Minimum Wage

The Costs of a $15 Minimum Wage

The price is paid in jobs

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In the 1970s, when oil prices jumped, most liberals embraced a simple solution: price controls. It should be illegal, they thought, to sell oil or gasoline for more than a certain amount. Americans should be able to drive without being fleeced by oil companies and foreign governments.

The impulse was understandable. Gasoline is an essential commodity for most people. When the cost rises, it imposes a heavy burden on consumers, most of whom have few transportation options.

In 1971, in an attempt to tame inflation, Republican President Richard Nixon imposed controls on almost all prices. By 1974, he had lifted most of them. But those on gas remained. Under Democratic President Jimmy Carter, they led to widespread shortages and long lines at service stations—and didn't keep prices from rising. But the controls lasted until his successor, Ronald Reagan, lifted them in 1981.

Liberals learned an unforgettable lesson: Price controls on gasoline don't work. In recent decades, when gas prices have soared, Democrats have shown no desire to repeat the lesson.

But they embrace a similar approach for another problem: low pay for many workers. Chicago decided last year to boost the minimum wage to $13 an hour by the middle of 2019. Seattle, San Francisco, and Los Angeles have gone even higher, raising the floor to $15 an hour in the next few years, and other cities may follow suit. It's a price control on labor.

Their intentions are good. Full-time employment at the current federal minimum of $7.25 an hour provides an income of just $14,500 a year. For an adult supporting one child, that's well below the poverty line of $15,930.

The problem is that a higher legal minimum wage is at odds with the prevailing supply of and demand for labor. If you set the minimum too high, you will get a shortage of jobs. Forbidding employers from paying $9 or $12 an hour means that many of their workers won't get $13 or $15 an hour. They will get zero per hour, because those jobs will disappear.

Some businesses will reduce staffing or hours. Some will scrub expansions they had planned. Some will install machines to handle tasks previously assigned to humans. Some will shut down.

Not all employers will take steps that will curb employment, but many will. Raising the minimum wage collides with one of the basic laws of economics: the higher the cost of something the lower the demand. In the employment realm, the effects may not be immediate, but they are inexorable.

An editorial in The New York Times wished away unwanted responses. It promised that the change will yield "savings from lower labor turnover and higher labor productivity." Higher pay can "be offset by modestly higher prices" and by "paying executives and shareholders less."

But if giving raises paid for itself, companies wouldn't need to be forced to do it. Raising prices means fewer customers will buy what these companies are selling, which reduces the number of employees they need. Executives and shareholders who get paid less can turn to companies that can pay more because they don't rely on low-wage labor.

Some of these consequences have already occurred in Seattle. One pizzeria owner, employing 12 people, told NPR her choice was to go back to working 60 to 80 hours a week or close. She's closing.

"Even Seattle's best-known chef, Tom Douglas, says he may have to close some of his 15 restaurants," it reported. If a famous restaurateur can't make it work, how will obscure ones fare?

Restaurants have other options besides shutting down. They can automate orders with modern technology. They can require diners to pick up their food at a counter instead of having it brought to them. They can use disposable plates and utensils. And if you worry about robots taking your job…

All of these changes reduce the need for employees. Maybe the higher pay to the workers who have jobs will make up, by some calculus, for the unemployment visited on the others. Maybe not. Either way, there's no escaping the tradeoff.

Back in the 1970s, people imagined that stations would supply plenty of gas even if we restrict what they could charge. Today, they imagine businesses will supply plenty of jobs even if we dictate what they must pay. But the laws of economics are not so easy to repeal.

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  1. Liberals learned that price controls on gasoline don’t work? I’m skeptical, given liberals’ continuing love affair with price controls on goods such as pharmaceuticals and rental housing.

    1. Price controls on gas don’t work, except in the very situations where a free market is desperately needed – after a disaster, or a shortage, or to help get me re-elected.

      1. I wonder how many people were indirectly killed by Chris Christie’s gas rationing in New Jersey.

        1. I wonder how many people have been directly killed by Christie’s lack of (personal) gas rationing.

      2. I’m a little puzzled by your comment. When you have an event that causes some scarcity, “price gouging” is precisely what you need to do otherwise you will get a shortage of the commodity in short order. If during Katrina, they would have let gas prices move freely to say – 10 bucks a gallon – gas would have flowed in from all parts of the country way more quickly than the National Guard could have moved it. Then as the scarcity of gas diminished the prices would have gone back to normal.

        Another benefit is that more people would have gotten gas even at the higher prices cause the incentive would have been to get just as much as you needed.

        1. At least that’s what Thomas Sowell said…and I believe him.

          1. And the time that ‘price gouging became illegal’ for folks trying to bring portable generators to post-hurricane Florida…

            Result: Zero generators delivered to Florida by entrepreneurs in neighboring states who had ’em and could have brought them to WILLING buyers…

            Why? Because ‘the poor, needy folks couldn’t pay the higher prices.’

            Liberal Logic.

        2. That’s what Agammamon said too. The “or to help get me re-elected” should be a dead giveaway.

  2. Fine, tag the min wage to inflation. But we don’t have any inflation, right? You have one wing of progressive politics claiming Fed actions haven’t led to inflation and another wing lamenting the high cost of living in America today.

    1. “Fine, tag the min wage to inflation.”

      I hope this is sarcasm.

      Tying min wage to inflation would just double the rate of inflation. Businesses would have to increase prices by a similar amount to the amount of increase in wages, and the increase in prices across the board due to higher wage costs would mean an increase in inflation, and then that increase in inflation would mean an increase in minimum wage tied to inflation, which would necessitate an increase in prices and so on and so forth until our money is as worthless as Venezualas

      1. This isn’t true at all, most businesses could care less about an inflationary adjustment to the minimum wage so it would have almost no impact on the overall economy, it would just save everyone the trouble of fighting over a minimum wage increase every 5-10 years.

        1. So you are trying to tell me that businesses are NOT going to increase prices to make up for a mandatory increase in labor costs every year?

