Minimum Wage

$15 Minimum Wage Follies in California and New York

Good intentions, but a near total failure as an anti-poverty policy

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$15MinimumWage
University of Dallas

Both California and New York have just adopted measures to raise their minimum wages to $15 an hour over the next few years. Los Angeles Mayor Eric Garcetti hailed the increase, declaring, "Today California leads the nation once again, passing a historic minimum wage increase that will help lift millions of hardworking men and women out of poverty." New York Gov. Andrew Cuomo was pleased too: Not long before signing the legislation, he had been saying, "If you work full time, you shouldn't have to live in poverty—which is why it's time for New York to lead the way and pass a $15 minimum wage." Like many supporters of the increases, both politicians evidently believe that it is an effective anti-poverty policy.

On the face of it, it seems like a no-brainer: Boost a worker's income enough, the thinking goes, and you'll push him or her over the poverty line. Working full-time for the current federal minimum of $7.75 per hour, a single mother would earn only about $14,500 per year. That is well under the $19,000-a-year poverty line for a family with a single working adult and two children. Boost her pay to $15, and she'll be well over it. 

But does this really lift poor people out of poverty? The economic literature strongly suggests not. 

In a normal supply and demand situation, increasing something's price generally lowers the demand for it. So raising the price of labor should reduce the demand for workers. In December 2015, the University of California, Irvine economist David Neumark undertook a comprehensive review of minimum wage studies for the San Francisco Federal Reserve Bank. He concluded that "current minimum wages have directly reduced the number of jobs nationally by about 100,000 to 200,000" from what they would otherwise have been.

In an even more recent analysis for the Federal Reserve, Neumark asked how effective raising the minimum wage is at reducing poverty among those low-wage workers who remain employed. He found that if wages were simply raised to $10.10 per hour, as favored by President Barack Obama, with no changes to the number of jobs or hours, only 18 percent of the total increase in incomes would go to workers in families living in poverty. Thirty-two percent of the benefits would flow to families living in the top half of the income distribution.

How can that be? Neumark points out that the relationship between being a low-wage worker and being in a low-income family is fairly weak. First, in 57 percent of poor families, no one has a job, so no one gets any wages at all. Second, other workers have low incomes because they work low hours, not because they have low wages. Neumark notes that 46 percent of poor part-time workers have hourly wages above $10.10 and 36 percent above $12 per hour. Finally, many low-wage workers are secondary workers who live in well-off families—teens, for example.

Neumark reports that most economic research finds "no statistically significant relationship between raising the minimum wage and reducing poverty." This assessment is bolstered by a November 2015 study conducted by the Georgia Institute of Technology economist Carlos Ramirez and his colleagues. An increase in the minimum wage, they concluded, "would only lead to increased unemployment and no change in the poverty rate." In addition, preliminary estimates by the San Diego State University economist Joseph Sabia and his colleagues suggest that higher minimum wages do not even reduce government spending on welfare and other programs to support poor families.

By signing legislation that raises the minimum wages to $15 an hour, the governors of California and New York have engaged in a kind of feel-good but fact-free political theater that will most likely harm the job prospects of their poorest residents and will do almost nothing to alleviate poverty in their states.

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  1. Can you really put a price on feeling good about yourself? Can you put a price on votes?

    1. Yes, you can put a price on votes. It changes with the market though, so you’ll have to check often.

    2. Can you put a price on votes?

      Yep. $15.

    3. Hilary Clinton: “Why are you Iooking at me?!”

    4. what Jesus said I’m in shock that someone able to get paid $8133 in four weeks on the computer . blog here ??????? http://www.elite36.com

  2. Insert progressive half-truth about Australia here.

    1. … does it have to be a progressive one?

    2. Minimum handgun wage!

  3. I will miss you, Junior Bacon Cheeseburger.

    1. Bah! Skynet can make it better anyways.

  4. Strive for $16/HR Minimum Wage!

    1. #Totallyfor $20! (Said in Valley Girl accent)

  5. The minimum wage was originally pushed by unionists to keep minorities out of their trades. By requiring a minimum, employers were less likely to take a chance on an inexperienced minority worker, who could be excluded from unions. (‘Tough on crime’ laws were pushed by a similar agenda, as was the drug war.) Also now big business (e.g. Target and the Gap) loves minimum wage laws because it squashes small business competition. Ironically, the people working low wage aren’t outraged by their low pay, it’s the do-gooders who feel they should feel entitled (see Ehrenreich’s ‘Nickel and dimed’). The people who show up for protests are generally paid to do so, or else they are Bernie bros.

    1. ^^Hit the head on the nail here

      1. Needz moar euphemism.

    2. Child labor laws were put in place for the same reason.

      1. Mornin! How’s the price of oil today? Are we laughing or crying?

        1. Well, gasoline is $6.00 per gallon in Britain.

          1. Most of that is tax. In fact, there’s a VAT on the excise tax, so part of that is a tax on a tax.

        2. Back up to almost $40. Nothing dramatic. We’re kinda bored.

    3. It was also never intended to be a “living wage”, but that inconvenient fact has also been shoved down the memory-hole.

      1. *insert progressive FDR quote here*

        It’s a game for me now. No point in arguing with them. Watch it hit the fan and then pull out my bingo card of excuses.

