Seattle Minimum Wage Study Has Serious Flaws (washingtonpost.com) 528
"Remember the story from last week about how the new Seattle minimum wage law was hurting workers?" writes Slashdot reader PopeRatzo. "Well, it turns out that there are some problems with the study's methodology." The Washington Post reports:
First, their data exclude workers at businesses that have more than one location; in other words, while workers at a standalone mom-and-pop restaurant show up in their results, workers at Starbucks and McDonald's don't. Almost 40 percent of workers in Washington state work at multi-location businesses, and since Seattle's minimum wage increase has been larger at large businesses than at small ones -- right now, a worker at a company with more than 500 employees is guaranteed $13.50 an hour, while a worker at a company with fewer than 500 employees is guaranteed only $11 an hour -- these workers' exclusion from the study's results is an especially germane problem (note that low-wage workers in Seattle have had an incentive to switch from small firms to large firms since the minimum wage started rising).
In earlier work, in fact, the University of Washington team's results were different depending on whether these workers were included in their analysis; including them made the effects of the minimum wage look more positive. Second, the University of Washington team does not present enough data for us to assess the validity of its "synthetic control" in Washington -- that is, the set of areas to which they compare the results they observe in Seattle. The Seattle labor market is not necessarily comparable to other labor markets in the state, and given some of the researchers' implausible results, it's hard to believe the comparison group they chose is an appropriate one.
Suggesting Seattle's booming labor market may have skewed the study's results, two nonpartisan economists concluded it "suffers from a number of data and methodological problems that bias the study in the direction of finding job loss, even where there may have been no job loss at all." And the Washington Post also notes the researchers' findings are suspiciously "out of step with a large body of research," including another study from U.C. Berkeley researchers [PDF] which determined Seattle's wage increase "is having its intended effect."
In earlier work, in fact, the University of Washington team's results were different depending on whether these workers were included in their analysis; including them made the effects of the minimum wage look more positive. Second, the University of Washington team does not present enough data for us to assess the validity of its "synthetic control" in Washington -- that is, the set of areas to which they compare the results they observe in Seattle. The Seattle labor market is not necessarily comparable to other labor markets in the state, and given some of the researchers' implausible results, it's hard to believe the comparison group they chose is an appropriate one.
Suggesting Seattle's booming labor market may have skewed the study's results, two nonpartisan economists concluded it "suffers from a number of data and methodological problems that bias the study in the direction of finding job loss, even where there may have been no job loss at all." And the Washington Post also notes the researchers' findings are suspiciously "out of step with a large body of research," including another study from U.C. Berkeley researchers [PDF] which determined Seattle's wage increase "is having its intended effect."
That's fresh (Score:3, Insightful)
>And the Washington Post also notes the researchers findings are suspiciously "out of step with a large body of research
As in, "the large body of research" where 79% of economists agree that "a minimum wage increases unemployment among young and unskilled workers" [blogspot.de]? This is undergrad economics at any college worth its salt.
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Blogspot isn't exactly known for it's scientific reputation.
Maybe try posting a peer reviewed study, not a random blog?
That is not a valid counter point (Score:5, Informative)
Call me crazy but I am untrusting your blogspot source about polls, and expect peer reviewed litterature, just for the reason that at least peer review and publishing allow to uncover the flaw cited in the summary.
So if raising the minimum wage is bad for workers (Score:3)
Yeah, I'm being facetious. But it's a core argument made by the other side (raise minimum wage to $200/hr!).
And yes, those studies are correct. They're correct because you'll see adults competing for jobs that only kids can hold right now. That's because only kids could make that little and survive. It's a minor thing since poor economic conditions forcing adults to take second jobs and increasing workload at scho
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Those countries also have little niceties like free healthcare, child care - and probably subsidized housing. But who's counting...
They have ridiculously strong Unions (Score:3)
Basically, they've achieved the same thing with a different set of laws. Government intervention was still necessary to prevent worker abuse. They just went about it a different way.
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Re:83% of statistics are made up (Score:4, Interesting)
But since nobody is actually proposing that- it's meaningless to study it.
What DOES make sense is to study what effects small and moderate minimum wage increases have on employment - since those are what actually happens.
Nobody would set such a high minimum wage because everybody knows it's insane and would have terrible effects. But it does not logically follow that a small increase would have the same bad effects.
Your bathtub is at 25C. Increasing the temperature of your bathwater by 100C would kill you, increasing it by 3C just makes for a nicer, more comfortable bath. Small interventions do not always have the same effects as a large version of the same would have.