          Are you also assuming that an increase in min wage is not going to cause an increase in wages at all levels? if min wages goes up from $10 to $15, the people who were making $15 before the increase are gonna want a raise too…

          1. True. I was considering my wage to be worth less now that people working at McDonalds are making closer to it.

          2. This is the one thing liberals don’t want to admit.

            Raising the minimum also raises everyone else’s wage too. If I’m currently making $15 an hour doing X, I’m sure as fuck not going to be happy when the guy doing X-Y suddenly is making what I’m making.

            And inflation is GOING to happen. Money has value because of its scarcity. When you artificially introduce more of it in to the economy, it becomes worth less and you’ll need more of it just to keep with the status quo.

            1. They don’t admit it because they don’t understand it.

              1. They understand it just fine. This is all about union contracts, where wages are tied to minimum wage. The “family of four struggling on one minimum wage job” is a figleaf for the actual motivation.

              2. Horse shit.

                1. That was regarding EV’s comment.

            2. And it doesn’t stop at those between current minimum wage and target minimum wage either.

              The guy making $17 an hour will also want more too. And when he gets a raise, the guy making $22 an hour will too want more.

              They want to pretend that everyone will make more but nothing will rise in cost!

              It’s fucking maddening.

              1. They want to pretend that everyone will make more but nothing will rise in cost!

                Wages and salary are the cost of labor?

          3. LibJoe… of course businesses would raise prices to cover the additional costs, but the minimum wage is actually paid to a very small part of the overall labor force, so the impact would be small on the margin. It’s not like every minimum wage dollar increase would raise ALL employees’ wages, although that’s probably what the Liberals would expect (or hope.)

            The stats on Seattle’s increase’s impact was something under 5% of the workforce.
            Plus the fact that some percentage of those Getting That Raise would be laid off or fired or not replaced if they attritted…. well… Let’s check back with Seattle after a few months or a year or two of Unintended Consequences.

            All that shit is just an experiment and what the MSM doesn’t do is follow up on ‘old, dead stories’ like those. The next ‘catastrophe’ (that has no personal bearing on you or me) will blanket the airwaves soon.

            1. so the impact would be small on the margin.

              No, it will not. If you’ve been busting your ass there for two years and have gotten raises so that you are now earning $13.00/hr- how much will you be earning when the minimum is $15/hr?

              Likewise, the asst. manager making 40K/yr for a 50 hr/wk…how much of a raise does she get when you’re paying worthless newbies 30K/yr for 2000 hours?

        2. Maybe. Personally, since we have a minimum wage, I don’t mind us “fighting” over it every now and then. Costs do go up over time and minimum wage earners tend to fall through the cracks since it takes a literal act of congress or the state legislature for them to get a raise. But in even a relative short term it doesn’t seem to make much difference.

          When the minimum wage is increased, everyone else increases their wages to compensate- unions being among the first. Within a few years, minimum wage earners are back to square one because there’s always going to be someone at the bottom of the pay scale. Even if you had regular minimum wage increases adjusted to inflation, they’ll still be at the bottom of the pay scale.

          I don’t see how making the minimum wage a “living wage” would ever work. Even if you make it $20 or $30 an hour, nobody else is going to be wanting to make minimum wage so their pay goes up accordingly. The only real way to get out of minimum wage pay is to find a higher paying job.

          1. “…since it takes a literal act of congress or the state legislature for them to get a raise.”

            Or they could…um I dunno…lern sum skilz… and actually earn more.

        3. No. It’s much better if politicians are forced to fight over MW or any other changes in economic or tax policies/rates. Automatic increases are not a good idea if you care about responsible and accountable government.

    2. I’d rather not have a minimum wage but if it’s here to stay, I would rather have small increases that businesses can anticipate as opposed to infrequent large jumps in the wage. Going from 7.50 to 7.70 to 7.85, etc., causes less problems than going from 7.50 to 13.00.

    3. I’d like to see the government tie minimum wage increases with inflation? because the wage-inflation spiral would clue people in that the cost of labor is part of the cost of goods.

      Although? anyone think progressives would be clever enough to figure it out?

  3. They are so far removed from reality but TDGAF. They care what gets them elected, no matter the current and future generations they have to screw over.

    It’s not a wonder why they promote the same crap over and over again…..these policies make them look good in the present, and screw all including the future. They don’t have to sacrifice their businesses, their property, or their savings account.

    1. “They care what gets them elected.” Bingo. The long term unemployed vote overwhelmingly Democratic.

      It is expensive and makes the Democratic party look bad to buy votes. Only in Obama’s Chicago and other places can you get away with direct buying of votes. But if you use the public purse, the welfare dollars, to purchase votes for their party, it makes them look great without costing them a dime.

      It is a mistake to think they are stupid like the author does, thinking they don’t understand basic economics. The author is naive. He thinks that they care about the truth and that he can educate them. They understand reality perfectly well.

      But they must deceive. To do this, they use marketing strategies come up with small group opinion analysis. “We demand a living wage”!, they say. But the “living wage” is a lie. Only single digit percentages of minimum wage earners are head of households. And if you are the head of household, vanishing small percentages of these are still making minimum wage after a year.

      Truth is not important. Votes are.

      1. “They care what gets them elected.” Bingo. The long term unemployed vote overwhelmingly Democratic.

        So, by voting for minimum wage increases, they buy the votes of minimum wage earners. By increasing welfare, they buy the votes of those who were priced out of the market by high minimum wage. It’s a win-win situation!

  4. The author misses the point. He makes the mistake that Liberals want 1) to be honest, and 2) they want whats best for the poor. Liberals don’t mind out of work people who are on the dole. They vote overwhelmingly democrat. In a Kaiser Family Foundation/NPR poll in 2011, they found the long term unemployed vote 72% for Democrats. So more unemployed, more voters. What’s not to like!