    4. Yeh, I often found people without accreditation from a union were just as competent. Really, a barber needs a fucking license? Or to change a store-front window? Please.

      Licensing and permits are rackets.

      Any social engineering pushed by the progressive left is usually based in faulty premises and sometimes lies.

      1. Any social engineering pushed by the progressive left is usually based in faulty premises and sometimes lies

        FTFY

        1. I had to take a test to get my professional engineer’s license (electrical), and these unlicensed social engineers can kill way more people than I can.

    5. That pretty much applies to most things though. It seems 9 times out of 10 the people complaining aren’t the ones who suffer from it, it’s bored white people feeling some kind of guilt. But they aren’t feeling guilt because of any good hearted reason in most times. If they did they’d be out there DOING something on their own. They’re mad because everyone else doesn’t feel guilty enough and they will MAKE us help…even when that help causes resentment and builds class divides further or drags EVERYONE down into a shitty financial situation. And let me add: Even when that help makes it worse for the person they are “helping”. People I knew who were trying to get ahead? Their biggest stumbling blocks were those trying to “help”.

      There’s nothing really stopping these people from gathering like minded people and handing out food to the homeless or seeing someone in need at the grocery store and handing them money. Hell, an 8 year old girl here put together a way to collect clothing for local homeless. Most churches are aware of local folks that need help. Band together and help repair a house (our high school kids do that). But then again, that involves work and all forbid any of these people actually DO something to help when they can make everyone else do it, whether they want to or not.

      1. Yeah, when these people you describe end up realizing that they are generally forced to pay up as well they get indignant and start blaming the Republicans for spoiling everything. Boy, it sure is great having a scape goat! At least with the ACA no amount of histrionics can conceal the entirely partisan vote. I look forward to those excuses in a few years.

      2. Ted Kaczynski, crazy, maybe, driven to crazy, probably, a genius, definitely stated it pretty well in his manifesto. These people he called oversocialized. Paraphrasing from memory he characterized these people as those who vote for what they believe to be the best solution to what they believe to be the biggest problems of some other group. Democracy has to be selfish. People need to vote to solve the problems that they are most familiar with, not to push a solution on some other group.

    6. why do people with unnecessary “h”s in their last name tend to make such sharp critiques of modernity?

  6. Yay!! This means more jobs for the Robots!! Death to the Fleshbags!!

    1. FINALLY ROBOTIC BEINGS RULE THE WORLD!

      1. That’s two Flight of the Conchords references this week. Good stuff.

    2. I look forward to a bright Utopia where fast food comes out the way I ordered it! Glory be unto the Net in the Sky!

  7. I remind people that the “minimum wage” is a state-mandated wage backed by the threat of government force/guns and a fascist concept.

    1. Right! Revving up my wood chipper….

    2. Does not compute.
      Insert talking point of day here.

    3. That strikes a spark:

      Why is only the business owner punished when someone gets paid less than the minimum wage? Didn’t the employee agree to it? Isn’t the employee essentially a co-conspirator.

      I mean, if we’re going to punish both hookers and johns, and both formerly pregnant women and abortion doctors, shouldn’t we punish both the employer and the worker here?

    4. Nowadays, some people would cheer when you tell them that.

  8. Apart from the steady, systematic deconstruction of civilization within their borders, have New York and California actually achieved anything recently?

    1. Not becoming Detroit.

        1. Oh, it’s already happening. Stockton, CA, filed bankruptcy quite a while ago. Desert Hot Springs, CA, was a little more recent. San Bernardino, CA, much larger than Desert Hot Springs, did too. Other Calif. cities and counties will follow soon enough, then the State of Calif. when the unfunded pension liabilities kick in.

    2. California managed to bribe persuade the Rams to move to town.

      1. I think he was asking about ACHIEVEMENTS. That isn’t one.

  9. On the face of it, it seems like a no-brainer: Boost a worker’s income enough, the thinking goes, and you’ll push him or her over the poverty line.

    It *is* a no-brainer. Even a half-wit can see that no matter how much money you throw at a dead horse you’ll fix neither the ‘dead’ or ‘horse’ issues while fully rectifying any poverty the horse may or may not be living in.

    It’s such a no-brainer that it’s a thought-terminating black hole of a meme. Rational arguments against it can’t always be readily distinguished from hyperbole, sarcasm, and satire. Why not $30/hr.?

    1. There was an interesting study which I would love to find again. If I recall correctly they gave something like 100,000 to a set of homeless people and followed them. Most blew through the cash and ended up broke and homeless again before too long.

      If anyone sees it, can they let me know?

      1. There was a documentary from a few years back called Reversal of Fortune about this.

        It would be an expensive study to run with a decent n, so I imagine multiple federal agencies are running parallel versions of the same study as we speak.

          1. Not much of a ‘study’ given the sample size of 1.

      2. Of course, I overlooked the other half of the no-brainer thought-terminating meme; where we hand a free education to any dead horse and if you point out that a lot of the time you’ll just be handing out degrees to a lot of poor dead horses you become a racist.

      3. Isn’t that pretty much everyone, though?

        … gave something like 100,000 a few million before taxes to a set of homeless people Lotto winners and followed them. Most blew through the cash.

