr. Our dimensional analysis is working so far, kids.

    Then we have:

    Pollin and Wicks-Lim roughly generate enough revenues to cover the higher wages by calculating that a three-year increase in prices and three years of sales growth will net $10.6 billion and $19.8 billion, respectively.

    Do we see the problem yet? Is that $10.6BB and $19.8BB every year or the total for three years? The claim that it balances implies every year, but if it’s every year, then why do I have to wait three years? Why mention three years at all? Or does it grow to $10.6BB and 19.6BB in the third year. If so, what finances the initial two years?

    Not to mention the use of the word revenue, which is before costs. Unless labor costs are the only cost(and it isn’t), the resulting revenue available to pay wages is going to be less that the total change in revenue.

    Try again.

    1. They’re also ignoring the pipeline costs that will increase, thus making the cost of goods higher for the fast food operators. Those feed lot workers getting higher wages, the slaughterhouse workers getting higher wages, etc.

      No way in hell could fast food companies get by with an imposed $15 national minimum wage.

      1. “No way in hell could fast food companies get by with an imposed $15 national minimum wage.”

        You’re missing a non-trivial time dimension here.
        The immediate effect is a major loss of jobs in the lower-pay ranks.
        One longer term effect is simply higher costs for everything (inflation), since the increase in cost was not accompanied by an increase in productivity.
        Resulting in the second longer term effect of those who lost their jobs now having to pay more for what was cheap food.
        We have a lose-lose-lose transaction here!

        1. Oh I see it. I just don’t think thy see it or they don’t care that they do.

          They ignore the fact that wealthy people are more insulated against inflation than poor people are. Well, it’s either that or they think Zimbabwe is some kind of how-to instructional.

      2. I was actually poking Bailey more on this one. Either the paper is really that stupid (a null hypothesis I cannot reject), or his write up is lacking, or, the obligatory both.

  39. I’m surprised we have no supporters of the ‘low income job loss’ program. Usually, the subject line drags out at least one lefty ignoramus to whine about how no one can raise a family on the existing M/W, ignoring that no one can raise a family on the new M/W of zero after they lose the job.
    BTW, I was once told that opposing a raise in the M/W was equivalent to saying poor people couldn’t have sex!

    1. The progtard leaders have been too busy writing marching orders to send death threats and arson threats to some pizza joint in Indiana. The minions don’t know how to respond to this topic until they’re told what to say.

      1. On a positive note, today was Table Top Game Day over at a friend’s. My team managed to beat the zombie apocalypse with only one team member getting non-fatally bitten. And we wouldn’t have even had that scrape if the one retard had listened to me at the beginning.

  40. There is a man with a plan dude.

    http://www.AnonGO.tk

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

    This may have been mentioned before in the comments. However, I must point out that the minimum wage proponents don’t CARE if they harm people. They are not out to help anyone. They like to “show” compassion but really don’t care if the end result is compassionate or not. They are only out to make themselves look and feel better.

  42. Of course Seattle’s minimum wage was passed by people who, on paper, refute the idea of relative value.

    For those of you watching at home, this is the economic equivalent of believing in Creation Science.

    1. Sorta like how in economics, externalities are the equivalent of pharisees and/or the unrepentant hypocritical sinners?

      Economics: when you want the convenience of being able to ignore certain facts, to better make your lying case about the supremacy of “profit.”

  43. If only we had some system where the central government only looked after common needs while local governments were empowered to adjust things like this according to their own needs and economic needs.

    1. We do. For instance, it’s illegal in Washington to be out in public with a cold:

      RCW 70.54.050
      Exposing contagious disease ? Penalty.

      Every person who shall willfully expose himself or herself to another, or any animal affected with any contagious or infectious disease, in any public place or thoroughfare, except upon his or her or its necessary removal in a manner not dangerous to the public health; and every person so affected who shall expose any other person thereto without his or her knowledge, shall be guilty of a misdemeanor.

      http://apps.leg.wa.gov/rcw/def…..=70.54.050

  44. I can’t think of anyone better than Ron “nyaaah nyaaah I can’t see you I can’t hear you” Bailey to discuss “magical thinking.” Bailey’s spent an entire journalistic career ignoring what he didn’t like, factually speaking, in order to do a polemic for pay.

  45. Henry . I see what you mean… Theresa `s story is surprising, last monday I got a great Renault 4 from having made $5596 this – five weeks past and-more than, ten-grand last-month . it’s by-far the most rewarding I’ve ever done . I began this 3 months ago and right away started making more than $77 p/h . Find Out More ……. http://WWW.MONEYKIN.COM

  46. Another huge issue with a national minimum wage hike is that some parts of the country are very cheap and some parts very expensive, and yet the national wage would ignore that.

    People living in SF or NYC may think $15 / hour is not very much, but for the kid living in Arkansas is a ton.

    In fact, it would probably lead to jobs staying in coastal areas longer instead of moving to Arkansas, for example.

    I suspect this is a feature not a bug, for Obama et al. They can force businesses to stay in blue states, because there are no “cheap” wages to be found by moving.

    OK…maybe that is a real stretch, but its definitely a messed up price signal, and bad price signals lead to malinvestment.

    Like the price signal of getting a better job: with a high wage at McD, the worker never figures out he should go to welding school and thus artificially keeps working at a worse job, because hey, it pays $15 now.

  47. 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…… ?????? http://www.netjob80.com

  48. Look here at the Federal government lobbying ITSELF.

    http://www.dol.gov/minwage/mythbuster.htm

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