The overwhelming evidence is that moderate minimum wage increases have little to no impact on overall employment rates. It makes sense too - what business would choose to LOSE money by firing people it needs and losing out on sales because it couldn't produce enough goods ?
A business would only start looking at layoffs if the increase is so big that they would lose MORE money paying those people than they will lose turning away customers (and that's BEFORE we even consider the possibility of having more customers when wages go up).
Investigative study "smells" (Score:4, Insightful)
As with code "smells", the response to the Seattle study suffers from study "smells."
It seems the people want a certain outcome, namely, that increasing the minimum wage puts more money in the pockets of working persons trying to get by. I mean, who can be against that apart from some mean-spirited Conservatives and clueless Libertarians, no?
But isn't science supposed to be about where the data lead instead about what we want the outcome to be? This study isn't what we want to hear so oh noes, the study has flaws and it doesn't agree with all of those other studies.
I am sure this study has flaws along with every other data-collection and interpretation effort in the social sciences. My concern is with the confirmation-bias-y tone of the parent post, like the Wild West prospector who sees a few yellow sparkles and starts hopping up in down, "There's goooolllld in them thar heels!"
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It seems the people want a certain outcome, namely, that increasing the minimum wage puts more money in the pockets of working persons trying to get by. I mean, who can be against that apart from some mean-spirited Conservatives and clueless Libertarians, no?
See, this is what I don't get. I mean, there is absolutely nothing stopping you from opening a burger joint, pizza place, or coffee shop and paying the workers $50/hour if you want. However, if there are people out there willing to work for less than $15/hour, or $13/hour, or $11/hour, or whatever, who are you to tell them that they can't. If there are employers out there who don't think that they can or want to pay a certain amount, who are you to tell them that they must?
How is it that the argument
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So, you are saying that people should be "free" to work for low wages where they can't afford food or shelter?
"Freedom's just another word for nothing left to lose..."
Re:Investigative study "smells" (Score:5, Interesting)
So, you are saying that people should be "free" to work for low wages where they can't afford food or shelter?
So, you are saying that people should be "free" to work for the highest wage they can obtain? Perhaps Seattle should introduce a maximum wage bill that caps wages at something reasonable, like $30/hour. I mean, if the government gets to decide what the minimum standard is for someone to live and how much they should be paid, then why not also define, set, and enforce a maximum standard as well?
Re:Investigative study "smells" (Score:4, Informative)
The discussion is about giving people enough money to afford food and shelter, not limiting their potential earnings.
However, I could see that this suggestion might be good for corporate executives to limit their pay. Several countries/jurisdictions have actually implemented rules that limit executive pay to some multiple of the lowest wage their company pays. Usually it's a factor of less than 100.
Re:Investigative study "smells" (Score:4, Interesting)
The discussion is about giving people enough money to afford food and shelter, not limiting their potential earnings. However, I could see that this suggestion might be good for corporate executives to limit their pay. Several countries/jurisdictions have actually implemented rules that limit executive pay to some multiple of the lowest wage their company pays. Usually it's a factor of less than 100.
You and others may claim that the discussion is about making sure people can afford to live. But more fundamentally, the discussion is about taking away choices from employees, employers, and even customers and other actors in the market. Ultimately, every government regulation is a removal of rights and choices. There are some instances where such removal of rights and choices is clearly in the best interests of one or more groups of market participants. Environmental regulations are a very good example, in particular because of the indirect nature of the associated costs and benefits. But an honest debate cannot be had when there is an unwillingness to have a balanced discussion that considers both sides of the issue.
Now, don't get me wrong, I am all for local and even state governments deciding on matters like this. I think Seattle's policy is wrong, but their duly elected representatives implemented it, so I am going to give them the benefit of the doubt and assume that they did it because that is what their constituents want.
The two problems that I have with the whole debate is: 1) proponents always frame it as a "we are here to help" sort of thing, while never willing to acknowledge that their "help" requires that everyone involved give up some of their rights (again, that is a matter for local jurisdictions to decide if that is an equitable exchange, the right of choice of employment for the guarantee of a better wage); and, 2) for some reason lots people seem to think that this is a matter for the federal government when it clearly is not.
So, to summarize, just be honest about what is actually being taken/given (this isn't a give only arrangement) and don't bring the federal government into it. Then, local governments are free to do as they feel is right in this matter and people who like can move there and work/start businesses and people who don't like it can go work/start businesses elsewhere.