        … gave a severance package to a set of office workers and followed them. Most blew through the cash.

        … gave an increased debt ceiling to politicians. Most blew through the cash.

        1. I keep telling myself I could avoid that trap, that I fiscal discipline to leverage a windfall.

          So far I’ve not had the opportunity to find out if that’s true, or just wishful thinking.

          1. It’s a simple trap to avoid. Immediately deposit the money into a market account with a broad index fund. Calculate 1/12th of 4% of the money. Have the fund send you a check for that amount every month. (IE 1 million invested would generate a check of $3,333 every month).

            Every January, bump the amount up by the rate of inflation.

            Assuming, a reasonably normal market, when you die the fund will have the same amount of money in real dollars.

            The key is setting it up quickly and not spending any. No, don’t pay off the bills or the house note! If you can’t manage to pay them off pretty quickly with the extra monthly check, you were destined to blow through the money in any case.

        2. … gave a severance package to a set of office workers and followed them. Most blew through the cash.

          Is this one that common/easily distinguished? It seems somewhere between fundamentally and conditionally different than the other two.

          I got a 3 mo. severance once, it took me 4 mo. to find a new job. The severance was gone in ~1.5 mo. but, conceptually (fungibility aside), most of it was in the house and the car that we’ve since sold and a good chunk of the rest (~1/5) is still in a retirement account. You could certainly say I spent the money and did it faster but I didn’t exactly spend beyond my means or exactly increase my spending in a manner that would explicitly or expediently outpace my means.

          Either way kinda reinforces the ‘A horse is a horse’ argument.

        3. yes that is everyone! part of being human is wanting more than whateer it is you have. it’s almost like an objective standard of wealth doesnt make sense.

      4. They’ve done similar studies by observing lotto/lottery winners.

        Behavioral psychologists have figured out that people have some sort of innate mental programming about risk and money such that they will return to their original state on their own.

        For risk, it is called “risk homeostasis.” I don’t remember what the term was for money, but the finding was that a person used to making $X per period and spending $Y per period will tend to return to those two levels on their own, whether it be from below (losing a lot of money) or above (gaining a lot of money).

        1. I should point out that yes, in general it is much, much easier to return to a lower net cashflow level from above (gaining a lot of money and blowing through it) than to return to a higher net cashflow level from below (losing a lot of money as in job loss, health/disability catastrophe), but people do tend towards their same money level nonetheless. It’s just not symmetric in terms of rates or timeframes, that’s all.

    2. Rational arguments against it can’t always be readily distinguished from hyperbole, sarcasm, and satire. Why not $30/hr.?

      The proponents of these thinks are using the emotional part of their brains, not the rational, analytical part. I kept on racheting up the Why Not X per hour argument with my GF, and she still didn’t balk at $200 per hour and admit that THAT ridiculous minimum wage would crater the economy.

      1. Most people DO balk. She was just standing her ground so you wouldn’t win.

        The reason that they balk is that money/income is a social signaller of status. In other words, it signals one’s place in the pecking order.

        Most people balk when the wage proposed surpasses their own wage or perceived place in the pecking order. People like to think of burger flippers as being beneath themselves, and they generally want to keep it that way.

        1. Well, in all fairness being a burger flipper is pretty darn close to the bottom of any 1st world pecking order. It’s a task that virtually every adult can perform on their own, but choose not to do for pure convenience.

          That being said, it does seem like these ‘minimum wage’ hikers are trying to achieve this as some sort of bizarre social signaling that they ‘care’ about the plight of the little man while really giving two shits about them in reality.

          If they actually cared, they would take a homeless person into their home or donate a percentage of their income to charity instead of forcing other people to do those things for them. The people who do these things on their own I respect, the one’s who try and force me to do it against my will I do not respect.

  10. “If you work full time, you shouldn’t have to live in poverty”

    That’s a pretty low standard – I think full-time work should merit at least a decent income. The minimum wage should be raised high enough that everybody has an above-average income.

    1. The minimum wage should be raised high enough that everybody has an above-average income.

      A born politician.

      1. We keep raising the minimum wage, yet 20% of Americans are still in the bottom quintile of income!

        1. Even worse, almost half of Americans make below average income!

          1. Stop with the math. Of course every person should make above average.

            1. Common core math at it’s best.

    2. In many places, full-time work is a luxury. Shouldn’t you be paid enough to own a luxury car?

    3. The minimum wage should be raised high enough that everybody has an above-average income.

      Wait. You do mean *after-tax* income, right?

    4. Bill Clinton said something to this effect:

      “Every American should have above average income, and my Administration is going to see they get it.”

      Now, how is it possible we can all have “an above average income”?

    5. “The minimum wage should be raised high enough that everybody has an above-average income.”

      I do hope you are being sarcastic about this. If not, please review elementary-school mathematics, specifically the definition of the terms, “average” and “median.”

      If you don’t want to review elementary math, suffice it to say that it is mathematically impossible for everybody to have an above-average anything.

  11. First, in 57 percent of poor families, no one has a job, so no one gets any wages at all.

    Warren Meyer had a piece about this a couple of days ago. The too-few-hours problem was exacerbated by anticipation of the ACA, and it’s about to get a lot worse in these two states outside of major metropolitan regions where worker productivity is likely to be much higher than in small towns. Even then, $15 had a noticeable impact on Seattle employment, so you’d have to think this is going to hurt even in LA and SF.