  5. I agree that normally if you require an employer to expend greater cost per hour (in wages and other per-employee expenses) than the employee’s labor is valued (e.g., if it costs $15 an hour to keep the employee but their work is only worth $14 an hour) the employer will eliminate the job. But I can imagine some scenarios where the employer is getting much higher value from the employee’s labor than the prevailing wages are costing (e.g., it costs $10 an hour to keep the employee but their work brings over $25 an hour in value to the employer) due to a big surplus in jobseekers and the low skill of the employee, and in that case raising the minimum wage slightly would not cause the employer to eliminate those employees. (Assume for this case the employer would get no added value from adding further employees at either the natural wage or the artificially increased minimum wage)

    But in general, the way the Left brushes off claims that higher minimum wages would lead to job losses is foolish. It’ll be interesting to see what happens in Seattle and L.A.–even some liberal writers think the $15 minimum is too high.

    1. Brando,

      What you describe is the economic theory of Price Elasticity- how much will the demand of the Buyer (in this case the Employer) change as the price changes. Certain goods have high elasticity and others have low.

      The problem is that Supply and Demand curves are a single time slice. In our ever changing world, those supply and demand curves are very dynamic.

      You are right that there are some cases where the elasticity means the business will just suck up the difference in wages. However, the follow-on effects will still occur. For example, you cannot escape the Law of Diminishing Returns. Every time you hire a new person, you get less ROI on that investment. Eventually, the cost of hiring a person will return so little that it isn’t worth it and that eventuality will come sooner if you raise the cost of labor. So a business that could have hired 10 people and still had a decent ROI may choose in the future to only hire 7.

      The problem with this is it is so hard to model empirically. How can you look at any aggregate numbers and say “All these businesses would have hired X More people if the minimum wage didn’t go up”. The cost of increasing Minimum Wage isn’t seen immediately. It is a hidden cost that is nearly impossible to observe. Which is why the Left loves to deny it exists.

      1. Add to this that fact that the markets for most businesses goods and services are generally independent of the labor market.

        In other words, my customers don’t give a shit what I pay employees. They are going to pay the prevailing market price (or less, the bastards) and not one cent more. If I have great big operational margins, then I can absorb some of the cost of increased labor rates.

        If not, then I’ve got a real, maybe existential, problem.

        1. This is exactly right, and all figures into the elasticity of your demand. If you have high margins or if customers don’t care about paying more for your product/service, then you can probably demand the same amount of employees at the higher price. If your margins are small or your market won’t tolerate a higher price, then your demand at the higher labor cost is lower.

          The net result is various reactions:
          1) Some businesses cannot afford the higher cost and will shut down
          2) Some businesses will lay people off or reduce hours and make due with less labor
          3) Other businesses will defer expansion some point in the future because the ROI is not there for adding new labor.

          Our company uses interns and contractors frequently. It is a pretty big investment to structure your organization so an intern or temp can come in and be productive immediately. Documentation needs to be written, projects broken into simpler chunks and training materials created. We only go through that process because when we bring in these workers, it frees up our highly paid engineers to work on additional stuff that is worth the ROI. If those temps cost more, we won’t bother to do the work necessary to bring them in. They’ll never be hired. No macro analysis will ever capture this cost.

  6. Notably L.A. area unions (who pushed for the $15 minimum) are trying to get an exemption for jobs subject to collective bargaining agreements–the idea being that non-union employers may decide to encourage unionization of their work forces rather than have to pay the $15 minimum.

    These are not honest or sincere people–this is all a big racket and California is going right down the drain when the next tech bubble bursts. It won’t be pretty.

  7. Next up is Directive 10-289

  8. I honestly have no problem with local governments setting these high minimum wage levels, “Laboratories of Innovation” and all that, and I if I owned a business in Seattle I would have the option of moving it to the suburbs if the increased pay was a problem.

    A US-wide $15/min wage on the other hand would be a complete disaster.

    1. I honestly have no problem with local governments setting these high minimum wage levels, “Laboratories of Innovation” and all that, and I if I owned a business in Seattle I would have the option of moving it to the suburbs if the increased pay was a problem.

      That can be a pretty ugly option depending on the type of business you run. In fact, it can be a devastating option.

      1. Definitely. I would say I have less of a problem with the laboratories than blanket authoritarianism across the entire country which is not much different than N. Korea keeping its borders closed.

        But an assault on freedom of association is wrong no matter the scale.

        1. But an assault on freedom of association is wrong no matter the scale.

          Or the location.

    2. A US-wide $15/min wage on the other hand would be a complete disaster.

      It would be in most states too. Take NY as an extreme example. Cuomo is making supportive noises at the 15 dollar crowd – knowing full well that outside of the NYC region, where the economy is complete shit, half the population would get sacked.

    3. I agree. Keep MW at the local level. There shouldn’t be a federal MW at all. If MW is a good idea, it will settle around some commonly accepted level.

    4. I have no problem with it either, as long as a local municipality has the option of eliminating the minimum wage entirely.

  9. Of course, when this won’t lead to the desired results, they will take responsibility for their actions, correct?

    Right?

    1. From the article:
      “Their intentions are good.”
      All you need to know.

  10. “I honestly have no problem with local governments setting these high minimum wage levels”

    I have no problem with the local government forcing you to take a pay cut to support low wage workers. 5 or ten dollars an hour of your salary will be a great boost to someone that isn’t making that much money…………

    See how easy it is when you don’t have a problem with government violence? That is why these douchebags have power over others. Some folks don’t mind a little slavery, instead of being free and being good stewards of their liberty.

    Not only do they sacrifice their own liberty, but enslave others, based upon the belief that TOP Men, and Top Women with fancy suits and pantsuits are capable of doing so many things on a broad scale, when they haven’t the slightest clue about concrete work or plumbing, and so many other things that they are overseeing or hiring bureaucrats to oversee. Yet they’re willing to sacrifice everyone else’s stuff too, because of their feeeeelings.

    To hell with what you feel if it denies liberty to other individuals.

  11. This time, writes Steve Chapman, the hard lesson is likely to be learned from lost jobs.

    No, no it won’t.

  12. I don’t see why some people buy into the notion that progs are “fighting for the little guy”. They’ll push policies like a $15 minimum wage and bolster their argument with “Walmart/McDonald’s/Starbucks can afford it”. Maybe those corporations can afford it; but what of the little guy trying to keep his little shop afloat? He can’t afford it and gets crushed, to the advantage of the big corporations. This is the prog standing up for the working man?