Re:Investigative study "smells" (Score:4, Insightful)
I know, and every time a mother puts a toddler in time out for acting like a horrible little shit, it's a "removal of rights and choices". News fucking flash - we live in a society. Go read your fucking Thomas Hbbes, and grow up out of this thirteen year old's mentality (and economic philosophy), JFC.
Re:Investigative study "smells" (Score:4, Insightful)
The two problems that I have with the whole debate is: 1) proponents always frame it as a "we are here to help" sort of thing, while never willing to acknowledge that their "help" requires that everyone involved give up some of their rights (again, that is a matter for local jurisdictions to decide if that is an equitable exchange, the right of choice of employment for the guarantee of a better wage); and, 2) for some reason lots people seem to think that this is a matter for the federal government when it clearly is not.
You have a very strange definition of "rights." Your definition appears to be something along the lines of each person being able to say "what I've decided is best for my situation" as evidenced by:
if there are people out there willing to work for less than $15/hour, or $13/hour, or $11/hour, or whatever, who are you to tell them that they can't. If there are employers out there who don't think that they can or want to pay a certain amount, who are you to tell them that they must?
and
fundamentally, the discussion is about taking away choices from employees, employers, and even customers and other actors in the market. Ultimately, every government regulation is a removal of rights and choices.
But that definition suffers from so many obvious flaws. I mean, take antitrust regulations. Do they take away choices? Of course! They take away the decision of corporate entities and their owners to eliminate all competition in a market and become the sole source of an essential good or service. By doing so, the regulation stops entities who would do that from denying choice to consumers after they've cornered their market. So, whether regulation is applied or not, choice is inevitably denied to someone. But, according to your definition, for some reason that's a bad thing because it was the federal government making that restriction and not a state or local government. I never fully understood that logic. But I digress.
On to the matter at hand - the existence of minimum wage. And let's cut to the chase here, all your arguments here have been most applicable to the existence of minimum wage, not about whether the minimum wage should be increased or not. I mean, by saying that I as an employer have to pay someone at least $7.25 per hour (the current federal minimum wage in the US), the federal government has taken away my choice to pay someone $3 per hour and the choice of people to find a job that pays $3 per hour, so your arguments still apply.
Employers have a rational desire to seek the most gain for the least cost to them. This means that without outside interference they will pay the least amount that someone is willing to do the job for. Employees will seek the greatest pay for the skills they possess (actually, it's more complicated than that, but I think we can all agree that that is at least one of the factors). With no minimum wage, for skilled labor there is a shortage of the necessary workers so you end up with pay pretty much the same as what it is now - well above the minimum wage. For unskilled labor, if there are ever more people than jobs in any locality then you end up with people competing against each other to see who is willing to accept the least pay and the longest hours. Those who refuse to accept low pay don't get jobs. It doesn't matter if the long hours at low pay just barely get you enough to pay for enough food to survive. You will accept it if the alternative is starvation.
By allowing choice up front (the choice to form monopolies or pay as low a wage as you can get employees to work for), you take away the choice of unskilled employees to do anything but struggle to survive. Whether you regulate or not, someone's choices are going to be affected by the economic framework they live in. If you're going to complain about everyone else misrepresenting the debate, you need to make sure you're not making the same mistake.
tl;dr - Maximizing the number of choices that each economic player has is not a "right" and it is not a wise long term strategy.
Re:Investigative study "smells" (Score:5, Insightful)
The discussion is about giving people enough money to afford food and shelter, not limiting their potential earnings.[...]
Minimum wage has nothing to do with 'Giving' money(except for campaign contributions).
Employment is about earning money by exchanging services for compensation, and only makes sense when those services provide more value to the employer than the cost of the compensation.
Minimum wage is about creating a minimum level of productivity, below which a person becomes unemployable.
(it also affects a number of union negotiated contracts, and reduces competition, but that is a different argument)
Minimum wage does nothing for the person who does a great job, who the employer is afraid of losing to the competition.
Minimum wage makes people who are not able to provide enough added-value unemployable.
Minimum wage raises the minimum price point of human labor so that automation is more competitive for more jobs.
Minimum wage also increases the risk to the employer when hiring(they lose more money if the new hire cannot do the job effectively)
When a given task is only worth a certain amount, anyone hired to do that task must complete it more quickly to be cost-effective when minimum wage goes up.(and if it cannot be done more quickly, then it is just not cost-effective to have it done, eliminating the job entirely)
The *only* reason minimum wage even sounds like a good idea, is the belief that employers are sitting on huge piles of cash that they *could* give to their employees but choose not to. While this may be true in a few rare cases(see Apple), the vast majority of employers invest in growing their company with every spare nickle they can scrounge.