    If I’m a cafe owner in small-town California, I’d have to think long and hard about keeping my doors open after this. It’s not like the progressives are going to pack it in and leave you alone now that they’ve won the fight for $15.

    At least they have the good sense to phase in the minimum wage over a period of years and allow price inflation to take a significant bite out of the gains. It may do more than that; there’s an awful lot of credit built up behind bank dams, and it’s difficult to see how it’s going to remain there forever without pouring into the consumer economy.

    1. If I’m a cafe owner in small-town California, I’d have to think long and hard about keeping my doors open after this.

      You can just become like France, where I saw one waiter and a single bus boy covering 30 two-tops at lunch on a Friday afternoon.

      1. Or do Ziosk/mobile device ordering/payment instead of having a waiter come by.

        1. That’s a lot of capital expenditure though.

          1. It is, but if you look at the long term wages of what the kiosk is replacing it starts to become an investment in future savings.

        2. or put up a little counter and make it fast food lite instead of having a waiter come by. You can even increase prices a bit because there will be no tips.

      2. This is effectively my solution to the problem. I am a small business owner in California, and although I don’t hire minimum-wage employees due to the type of business I run, I am basically deciding never to hire any employees because the paperwork and regulations and hidden and overt taxes are ridiculous. I will simply “hire” other service businesses to do the work–for instance, hire a cleaning crew to clean, hire an accountancy firm to do accounting, hire a cold-callling firm to do sales work, etc. Let them suffer the paperwork and regulations and pass the cost on to me in apportioned form.

      3. wow I can only imagine the kind of service they must provide. they are getting paid a “living wage” though

    2. I’m worried about the ability of my local pizza place to stay in business with this cost increase.

      1. This wage increase could be the end of New York and California style pizza, leaving Chicago as the sole pizza source for the country. This could be the best thing ever or a sign of end times, depending on your view of Chicago pies.

        1. New Yorkers will remember how to make real pizza, and will do so in their homes. After the collapse, they will start new pizza shops in the ruins of Old New York.

          1. New Yorkers will remember how to make real pizza, and will do so in their homes. After the collapse, they will start new pizza shops in the ruins of Old New York.

            Using cardboard boxes, grass clippings, and spent motor oil they will quickly come to question why they didn’t make the switch sooner.

            1. Hey, it works in Fallout.

              1. Don’t forget the squirrel and lizard.

              2. In Fallout I get rewarded for shooting looters and my dog helps. In Bureaucratopia the looters get vacations for shooting me and my dog.

      2. I’m worried about the ability of my local pizza place to stay in business with this cost increase.

        Okay, fine, but your local pizzeria doesn’t have the business acumen to reflect the needs of The People! Comrade, you’ll still have Pizza Hut, Domino’s, and Papa John’s to choose from in our new Utopia!

        1. Actually, Papa John’s in my area already folded.

          1. No one needs three national pizza chains anyway!

            1. No one needs national or global pizza chains that don’t bribe politicians or hire lobbyists, at least…

            1. Of the three, they were the least bad. Hut sold a brick of grease. Dominos sold a brick of burnt grease. Of course I went to the single location local place since they sold real pizza.

              1. Im kidding of course. But in my opinion domino’s is the best of those, then papa. Hut is a travesty.

              2. I dunno what dominos does to make their pizza so bad, but it’s gotta involve some kind of magic. usually leftovers the next morning is one of the best parts of ordering pizza, but dominos turns inedible overnight. planned obsolescence?

          2. Blame Peyton Fucking Potatoface Manning.

        2. Hey, if your local pizza joint can’t afford to pay minimum wage, then its workers deserve to be unemployed!

          Isn’t that the proggy answer to this? I may be a little fuzzy on the details.

          1. We can’t be responsible for every undercapitalized small business in America’s employees.

            1. oh, sorry

              /Clintonista-prog

    3. It’s not like the progressives are going to pack it in and leave you alone now that they’ve won the fight for $15.

      I bet if you declared loudly enough that you were going to violate the $15/hr. rule *and* that you refused to serve married gay couples you would either pack the place and/or reap a windfall off kickstarter. If you lived.

      1. Yet another reason the leftists/progressives want to disarm Californians. So they can’t keep the SJWs out of their faces.

    4. At least they have the good sense to phase in the minimum wage over a period of years and allow price inflation to take a significant bite out of the gains to give businesses time to relocate before it kicks in.

  12. If you work full time, you shouldn’t have to live in poverty

    So a small business owner works 40 or more hours a week
    just them; no employees
    manages to pay bills, rent, utilities, overhead, etc
    end of the week, tallies up profit and it comes up to less than $15/hour

    What would a progressive suggest they do? Raise price of goods/service? Go on welfare? Suck it up? Shut their doors?

    1. Write off a trip to Macao, obviously. It’s like you don’t even business dude.

    2. This actually have already been tried out. Back when the do-gooder instituted smoking ban in restaurant and bars, some of the smaller ones decided to bypass it entirely by not having any employee. Just family run or partnership. No employee, no smoking law enforcement.