    1. Maybe those corporations can afford it; but what of the little guy trying to keep his little shop afloat?

      “Little guy” has nuanced meaning. By ‘little guy’, they’re referring to labor unions and the government.

    2. If those companies simply ate the increase in labor costs and didn’t successfully cut other costs and/or raises prices to compensate, they’ll fail to post growth, and their stock values will decrease. Since most of us have almost all of our retirement assets in stocks, that’s yet another way we get screwed.

      1. The other thing for the large companies, not the franchises, is that many of them calculate hours by profit per man hour. Managers are allowed x amount of manhours per $ profit, and leeway to schedule up to 2 times that amount for rush times. I know from working at Wal-Mart that my hours would go down if the store was not as profitable as the targets indicated it should be, even if I was going to end up the only person on the sales floor because there weren’t any hours for any other associates to work.

        1. There are implications all over the place, and sometimes the pain is more generalized and subtle. But market forces happen, regardless of how much we like to pretend they don’t.

          1. The thing I always found brutally honest about Wal-Mart is that if you asked a manager why your hours were being cut, they’d simply say, “Our sales are down from the goal, and we had three accidents (accidents, regardless of how severe are like $30K each in cost to the store).” It sucked not always getting hours, however, I was always dealt with honestly.

      2. Yep, the knowledge problem that progressives cheerfully ignore.

    3. Prog leadership loves big corporations. The rhetoric is for the ignorant in the ranks.

    4. Walmart and McDonalds definitely can NOT afford to pay more… they are notorious for having razor thin margins. That’s how they work. They’re economies of scale, not margin. They make almost nothing on every product they sell, but by being so darned cheap they sell an awful lot of almost no profit gear to make big numbers. But not big numbers compared to what they actually spend. Look at every single case study in generic B-School literature on either one. They both use their massive scale to squeeze supply chain prices down… and it’s not because they want to be assholes. It’s because they have to, or else they can’t exist.

      1. That’s why the Walfart family are the richest in the world… that bleeding razor thin margin.
        Keep spouting the twaddle the parasites will always applaud.

    5. This is exactly why WalMart is pushing for the $15 minimum wage!

  13. Liberals learned an unforgettable lesson:

    No, no they didn’t.

  14. It promised that the change will yield “savings from lower labor turnover and higher labor productivity.”

    How does a higher minimum wage raise my productivity?

    1. Well, not your productivity, but when the robots are flipping the burgers, aggregate productivity will be up.

      1. Well played, sir. Well played.

    2. Another response is: So you’re capable of higher productivity but have been slacking because you think you’re underpaid? You accepted the job at the agreed upon wage but aren’t giving it your best effort? You’re fired.

    3. You’ll be doing twice the work to make up for the layoffs?

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  16. “Even Seattle’s best-known chef, Tom Douglas, says he may have to close some of his 15 restaurants,” it reported. If a famous restaurateur can’t make it work, how will obscure ones fare?

    What really sickens me is Economic Creationists like Kashama Sawant don’t care. They don’t care at all. They mask the nature of their brutality with populist double speak which fools idiots at the Seattle Times into saying things like, “Well, we need a populist voice on the city council…”.

    Would they say the same thing if a religious christian won a council seat and started pushing to have evolution scrubbed from the Seattle Schools’ curriculum? Would they say, “Well, we need a religious voice on the city council”. We don’t have a single religious voice on the council… yet no one is calling for one?

    But we get a self-described communist on the city council and this is a good thing, because the rest of the council is only moderately fabianist?

    1. A friend of mine posted something on Facebook about Seattle’s unemployment rate falling, so, therefore, raising the wage doesn’t just not increase unemployment, it decreases it! Economics is so 1900s.

      1. Two things about that.

        They’re phasing this in. I have not yet had a good answer from the progressives as to why they’re phasing it in, but the negative effects will be phased in as well.

        Seattle isn’t a big minimum wage town. It’s full of IT people writing apps and very expensive restaraunts and bars. So the number of people getting a minimum wage increase won’t be huge.

        Three (I said two, but fuck it) the effects of something like this always go unreported because it tends to have the worst affect on people no one cares about. The small family run restaraunt that doesn’t get glowing Zagat ratings and yuppie critics doing writeups in the times. They provide a valuable service to a neighborhood, but they quietly close down and no one notices. Healthcare is already in crisis and heavily subsidized by the government. Who cares if all the housekeeping and janitorial staff causes one more cut in the thousands that healthcare is already suffering. The Seattle Times will be completely uninterested in that kind of nuance, so it’ll never be reported or tracked. As long as Chez Yuppie stays open, we all just tightened our belt a bit, and made the world a better place for working class folks!

        1. Our three weapons are fear, surprise, and ruthless efficiency. . .and an almost fanatical devotion to the Pope.

          Yeah, I know it’s bullshit. That kind of basic economics doesn’t go away because you want it to.

          What was the market wage for unskilled labor in Seattle in the first place? I imagine it’s higher than average.

          1. Washington already had one of the higher minimum wages in the country, I think around $10 an hour?

            Seattle is a typical livable-left-coast city: Expensive, so wages here are already generally higher than other places. It’s also why traffic is so bad. When you can live in the ‘burbs and pay 1/2 the housing cost but make the Seattle wage, commuting becomes an attractive option.

            I couldn’t say if the typical unskilled position payed higher than minimum wage because I don’t have that data. But if you are unskilled labor, you probably don’t live in Seattle (I can barely afford to live here, how’s unskilled labor going to live here?) and there are plenty of unskilled labor jobs that would pay the same $10 minimum wage wherever it is you do live– and you don’t have the commute.

          2. I imagine it’s higher than average.

            They’re pushing the magic number 15 here in NYC too yet I’m almost certain I could walk into any McDonald’s and get more than that. My first unskilled job in NYC was 10 bucks an hour and that was 20 years ago.

        2. A small local bike shop owner (you know, the sort of profile lefties love to say they protect) packed up and left to another town having had enough of the excessive bureaucratic interference and red tape in town. Now his locale remains empty whereas once upon a time there were neat bikes on his property (the city demanded he bring the bikes in but allow the big companies to keep their products outdoors because it’s easier to bully the little guy) is filled with weed.