Japan did that (Score:3)
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So, you are saying that people should be "free" to work for low wages where they can't afford food or shelter?
So you're saying the only jobs that should exist need to pay well enough that the worker can survive without any for of assistence? Where will a high school graduate go to get their first job? What about summer jobs to pay help pay for college?
Every job has to pay $15/hr?
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Yes. It's called a living wage.
And yes, even summer jobs should pay a living wage. (BTW, most minimum wage jobs are held by adults struggling to support their families, not teens on summer break.)
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Where will a high school graduate go to get their first job? What about summer jobs to pay help pay for college?
Ideally by not taking away someone else's only chance at full-time employment.
Re:Investigative study "smells" (Score:5, Insightful)
The problem is that these are not "entry positions". They are the only jobs available for people trying to support a family. They don't pay enough for one person to live on and certainly not enough to support a family.
Funny... "simply look for the next job and find one that pays more"
Re:Investigative study "smells" (Score:4, Interesting)
The problem is that these are not "entry positions". They are the only jobs available for people trying to support a family. They don't pay enough for one person to live on and certainly not enough to support a family.
Funny... "simply look for the next job and find one that pays more"
Previous increases in minimum wage eliminated the truly entry level positions and the associated on the job training that would have allowed these people more freedom both to move up to higher paying jobs(possibly at a different company), or to start their own company(with it's own entry level positions).
It also means that the people trying to raise a family at the new minimum wage must compete with all of those who do not need to support a family and just want some extra cash such as students. Increased competition for a job means that the employer can provide fewer benefits and less tolerable working conditions until there are only just enough people desperate enough for the job to fill all of the available positions.
Then again the politicians bragging about raising the minimum wage do not care about unintended consequences, they just want their sound-bite and photo-op.
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In some of these population-dense areas, the supply of laborers far exceeds the available jobs. You don't have opportunities for higher wages.
Now, at the same time there are a lot of high wage earners in Seattle. They can afford to buy lots of minimum-wage supported goods and services at a slightly higher price. Many of these businesses are making plenty of money and could afford to pay more because of the size of their profit margin. They don't need to simply because of the size of the labor supply. I
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However, if there are people out there willing to work for less than $15/hour, or $13/hour, or $11/hour, or whatever, who are you to tell them that they can't.
People don't work minimum wage jobs because they want to, they work at them because they are the only jobs available to them (whether due to the skill/ability/hireability of the worker or the availability of jobs in the area). Employers have a monopoly on jobs, so without a minimum wage they employers get to set the "price" of those jobs (where "price" is measured as the difference between what the employee would like to get paid and what the employer will pay).
Judging by your username, you are most likely not a fan of socialism but rather prefer free market capitalism, however you are espousing capitalistic views that are so radical that the effect might as well be the same as under most Communist governments, and would leave the common worker in abject and permanent poverty.
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It works both ways. Those who praised the study last week were merely engaged in confirmation bias. Those who ignore the fact that inflation has outpaced low-end wages for decades, or try to formulate convoluted arguments as to why trying to curb this process is economically harmful, latched onto the original study without considering whether its conclusions were sound.
Also, your assumption that "social sciences" actually practice science may contribute to your confusion here. Social sciences combine logic,
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> isn't science supposed to be about where the data lead
Yes. But which data?
> instead about what we want the outcome to be?
If you want the outcome to be a certain way, perhaps you'll discard 40% of the data if you discover that 40% tends to give the outcome you do not want, and the other 60% gives the desired outcome.
That's what happened in this study. They intentionally filtered away all the big companies who were required to pay $13.50/hour and only looked at employment from small companies requir
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McDonalds hires only the minimum number of workers to serve its business, to sack workers it would need to have a drop in sales, which isn't shown.
Or automate. [cnbc.com]
Re: If the study has flaws, they need to be fixed (Score:2)
How cute, somebody thinks it is remotely possible to statistically correct for all the relevant confounders in economics.
WaPo gets the Captain Obvious Award (Score:3, Insightful)
You have to explain to journalists at the WaPo that "Maybe hurting some hourly workers", and "Some companies maybe cutting hours" meant that it didn't include all businesses such as McDonalds and Starbucks who play by a special and exclusive set of rules. They are part of that "elite" and "special" group and comparing them to smaller mom and pop businesses is like comparing apples and oranges.