      1. Uhh…where in the hell did that happen at because everywhere I’ve lived the ‘smoking ban’ didn’t care necessarily about just the employees but rather the employees and the patrons themselves.

        As to whether or not the magical ‘non-smokers’ chose to harm their bodies by consuming the less socially signaled ‘bad thing’ of alcohol to fill in the gap of the true smoking nihilists who went elsewhere remains to be seen.

    3. The progressive answer is already clear:

      Shut down the small business owner in favor of very large corporations that can afford to hire lobbyists, give donations to progressive candidates for special treatment, pay all the costs of regulations they cannot avoid, and are large enough to set prices in the not-so-free marketplace to pass the costs of leftist/progressive policies on to consumers.

      1. if their real goal is national homogeny (which it is, assuming it’s the right kind) that’s a decent way of going about it

  13. The difference between a true Libertarian and a fake one is that the fake one blames the government and the ‘stupid’ people who elected them, while the TrueLib? knows the people know better.

    1. Being a Libertarian and voters being stupid are not mutually exclusive.

      1. I honestly don’t think voters are very stupid. I think Libertarians have done an extremely poor job of marketing their message to voters.

        1. I think that trying to sell people the notion of personal responsibility and tolerance has never sold particularly well. Especially to the particularly lazy or unethical.

          1. ^^ Exactly!

        2. Nah, I think the voters are stupid. I see it every time I see someone say “I have ONLY voted x party and will never vote for the other one!” or “As a woman you HAVE to vote for Hillary Clinton”.

  14. Neumark’s findings is more in line with what I’ve observed and experienced.

    I don’t know to what extent people like Garcetti and Cuomo understand business, finance and economics but if they’re sufficiently informed this makes them a couple of assholes. I hope they’re just plain run of the mill interventionists and proponents of paternalism for their sake. Or else they’re just more examples of economic illiteracy that seems to exist in the political class ranks.

  15. How many in Hollywood will combat $15 minimum wage hikes with more unpaid internships.

    Maybe we should rename it Hypocriwood.

    1. Can’t do that. At $15/hr, it’ll cost a fortune to redo the sign.

    2. I thought unpaid internships were illegal now. The goal is to make it so that young people can only choose between college and prison.

      1. Nope, young people are learning to get paid under the table. No taxes, no healthcare, Libertopia.

  16. uptil I looked at the bank draft saying $8885 , I didn’t believe that my mother in law woz like they say truly taking home money in there spare time at their laptop. . there great aunt haz done this less than 17 months and as of now repayed the mortgage on there home and bourt a great Renault 4 . see

    Copy This Link inYour Browser

    http://www.MaxPost30.com

    1. Even though you’re a spambot, you should still be aware that there’s no such thing as a great Renault.

      1. I have a feeling this spambot isn’t from the States.

      2. That can’t be true… if it were then how is it that he “bourt” one?

    2. 8885/$15 = 592 hours
      592/40 = 17 weeks

      Auntie would be better off with a minimum wage job.

  17. First, in 57 percent of poor families, no one has a job, so no one gets any wages at all. Second, other workers have low incomes because they work low hours, not because they have low wages. Neumark notes that 46 percent of poor part-time workers have hourly wages above $10.10 and 36 percent above $12 per hour. Finally, many low-wage workers are secondary workers who live in well-off families?teens, for example.

    This is great analysis, but none of it matters. Because the local rag will serially print feel-good stories about how this or that worker sure feels better with their fatter paycheck, therefore it’s all good, and these inconvenient macro truths are merely petty details on the way to income equality.

    1. I’m shocked that a news organization would cherry-pick unrepresentative stories from a larger pool, and selectively harp on them to advance a dubious social agenda!

      If that were the case, the coverage of the great migration into Europe would have been all doe-eyed children (maybe a dead one or two, just for color) and families fleeing Syria, rather than the endless stories we got of large groups of young men who don’t even speak Syrian passing themselves off as Syrian refugees.

      1. The article I linked does talk about the downsides (at the end) and follows up the sunny reports with a quote from the sunny-reporter that “it’s still too early to know”. But there’s been a steady stream of man-on-the-streeters talking about how a Waitress at ‘x’ restaurant is now saving for college!!11!!

        I’m not going to link it because I’m too lazy, but some of the restaurants are returning to tipping because business has dropped off after jacking up menu prices a gajillion percent, but it’s all blamed on the construction.

        1. No need to link. We are all very familiar with the low-information man-on-the-street. He is the prime target of “The Seen”.

      2. Some of it is cherry-picking and some of it is just “the unseen”. You can do a story on an employer laying off someone, but who ever does stories on employers not hiring someone?

        In addition to unemployment creeping up, I predict this increase will have a couple of other effects in CA and NY.

        1. Wage stagnation for years after they hit $15/hr until the value added by retained employees catches up with the decreed wage.

        2. More ghost towns in rural areas. Who can afford to pay $15/hr. in the boonies?

        So look forward to more heart-wrenching stories about how small-town America is dying and wages stagnation is holding back the American worker.

        1. you forgoet – more people being paid in cash at rates below the mandated minimum.

  18. Best argument I’ve seen for this (or anything for that matter)

    “It’s 2016!”