          You don’t miss something until it’s gone and people have expressed disappointment about him leaving. Then again, these same people do little to demand the city back off a little.

          Great, bang up job Rosemere.

          1. were neat bikes on his property (the city demanded he bring the bikes in but allow the big companies to keep their products outdoors because it’s easier to bully the little guy) is filled with weed.

            This is typical and it can’t be pointed out enough. A city will literally torpedo its own economy before it releases the stranglehold. They’d rather have 40% of nothing than 15% of a lot.

      2. A friend of mine posted something on Facebook about Seattle’s unemployment rate falling, so, therefore, raising the wage doesn’t just not increase unemployment, it decreases it!

        A city’s unemployment rate will fall if:
        1. Workers find jobs.
        2. Workers quit looking for jobs.
        3. Workers leave town.

        What’s the total employment figure doing?

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  18. Some people doing certain jobs are not worth $15/hr.
    Thank you. Drive through.

    1. It depends on where it’s at. What’s worth $7.50 one place might be worth $15 someplace else. Raise the MW and force out those who can’t justify a business paying less than MW, then all you’ll have are those tho *can* justify it thereby showing it was a good idea to raise the MW.

  19. As someone who is not a resident of Seattle or LA, this kind of thing doesn’t bother me too much. But then I realize that some of the ambitious, self-righteous a-holes who get these policies passed at the local level eventually reach the state and federal level.

    I am not sure whether federalism is an end in and of itself (liberty is the ultimate end), but situations like this make it clear how important federalism is at preventing morons in other states from affecting the rest of us.

    1. Maybe we need a political party on the local level that is willing to push back? Maybe it would be a political party with little hope of winning, therefore no incentive not to be honest with the citizens about the effect of such policies? I seem to remember a guy named David Nolan having that kind of vision but understand his political creation is all but invisible these days.

  20. It is a mistake to think they are stupid like the author does, thinking they don’t understand basic economics. The author is naive. He thinks that they care about the truth and that he can educate them. They understand reality perfectly well.

    It’s entirely possible that many such politicians are uneducated about economics. I had an hour long discussion about the minimum wage with my GF, a smart bleeding heart liberal who is bad at math and thus economics. She was horrified at my suggestion that the minimum wage ought to be set at $0 — and that that solution would HELP poor people. She just didn’t believe the underlying economic argument that labor and widgets act the same when it comes to supply and demand.

    1. There are exceptions to supply and demand. This isn’t one of them.

  21. I had the privilege of travelling around Norway for a few weeks last summer – stunningly beautiful country – and noticed a few curious things about how people lived. In a country where the minimum wage is something like $22 or so – service is very minimal in most places of business. Even mid-level, bistro-type restaurants require you to order your meal at the front register. Grocery stores are very low grade – shabby and understaffed. I guess in America we’re spoiled by our lavish, overflowingly abundant grocery stores. Road works – everybody is working – no extraneous flagmen or hangers on (they have those robot-like, automated flagmen routing traffic like the rest of Europe – we need to adopt). In a more equal society like Norway car ownership is expensive – fuel and general taxes – so it seemed like much more of the population drive around pathetic little diesel hatchbacks and tiny electric vehicles. But most of all: all prices are absurdly expensive – double to triple the costs of goods in nearby Germany. The borders are crowded with duty-free shops where residents stocking up on alcohol and other staples at vastly reduced prices.

    Even though the Norwegians average per capita incomes are higher than the US, their standard of living is noticeably lower, so overall, not at all a vast improvement over other developed nations. Like other posters have said – hard to get around basic economic principles.

    1. Road works – everybody is working – no extraneous flagmen or hangers on

      Here in NYC the unions are trying to take over those flag people as “construction workers” – who knows, the next one you see might be pulling in six figures just like the other construction workers who sit around half the day doing nothing.

    2. “So what if its an economic law? We amend laws all the time.”

    3. The only reason progressives use Norway and Sweden as examples of places to emulate is because most of them have never been to Norway or Sweden, never researched anything about Norway or Sweden (other than regurgitating talking points), and haven’t got a clue what Norway or Sweden are actually like.

      Once you realize that most progressives are actually simple-minded, provincial rubes who only pretend to be well-read, their worldview and economics beliefs make a lot more sense.

    4. A close friend of mine has extended family in Norway. Whenever they come to visit the states they bring 2 empty suitcases per person, just so they can fill them with cheap goods to bring back.

      1. AceDroman|5.28.15 @ 7:27PM|#
        “A close friend of mine has extended family in Norway. Whenever they come to visit the states they bring 2 empty suitcases per person, just so they can fill them with cheap goods to bring back.”

        An acquaintance of mine is married to someone from Venezuela. The acquaintance is not the sharpest knife in the drawer and sees no problem with mis-stating the values on a customs document, since her in-laws do it all the time.
        Once corruption becomes the standard, it gets difficult to reverse; see, oh, Chicago for example.

  22. Consider the irony. The biggest victims of an artificial minimum wage will be the same people as always. Young black males. Thank your Uncle Barack.

  23. Walked in the local Panera Bread this week and saw 4 kiosks set up, but not activated. They had “Coming Soon” signs taped over the screens. Yep, they’re ready for a $15 minimum wage. Politicians will never learn. It’s too easy to give away someone else’s money instead.

  24. We are naturally selfish, it’s what has allowed to survive throughout history, and survival is obviously the prime objective. The flip side of that is that if employers could treat and pay their employees how ever they see fit, sure there would be some who did right by the system but you would also see wage slavery, and therefor little to no way to climb the ladder. Money equals leverage (not speech as some may claim).

    The dramatic rise of minimum wages will most definitely cause some short term job loss, but those who do have jobs will be able to get ahead and advance up the ladder making more room at the bottom. Ultimately all of these people moving up will create more jobs as they advance and the economy grows.

    One way or another we need to support the least of us. Either we do it by mandating fair wages or we do it via social welfare, ignoring them is inhumane and will only drag your society down. Sure you still need social welfare with fair wages but it’s much reduced and you will have a stronger economy to support it.