The real story on this should be about how USA Today failed to make the bias known to readers. But then we wouldn't be feeding those snarky know-it-alls at the Washington Post now would we?
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And after taking time to read the publication, page 8 on the NBER Working Paper specifically points this bias out pretty clearly and why they did this. This is the root core of MSM's problem as well as lazy people failing to do their own research and read the pub, because you HAVE to these days.
it hurts small business then (Score:2)
Ok: replace "workers" with "local business" or "local business workers"
Better now?
Seattle=America (Score:2)
Do Starbucks baristas make $150K/year in San Francisco? Is minimum wage like $70/hour in California? Just curious how we've magically solved the minimum wage problem elsewhere, especially as we hear of all those poor developers practically living in poverty making six figures in the bay area.
Guess I didn't realize we moved all of the minimum wage jobs in America to Seattle.
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San Francisco restaurants are closing due to increased wages for workers. [washingtonexaminer.com] Granted they are lower-reviewed restaurants, but that doesn't lessen the sting for the terminated employee or former employer when their 3/4 star Yelp-rated restaurant closes.
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That frees up real estate for a better restaurant.
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Seattle & Sea-Tac were some of the first cities to implement the $15 min. wage which is why they are being watched closely.
That doesn't answer how baristas make it in the bay area on less than six figures, or why we chose to implement this on a small enough scale to easily fund collusion and corruption to manipulate any analysis. We seem to forget how may billionaires out there can easily buy and sell statistics to favor their particular flavor of Greed.
So they basically confirmed the study was correct (Score:5, Interesting)
So reading between the lines, the study's results were largely correct when talking about small businesses, higher minimum wage hurts small business. But it doesn't matter, according to these idiots because McDonalds isn't affected by it as much as true small businesses. Since when are we vouching for McDonalds and Wal-Mart as good corporate citizens?
You can't lump in McD and Starbucks because even though they do employ minimum wage, they will employ minimum wage regardless of the cost. They are large enough enterprises with high enough profit margins to absorb these costs and in the process drive out any competition from small business, which is exactly what McD and Walmart do when they're coming to a new market anyway, they operate at a loss until all the competition has starved out.
I'm surprised actually that McD, Starbucks and Walmart don't actively drive minimum wages up just so they can completely drive out every other local business. If I were an 'evil CEO', I'd do that and then when I have 90% of a market, I'd lobby to get it reduced again or even just to get my company excluded.
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I doubt the majority of Starbucks, McDonalds, and WalMart employees are paid the minimum wage. In my experience (observational, not personal) they tend to offer better than minimum wage to attract employees that can function at a higher-than-minimum level.
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You're right, they don't pay minimum wage. They usually pay $2-4/hr more then the minimum wage, it's the small business owners like mom n' pop restaurants, gas bars, small hobbyist stores, convenience stores that pay right at the minimum wage because their monthly profits are just enough for the owner to make ends meet if they're lucky(and providing they're not the ones who are there for 15hrs/day anyway). Strange thing though, every time these bumps in the min. wage happen those big name stores also stop
Re:So they basically confirmed the study was corre (Score:5, Informative)
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I'm surprised actually that McD, Starbucks and Walmart don't actively drive minimum wages up just so they can completely drive out every other local business. If I were an 'evil CEO', I'd do that and then when I have 90% of a market, I'd lobby to get it reduced again or even just to get my company excluded.
Because it's easier and more efficient to kill local businesses by simply leveraging your size to charge less, even to the point where your store is losing money since you can afford losses at one store when you have hundred of other stores. Then, once local competition has been driven out, you raise prices. If you want to kill a business you go after their customers, not their employees. Plus, this way you don't have to deal with the mess of raising, then trying to lower the minimum wage (good luck gett
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So reading between the lines, the study's results were largely correct when talking about small businesses, higher minimum wage hurts small business.
Nope. You're ignoring the effect of the different minimum wage for "mom and pop" businesses and larger businesses.
Pretend you're going work at a cheap restaurant. Your choice is $13/hr at a restaurant with one location, or $15/hr at a restaurant with multiple locations. You'd tend to choose the latter option, right?
It turns out, so would a lot of other people. So now the small business is dealing with a crappier, less-productive pool of workers because all the "good" ones are working for the large compa
Pick the Study your bias preferres (Score:3)
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Wow (Score:2)
First off, if we accept the premise that workers escaped low-wage employers and migrated to larger employers, are we to believe that this was never the case before, that larger employers didn't always offer better pay and benefits packages than smaller employers?