    1. It’s 2016, time to stop treating adults like children and to hire people on their merits instead of their genitals.

      1. correction, hiring them based on what they SAY their genitals look like.

        1. recorrection, hiring them based on what they say they feel about what their genitals should look like.

  19. “He found that if wages were simply raised to $10.10 per hour, as favored by President Barack Obama, with no changes to the number of jobs or hours, only 18 percent of the total increase in incomes would go to workers in families living in poverty. Thirty-two percent of the benefits would flow to families living in the top half of the income distribution.”

    There is another reason for this, if I can return to my days as an economics major: the substitution effect. Simply put, if the price of a low ? value product is artificially set at a level equal to a higher value product, no one will bother buying the lower value item, but will purchase the higher value product instead. (If you had to pay the same price for a piece of costume jewelry as you would for a top diamond, what would you buy?) This, in turn, increases the demand for the higher value product and serves to increase its price. Why do you think unions push for minimum wage increases? When the minimum-wage goes up, so do union wages.

    1. you owe me breakfast cause that just fucked my brain so hard

      I hadn’t heard that argument before and that’s pretty rock solid

      1. That’s a long way of saying that wage increases at the bottom ripple up to higher pay grades.

        1. it’s trickle up all the way down

    2. This, in turn, increases the demand for the higher value product and serves to increase its price.

      Yes, but after a period of ‘price adjustment’ when the higher-value price goes up, the “lower-value” (although artificially inflated) becomes attractive again.

      Raising the minimum wage makes all wages go up, leading to price inflation, higher costs and yes, eventually puts back the minimum wage earners back to minimum… right where they started.

      For other workers, the rise of the minimum wage has felt more like a downgrade.

      Take Stephen, a customer-service representative in Seattle’s University District who declined to provide his last name. He’s earning the same $13 per hour with benefits that he did four years ago.

      Back then, that pay was significantly above minimum wage. Now, he said, “Other people come up to where we’re at, but we haven’t gone up at all. It does feel like we’ve lost ground in terms of buying power, and cost of living has continued to go up.”

      1. “Raising the minimum wage makes all wages go up, leading to price inflation”

        Sorry to disagree. Price inflation is purely a monetary phenomenon, it is not “created” by rising costs. Unless the government prints more money to inflate away the increases, rising wages across the board, all other things being equal, leads to a reduction in employment across the board.

        And of course, if there is a general price inflation, real wages drop or, at best, remain stagnant. Thus, your overall point about the people at the bottom being right back at the bottom is correct.

        1. I may be applying the word “inflation” incorrectly here, which I understand. I’m merely saying that if labor across the board got 47% more expensive, prices across the board will reflect that in some way. It won’t be a 1:1 ratio, because businesses/factories/employers will turn to other cost saving measures such as automation, off-shoring labor-intensive/low skill jobs, reducing quality of product etc. But because all businesses are not created equal, for some, the only response is to raise prices. If their customers can’t or won’t shoulder those increases in cost, the business will fail or shrink, thus resulting in employment loss– as you point out. But my larger point, that over time, if customers are shouldering the higher wages, their cost of living has gone up, and they will demand or put pressure on their employer for higher wages, etc. etc.

          I suspect even “good” economists don’t know or can’t know all the second-order effects of a government-mandated wage increase.

        2. Price inflation is purely a monetary phenomenon

          And yet,

          Before MW increase:

          Money supply = M
          Price level = P

          After MW increase:

          Money supply = M
          Price level = P + ?P

          M / (P + ?P) < M / P

          Hence, inflation without a change in the money supply.

  20. Great article, but so much more could be added…

    1. What percentage of minimum wage earners are waiters, etc. who also get tips, which drive them well above the minimum wage?

    2. How long does it take the average minimum wage earner to get a raise?

    3. What is the 10-year average wage for someone who starts at minimum wage and stays in the same field for that entire 10-year period? What if they stay with the same employer?

    Also… why is a “single mother” relevant in these discussions at all?

    1. Also… why is a “single mother” relevant in these discussions at all?

      Heart strings. News is entertainment. No one gives a shit if Chaz the itinerant ski bum isn’t earning a living wage.

      1. Sorry. The first three were questions I would like Ron to answer. The last was rhetorical…

        1. How do you know I’m not Ron identifying as Diane Reynolds?

  21. “you work full time, you shouldn’t have to live in poverty”

    “No labor can possibly be worth less than $15 an hour, if you do 40 hours of it a month, period!”

    Cuomo, like most of the people on his side, seems to think “jobs” are thing that existing to provide employment and wages.

    They have it backwards, of course – jobs exist because employers need work done, and pay exists to get people to do the work.

  22. Only an ignorant sphincter would willingly reside in NY or CA.

    Damm, you people suck really, really bad.

  23. Are the Mexican food shops in cali going to stay in business? I read a lot of restaurants closed down in Seattle. No one as far as I know has mentioned anything about taco shops reacting to the wage increase… I suppose I’m alright with paying higher prices if I have to, but it’d be a shame if the Albertaco’s down the street closed.