    Let the stone throwing commence ;o)

    1. “Let the stone throwing commence ;o)”

      Simple:
      You’re full of shit. No gain will come of this, either short or long term.
      How did you become such an ignoramus? Were you born that way, or did it take long years of practice to get so stupid?

      1. Wow, that’s a strong argument you have there

        1. Josh Russo|5.29.15 @ 5:23AM|#
          “Wow, that’s a strong argument you have there”

          Far more than your pile of bullshit deserves.

      2. One of the biggest challenges we face today is that we don’t have constructive dialogue between opposing points of view. Every advancement is a compromise among many ideals. Unless we can actually talk to each other instead of slinging childish slurs we won’t progress very far as a society.

        1. Josh Russo|5.29.15 @ 7:58AM|#
          “One of the biggest challenges we face today is that we don’t have constructive dialogue between opposing points of view”

          No, the biggest challenge we have is ignoramuses spouting nonsense and supposing it should be taken seriously.

    2. It doesn’t matter WHY you think you should provide handouts for people. The MATH says it damages everyone — including the poor and destitute, over time. So you can take your society as a whole argument and stuff it.

    3. Explain how wages climbed when we didn’t have a minimum wage. You can’t because your argument is dumb. There is no such thing as wage slavery. A worker can quit any time and find a better job.

      You keep claiming that having a hire minimum wage will allow people to “move up the ladder.” Explain the actual mechanism that does this. By the way, offering people a high minimum wage for very low skill work is actually sending them a bad price signal that staying in low skill jobs is okay.

      Also, explain why the current system doesn’t allow people to “move up the ladder.” With low wages, the incentive is even higher to get that welder’s cert or find a job fixing computers rather than deep frying chicken.

      “One way or another we need to support the least of us. Either we do it by mandating fair wages or we do it via social welfare”

      Let’s assume we have to support the low wage earners. Your method essentially is a tax on certain kinds of businesses, and also a punishment for anyone who is not productive enough to reach $15.00 / hour.

      Or we could just increase the EITC, which is paid for by the taxpayer, a much broader swathe of society. It would also allow a market wage, and increased employment of humans and slow automation. So, if you truly think we have to support the poor, then this would be the more equitable way of doing this.

    4. The dramatic rise of minimum wages will most definitely cause some short term job loss, but those who do have jobs will be able to get ahead and advance up the ladder making more room at the bottom. Ultimately all of these people moving up will create more jobs as they advance and the economy grows.

      This is the ultimate in question-begging. Look at the past few decades where a minimum wage has been in place. We’ve STILL had recessions, and after all this time the labor force participation rate is back to late 70s/early 80s levels–and the decline is NOT being driven by baby boomer retirements, because the LFP of those 55 and over has actually gone UP since 2008. Saying that increasing the minimum wage will grow jobs and thus enable the economy to grow has no basis in historical fact. If this were the case, we might as well institute a $100/hr min wage and be done with it for the next 20 years until it’s time to raise it to $200/hr, because a loaf of bread now costs $100.

      It’s long past time for progressives to acknowledge that minimum wage is reactionary to inflation, and start treating the latter as something to combat, not passively accept as long as it doesn’t go above an arbitrary annual level. The laws of mathematics and exponential functions don’t go away just because you pretend they don’t exist.

    5. John Russo, after writing his self-proclaimed masterpiece, stretches his lethargic muscles from the long bout with the internet. Walking upstairs he goes through the hallway noticing the family pictures on the wall- vacation in Florida, Mom marrying Dad #2, John’s college of liberal arts graduation(major: Social sciences), these memories he glances past. The real reason he is moving becomes apparent when he enters the kitchen. Going to the fridge he opens it and finds the prize for all his SJW “work” he’s been doing in the basement- a free-range chicken salad sandwich on artisan bread made by his Mom. Thanks Mom for taking care of him the last 30 years!

      1. I see a stage-play here.
        We can do the first act with Dad #1 in attendance, and John rejecting the harsh requirement of getting a job. Second act has Mom’s plastic surgery, John’s emotional response, and the arrival of sugar daddy.
        Whadaya think?

    6. My God Josh, are you just stirring things up for fun or are you really this stupid?

      Employers treat their employees however they need to in order maximize productivity. Look up “Enlightened Self Interest”.

      Work skills are developed at the entry level. If you eliminate the viability of entry level jobs those that used those entry jobs will be stuck unemployed or end up working in the labor black market.

      And stop with the straw men Josh. “We” don’t need to support “the rest of us”. YOU are responsible for supporting yourself. “We” should have charities that help those that cannot help themselves. YOU should get a job that pays whatever you are worth. Based on this gibberish you wrote, not very much.

  25. “”savings from lower labor turnover and higher labor productivity.”

    The New York Times has it exactly ass-backwards. The higher cost of a new hire prevents employers from being able to reward employees that have shown a good work ethic by making it unaffordable to reward them. Wages are squeezed together. Someone who might have been able to earn $25/hour will no longer be able to. So now, there is no reward for working hard and putting your time in. Might as well slack off, I’ll make $15/hour either way.

    1. Or be fired

    2. Have you ever worked a minimum wage job? Employers do not reward employees with higher pay. This is absolutely unheard of.

      1. Yes I have and yes they do.

      2. I too have worked minimum wage jobs at Taco Bell, Del Taco, and a UPS style store.

        Of course they offer higher pay if you are a good employee. Yes, it won’t be able to to rise up to the salary of a computer programmer as only the Flash could actually produce enough bean burritos per hour to make that viable. (Our store record was 9 seconds for a bean burrito from order to counter.)

        But they also will offer to promote you to shift manager if you’re good. And then assistant manager. And then store manager. And then regional manager. Now, this is a hard business so the vast majority of employee graduate to better jobs in other industries.

        But they also offer small wage hikes even for line employees that show up, aren’t on drugs, and work hard. If you never got that nickel increase, well, look in the mirror.

        Another obvious argument against this claim is the fact that wages were above minimum wage for quite some time…why would businesses do this if you are right? And Wal-Mart is now raising wages.