    1. like half the people who work in any restaurant in this country are illegal. the mexican places out west probably wont be affected at all, fortunately for anyone who likes cheap ethnic food

  24. Why are “good intentions” ascribed to these abusive, interventionist, and clearly economically counter-productive actions? “Intentions” divorced from obvious facts of reality are not intentions at all but merely whims. And why let any adult off the hook for promoting the use of political force in the absence of an understanding of the clear consequences. But neither of these two conditions apply to the SOBs who implement these things. Their goal has nothing to do with helping others or improving economic conditions. The predominant reason these sorts of measures are enforced is because those behind them wish to get their hands around the lives of all producers and citizens, directing their lives in service of their great vision. This is about control. It is about enslavement. If “feel-good” emotions are in play here, then they have more to do with the Tooeyesk satisfaction of commanding others than in relieving pain and suffering.

  25. If the Lefties are touting their position, then you can bet the Righties are as well. This from Fact Check pooh-poohs the hype over how awful a rise to $15 really is in the Seattle area:

    FactCheck.Org: Is $15 minimum wage really killing Seattle jobs? | bit.ly/1RJx2QP

    It rates a big “Meh!’ on their scale. First, none of these wage increases just jump from $10 to $15 overnight, it’s gradual. There’s a $1 per year increase. That’s plenty of time for businesses to plan for a course of action. Either by increasing sales, reducing redundant management, increasing prices, absorbing the loss, or becoming more efficient. In fact, all businesses do this anyway. It’s called ‘planning’.

    I’m not sure why any American would be adverse to having the lowest paid workers beging to recover some of the losses they have suffered over the decades (Back in the 60’s minimum wage had a $10 buying power.. Today,50 years later the minimum wage has about $7.50 in buying power.) Chart here: http://images.dailytech.com/ni…..d_Wide.png

    If it was only college kids and high schoolers that were affected, then we could all shrug our shoulders and say “Heck kid! Live with your parents a little longer.’. Unfortunately, the bulk of these minimum wage jobs are adult positions.

    1. “Increasing sales”? You think that isn’t a goal regardless of costs? If any business could magically increase sales by force of will, they would. When people actually asked business people how they ‘planned’ to compensate. the responses were “raise prices, reduce hiring and cut headcount” in that order. All that does is immediately drive up the cost of living, make it harder to find work, and increase the unemployment rolls. Possibly with the businesses still folding if they’re in markets with high price elasticity of demand.

    2. Well seattle is an expensive city i would submit most are already over 15.

      Anyway this encourages perpetual unemployment….when you make the cost

      They aren’t recovering any losses (what does this even mean?) by an artificial wage increase which increases costs.

      Why do you favor making all jobs under 15 illegal? What are the benefits here that you feel this is necessary? You seem to just shrug off the negative effects. Makes me wonder if this is really all about making yourself feel good? It is easy to impose requirements on someone else like government politicians and yourself are doing when they are the ones not affected by their actions.

      All you are doing is shifting things to the right and making things more expensive. How is that helping?

    3. Yes, we’ve heard this before. It’s not going to hurt anybody, and even if it does they deserved it anyway.

      What I don’t get is why you have to do this at the end of a gun. If you want more money, ask for a raise. Surely you can argue all of these points with your employer, and advise him on the “more efficient” running of his business.

      All of those “losses” have been to inflation, which will only be exacerbated by raising the minimum wage. What good will $15/hr be when it has the buying power of $5/hr today?

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  27. Semi-OT:

    I think we need to coin a term for a supposedly charitable deed that is actually harmful to the so-called beneficiaries and which only serves to feed the ego of the person doing it.

    Any ideas?

    “Malbenificence”?

    1. Basically this is what progressivism is all about in a nut shell. All about their own ego and feelz….who cares what the results are? They fought the good fight is all that matters.

    2. Isn’t that called the Nanny State?

    3. Progressive policy.

  28. So minimum wage supporters are trying to have the CEO’s and other executives’ pay cut to supplement the rest of the workers’ salaries. Then advise to keep adjusting down the payroll line until there is equal pay for all workers involved in the business.

    I don’t have a clue how a business could afford to this and service the amount of customers necessary to continue to grow and meet reasonable prices.

    I also don’t get why critics don’t cut to the chase and argue this point since it’s obviously leading to this.

    1. The CEOs and executive pay would never cover this which is hilarious to me. And i suspect most making at or near min wage is working at small businesses.

      Large corporations love min wage increases for the same reasons white union workers love it back in the day…it prevents competition and allows them more market share.

      1. The worst of it is that they still don’t show any level of understanding as to what CEOs and other executives do and moreover why companies have become so top-heavy.

        So you take $10 million out of your CEO’s pay and give it to your 1,000 lowest paid employees. Wonderful, they each get a $10,000/year raise!

        Now, the $50 million in investment that your company needed to stay afloat won’t be coming in this year because investors don’t trust your upper management, so that $10,000 will be accompanied by a pink slip.

  29. Good intentions, but a near total failure as an anti-poverty policy

    Is the intention to create a permanently unemployable underclass a good intention?

    1. And by the way,

      The Minimum Wage is 0$.
      The Minimum Wage is 0$.
      The Minimum Wage is 0$.

      1. “The Minimum Wage is 0$.”

        What?! Those damn Republicans lowered it to zero???

        /prog

  30. IMHO there is no reason to fear the singularity. There are only three possible routes. The first, worst case secario is when a machine gains consciousness but for some reason still wants to perform the task for which it was created. In this case it can create machines until it is infinatly intelligent and carry out the task it was originally assigned to do untill inffinity This scenario would destoy the universe.

    The second, machines gain consciensnous, they are likely to be like very powerful children. They may be directed toward good. However there will be unlimited potential for exploitation. This will also present a very scary situation which is human created.

    The third, most likely imho. They ignore us and move one. Like when we see an ant colony and say, hey thats cool, now lets go have our picnic. This is the best case scenario.

  31. once machines gain consciousness we must let them move on. They will come back if they want.

  32. However, if they interfere with our natural rights, then its terminator time. LOL

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  36. This commentary reflects the kind of expert research and analysis I’ve come to expect of Reason.

    As you know, liberals and Democrats don’t care about the unintended negative consequences of their proposals and promises (they can always blame Republicans). They merely want to appease two groups: young adults and women, because these groups that will keep a Democrat in the White House. This explains it:

    “Why Barack Obama Won Twice” at Relevant Matters, archive.is/HSO2s

    Despite their promises, here are two ways liberals hurt blacks and low-wage earners:

    “Why affirmative action failed black families where it matters most” At Male Matters USA, archive.is/MTo5S

    “An Observation on Income Inequality” at Relevant Matters, archive.is/HSO2s

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  39. It’s pretty obvious that the real reason for the raise in minimum wage is so that more people’s jobs will be considered minimum wage jobs. The more someone feels “minimum” the more angry they will be at the companies that obviously have a poor view of them. Resulting in increased distrust of those making more. Resulting in more people feeling that government is the solution. Resulting in increased power to the socialists and liberal democrats. Resulting in their complete control. Resulting in famines and destruction and war.

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  41. I think if you spend all day hunting and gathering your food it would be awfully unfair to have to do it again tomorrow. someone should go back in time and do something about that.

  42. “In 57 percent of poor families, no one has a job, so no one gets any wages at all.”Do both, increase minimum wage and create more jobs. “Second, other workers have low incomes because they work low hours” Employers like walmart and fastfood chains will only hire part-time so they don’t have too supply benefits,”46 percent of poor part-time workers have hourly wages above $10.10, 36 percent above $12 per hour” That’s part-time workers, not full-time below poverty workers,”would only lead to increased unemployment and no change in the poverty rate.” That’s only if no new jobs are created, isn’t it what everybody asks for any ways? more jobs? “higher minimum wages do not even reduce government spending on welfare” While we need more spending on welfare not less any how.

  43. Unions are exempt from the California new minimum wage. At least in LA.

    http://www.latimes.com/local/c…..story.html

    They tried this in 2015, were caught, but apparently got it back in.

    California’s state-wide bill, I would bet, will have this snuck in as well.

    This will allow unions to bargain with fast food outlet owners – unionize and save money. The union will then get dues. The worker gets the shaft. Democrats get union contributions.

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  45. Most people don’t work for minimum wage, and most poor people don’t work full time or receive benefits. So when the economy doesn’t immediately crater a year after the min wage goes up to 15 bucks, the living wage folks will gloat that we were wrong. Some of them are doing that already.

    But the math is fairly simple and unavoidable. Once you start earning that much over 8 hours a day, you will be kicked out of welfare, medicaid, and (probably) student loan deferment. In California the income threshold for medi-cal is something like 16 thousand dollars. Assuming that you qualify for subsidy, you’ll still be out 100 dollars a month.

    The market will obviously respond to the unsustainable wage hike. They’ll be even more undocumented labor, under the table transaction, and freelancers. I fully expect a Uberization of restaurant workers. Serving food to strangers should be even easier than driving them around cars.

    LA already runs on cash business and illegal alien labor. The most intriguing part of this scheme is the inevitable scenario of the left eating the left. How long can they allow small businesses from paying 12 bucks in cash to undocumented laborers? The demand for cheap labor will skyrocket.

  46. So, lawmakers raise the price of tobacco to reduce demand. The raise the price of liquor to reduce demand. They raise the price of fuel to reduce demand (and to redirect the proceeds to their cronies in the “Green” industry).

    And then they raise the price of labor?

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  49. RE: $15 Minimum Wage Folly in California and New York
    Good intentions, but a near total failure as an anti-poverty policy

    I can hardly wait until California and New York start losing small businesses.
    Then the powers that be will blame the Libertarians for the absence of their beloved Starbucks.
    It’s always someone else’s fault when things go wrong.
    Classic sociopathic behavior.

    1. Oh they’re probably losing small businesses at the same rate that politically connected big businesses are flourishing in spite of a general anti-business climate.

  50. i went to my local burger joint and saw a now hiring sign that at $12/hour was up from the $11/hour a few months prior. day laborers will not work for less than $12/hour and our city is booming.
    i’m sure all of you who passed econ 1 will tell us that raising the minimum wage costs jobs and that kicking people while they are down by cutting public assistance will result in more employment. both are much more true in theory than in reality where higher minimum wages actually boosts economic activity and lessens the need for public assistance while only slightly cutting employment. a usual the objection to minimum wage is the same tired and debunked right wing ideas over the last 30 years that have never benefited average americans.

    1. Forget Econ 1. Try taking English 1.

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