      3. yes I have, and yes they do.

        Of course, you will need to EARN the reward. Maybe that is your problem?

      4. I worked fast food when I was younger. I started at one place as a fry cook. 3 months later they made me a shift manager with pay raise, and 3 months after that (6 months from the time I was hired), they made me an assistant manager.

        Obviously, you were doing it wrong.

      5. Chadwick08|5.29.15 @ 10:15AM|#
        “Have you ever worked a minimum wage job?”
        Yes.

        “Employers do not reward employees with higher pay. This is absolutely unheard of.”
        You’re either an ignoramus or a liar.

  26. This makes a lot of sense. In fact, if anything, we should lower minimum wage because that will raise employment rates. There are just so many people looking for work, and supply and demand tells us that they aren’t worth much, so lets take advantage while we can. My business is generously willing to hire a dozen workers (for $4/hr). Any takers?

    The argument from this article works very well for small businesses who have to fight every day to survive because of the crushing competition of large corporations. I would not argue that. But when large, multinational corporations are making record profits, can they not afford afford to pay their workers a living wage? Are they not overzealous in taking advantage of the supply and demand of labor? The author has given the example of the small pizza shop. What about an example of a large corporation? Is Walmart going to close because they have to pay a decent wage, or is the new minimum wage going to keep corporate greed in check? Could Michael Duke not afford to decrease his hourly rate from $17,000/hr to $15,000/hr to help offset the minimum wage hike? I know he’s very important and all, but I think he’d survive.

    If the demand for labor fell further, would we be OK with decreasing the minimum wage, pushing families further below the poverty line? Is that we need to get America “back on track”?

    1. So many logic flaws, so little time.

      1. Not only logical flaws, just plain stupidity
        “[…]living wage?[…]”
        WIH is a ‘living wage”?

        1. A monkey on your back.

    2. Why not address the example of the small pizza shop?

    3. “My business is generously willing to hire a dozen workers (for $4/hr). Any takers?”

      If I hadn’t completed high school and had no skills, I’d take that over $0.

      “But when large, multinational corporations are making record profits, can they not afford afford to pay their workers a living wage?”

      They may or they may not; the blanket solution of mandating a wage at any level will have unintended consequences, most often affecting the very people minimum wage is often pushed to assist.

      “I know he’s very important and all, but I think he’d survive.”

      He very well might, but thank God that’s not for you to decide.

      “If the demand for labor fell further, would we be OK with decreasing the minimum wage, pushing families further below the poverty line? Is that we need to get America “back on track”?”

      Can’t speak for We, but I would be Ok with decreasing minimum wage (preferably to $0). Further dicking with our economies in way that has been demonstrated to produce shit consequences is not progress.

    4. Wal-Mart closes stores that do not perform well. That implies they do not always make the huge amounts of money that you assume they do. Really, making pennies per can of beets is not as profitable as you think…or you should open your own store to compete.

      Have you done the math on Wal-Mart profits divided by number of employees?

      Have you done the math of CEO pay being reduced to zero and then divided by number of employees?

      If you “care” so much, why don’t you offer up your own money instead of other people’s money?

    5. I think I see why you didn’t get a raise Chadwick.

      1. Somebody got Chadwick’s number when he walked in the door!

    6. Ever been to a Walmart with 50 registers and 3 cashiers? That will only get better right?

      And those share holders who invest their savings they’ll have no problem taking a smaller return if it’s for the greater good so let’s not even ask them.

  27. Some businesses will reduce staffing or hours. Some will scrub expansions they had planned. Some will install machines to handle tasks previously assigned to humans. Some will shut down.

    Many may also keep the jobs they have, but simply replace their low skill workers with workers with better qualifications and more experience; at nearly 100% turnover per year in many minimum wage jobs, that doesn’t even require firing anybody.

    The insidious thing about that is that it looks like the minimum wage increase is working and isn’t “costing any jobs”, but the people it was intended to help are out of work now anyway.

    1. Prof. Antony Davies had a video on learnliberty addressing the unintended consequences of price controls; the scenario you state is exactly one of the affects that can be concluded from it.

  28. This probably goes without saying, but the self-serving, short-sighted pandering political class–left and right–will never recognize or acknowledge the destructive economic impact of raising the minimum wage. We’ll all need to re-learn the lessons of Econ 101. Stupid and irresponsible.

  29. Back in 2006-2007, the price of steel and other metals skyrocketed.

    Since my business makes products using steel, it was not a fun time, as customers refused to accept price increases.

    So, we did what anyone does when an input rises in cost:

    We tried to use less of the input.
    We tied to use substitutes for the input.
    Some products simply became uneconomical and we stopped making them.

    Now make that input more expensive labor:

    Businesses will try to use less labor – hire less, send production to China, or in LA, maybe buy their baked goods for their coffee shop from a cheaper nearby city’s bakery.

    Businesses will look for substitutes. They will automate. They move to cheaper locales, labor wise. They will use kiosks. Or switch to casual, no tip, dining.

    Businesses may also close if customers are unwilling to buy the product at the volume and price needed to survive. Too many progressives imagine a busy coffee shop that can just raise their prices by a 10 cents, but they don’t realize some products will go up by a dollar, and that can lower demand…not a lot, but just enough to make the overall store have major issues and possibly close.

    Yes, the top-performing stores will stay open. But some marginal stores will close. And some new ventures will never happen. It will be another dripping wound on growth.

    1. It seems this is exactly the scenario they want. Replace labor with automation then everyone has a great job right?

      Replace all jobs with automation and we all just sit on the beach sipping drinks with umbrellas made by our trusty robot overlords.

  30. 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.www.netjob80.com

  31. Under the higher-minimum-wages-per-hour scheme is another dirty little secret: employees will move to a higher tax bracket and end up paying taxes they possibly do not pay now. That effect is beyond all of those pointed out (correctly) by this article.

    Liberal-“progressives” understand about economics only that it can be taxed. And when it is, they can have money, lots of it, to spend or re-distribute.

    The plain fact that this doesn’t work out in the long run… never enters their mind, because they either cannot confront it or they will not because they have another agenda to stay in power at all costs.

    1. Not all of them believe that it will work out. The economically educated among them understand that the minimum wage puts people on welfare, meaning that a particular party will see its ranks swell as a consequence of higher unemployment.

      Whether they’re doing it out of vicious tribalism or because a few jobs is a small price to pay for a higher political purpose (namely social democracy) is unclear, but it’s very difficult to believe that people like Krugman don’t understand precisely what a minimum wage increase would entail re: unemployment and economic growth.

  32. Local info based upon direct data collection with local franchisee:
    All menu prices are directly proportionate to average worker costs (does NOT include Manager and Assisstant).
    Current Average hourly rate $8.43
    Current Marquee Product (best seller) Quarter Pounder w/cheese $3.89.
    $15.00/hr min wage is a 77.9% increase, $3.89+$3.03(77.9% increase)= $6.92.
    McDonald’s ALREADY has problems selling their overpriced chicken products. It is going out of date in their distribution centers.
    Say goodbye to the value menu. Say goodbye to your local franchisee providing 118 jobs (2 stores).
    What does that say for those areas where the marquee item is already $4.99 to $6.49?

  33. Don’t repeal the laws of economics. Peel them like a banana. Then it will be fone. For monkeys large and small.

  34. Australia’s minimum wage is 18 per hour, last time I checked the sky hadn’t fallen.
    When a CEO makes the amount they do any argument is only believed by the terminally ignorant.

    The USA needs to adopt a new national holiday. Bastille Day.. When the rich parasitic psychopaths loose their heads all go to bed warm and well fed.

    1. F*** the CEO’s. This is about what’s actually going to help the poor, unskilled workers. Pricing them out of the market and into welfare? Or letting them get the experience they need to increase their wages? The sky won’t fall in the U.S. either, but we’ll all be worse off because of it. Australia sounds like a nice place to visit, but I don’t think I want to live there.

    2. When a baseball player makes the amount they do…
      When a movie star makes the amount they do…
      When a brilliant investor makes the amount they do…

    3. RealityBites|6.3.15 @ 5:10PM|#
      ‘[…]The USA needs to adopt a new national holiday. Bastille Day.. When the rich parasitic psychopaths loose their heads all go to bed warm and well fed.”

      I prefer May Day, when slimy commies get to wipe their asses with their fingers, since commies always make toilet tissue disappear.

  35. Just b/c the minimum goes up doesn’t mean all wages do. Case in point: a guy’s dad started teaching in the late 80s and made between $12 to $13K per year (with coaching 2 sports). 26 years later based on raises and experience, he makes $49K per year (coaching 2 sports). Meanwhile, new teachers with no experience make $28K per year now(no coaching). His salary went up a few percent (2 to 4%, sometimes 0) a year based on raises approved by the school board. Some of those years, starting teachers salaries may have gone up by as much as 10 to 20% while his went up by 2% or so. So experienced people got a 2% raise and fresh out of school kids got 10% or more. So obviously raising the minimum doesn’t automatically equal a raise for all. Those kids starting at $28K now will likely be making close to $70K at 26 years of experience, when he currently makes

  36. If the government can raise the pay of minimum wage workers by 40%, why not raise the wages of every worker by 40%?
    Think of how that would “stimulate” the economy.

    1. If you ran for office on that platform and a slick presentation, you very well might get elected president.

  37. My first job was bagging groceries and I was thrilled when the minimum wage was raised to 3.35 an hour. I can’t imagine that being a $15 an hour job.

    There will be some lag in the system where things seem good but in the end all we’re going to do is create more minimum wage jobs by taking currently descent and survivable jobs and surpassing them with minimum wage.

    I have a morbid curiosity on how they’re going to spin that for the progressive agenda.

    Personally rather than raising the bottom id prefer for our education system to be something less disastrous while not abolishing technical or trade training.

    1. Will Nonya|6.3.15 @ 11:33PM|#
      ‘[…]I have a morbid curiosity on how they’re going to spin that for the progressive agenda.[…]”

      Simple:
      The huge teenage-minority unemployment numbers are a result of greedy business owners who should be forced to pay a ‘living wage’!
      So the solution is to raise the minimum wage.
      Fucking proggies are as predictable as the sunrise. And as brainless.

  38. my roomate’s mother makes $63 /hour on the internet . She has been fired from work for ten months but last month her paycheck was $16842 just working on the internet for a few hours. check out the post right here … ?netjob80.com

  39. How many times have we raised minimum wage and what the hell good has it ever done? We’re trying to force low skill jobs into being family of four supporting jobs. I guess I don’t understand progressives…cause ya know, “This time will be different. We’ll make socialism work, THIS TIME!”

  40. Nathaniel . although Stephanie `s rep0rt is super… I just bought a top of the range Mercedes sincee geting a check for $4416 this last four weeks and would you believe, ten/k last-month . no-doubt about it, this really is the best-job I’ve ever done . I actually started seven months/ago and almost straight away started making a nice over $79.. p/h….. ?????? http://www.worksite90.com

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  42. OK it probably be better as a gradual thing over a few years let’s say, going from $10 to $15 per hour. Certainly Walmart could afford it (remember many Walmart workers are on food stamps, as they can’t earn enough. Thus the taxpayers are subsidizing Walmart workers wages). Working folks are frustrated because nothing changes, things keep going up, but even with cost of living raises (which are getting rare) their wages aren’t keeping up. The median household income has flatlined for twenty years now. Wall Street has seen incomes skyrocket, talk about it.

    Several years ago a city in the Southwest was going to raise minimum wage, to $9.50 / hour. In fact they called it a “living wage”. Oh many in power and in the press ballyhood it, railed against it – it would cost jobs, they’d stop building hotels there etc etc. Well the city passed it and even maids
    at hotels started making $9.50 / hr. Wouldn’t you know it, the city kept growing. New hotels came in and we’re built. Jobs weren’t lost. In fact more jobs were created. A day business thrived. . Go figure?

    Bottom line: working people need a LIVING WAGE today, more than ever. Is $15 per hour the correct number? Probably.

    At least more goods and services will be purchased I imagine.

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