Second, we are expected to believe that increasing the cost of labor in no way encouraged employers to reconsider and possibly cut back on the number of workers they hire and the number of hours they work? A slightly higher wage coupled with fewer h
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Restaurants are probably the worst kinds of businesses there are. Unless your a franchise like McDonalds or Starbucks, your margins are obscenely low. True, by stiffing your employees you can find a bit of extra profit, but all.in all, anyone opening a restaurant thinking they are going to reap some grand reward is out of their mins. If the only way you can make a profit is by screwing over your employees, then I'd say the business mod is fucked.
And it is, high turnover is one of the biggest issues the rest
Milton Friedman's view (Score:2)
Maybe even worse than study suggests? (Score:3, Interesting)
Hold up a minute. If the smaller business is allowed to employ people at a lower minimum wage than the larger business (and remembering here we're talking in both cases about a wage above the unregulated market wage for that job) then the smaller business has gained a competitive advantage relative to the larger business, compared with the prior situation.
So you'd expect the larger businesses to be contracting, and the smaller businesses to be expanding.
If the study shows that the smaller businesses are actually contracting, that means the damage in absolute terms to those businesses is greater than the benefit from being able to steal a march on their larger competitors. But that doesn't mean they aren't winning some trade away from the larger businesses, just that it's not enough to fully cancel out the damaging effect.
Not covering the larger businesses is a limitation of the study. But far from proving - or even suggesting - that they've expanded by an equal or greater degree to the contraction by SMEs, actually we can guess that the contraction there is EVEN WORSE. (Note here that we're talking about contraction in employment: it's possible the larger corps limited the damage to their profits by contracting employment even more sharply, e.g. the robo-servers we see taking orders in McDonalds).
Bottom-line: OK, that study had limitations. What study doesn't? But don't be too quick to say that implies the opposite of the study's conclusions: it might be even worse than you think.
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So you'd expect the larger businesses to be contracting, and the smaller businesses to be expanding.
The labor pool contains more than idiots.
If you can make $13.50/hr or $11/hr doing essentially the same work, you're going to take the $13.50/hr job. Which means the quality of the labor left over for the $11/hr job is lower - they're the people who couldn't get the $13.50/hr job. Which means you're going to get the costs that come with a lower quality labor pool, such as reduced productivity and higher turnover.
Re:Minimum wage itself is flawed. (Score:4, Interesting)
You misunderstand what a free market is.
Free market means that governments or regulatory bodies cannot set the PRICE of goods and services. There's nothing wrong in setting minimum acceptable standards.
Ex: Sure.. mandate $150/Hr. then businesses can choose to either sell at existing price+$150, get rid or replace some employees and sell at same price.
Get it? the final PRICE is what's free to be decided by businesses.
Minimum wage and free markets can co-exist. Imagine if businesses said "Hurr-durr how dare government say I have to keep my premises clean huh? this is a free market dammit!"
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Since forever.
A person can't simply decide not to work and die instead.
Labor isn't a supply & demand market; it's supply (laborers) is fixed, giving the demand (employers) limitless bargaining power.
That is why there are things such as social wellfare and minimum wages.
Re: Minimum wage itself is flawed. (Score:3, Interesting)
Labor supply is anything but fixed. People take a gap year or go to law/grad school instead of getting a job, they retire early (possibly very early on disability), they work fewer shifts or less overtime or whatever, they work one job instead of two, they stretch their unemployment benefits out, they marry and raise kids at home rather than work. In the long run, they have more children or fewer.
One of the biggest changes in the workforce since 1970 or so is the increase in the number of women working fu
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Said person can have that decision taken from them: By not having money.
Re: Minimum wage itself is flawed. (Score:3)
Not really. What you would also have is low end businesses undercutting each other to save costs on hygiene, imposing health costs that probably overcome the savings of not taking care of hygiene. Businesses and customers don't have, and can't afford, perfect information, and don't make the most rationale decisions for themselves.
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The market wasn't free in the first place - in order for a free market to function correctly every player needs perfect information. That isn't possible.
That's why regulation is necessary - it enforces that the market behaves somewhere close to what would happen if people actually had perfect information.
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Most businesses pay minimum wage because they can. Not because they have to in order to stay in business.
When Walmart raised their worker's pay to $10/hour, they didn't go out of business and they are still very profitable.
There are a lot of desperate people out there who really want the work and will just about work for any pay. I've seen them wait in line at 5AM with the hopes of being called in and working on the line packing video games. Those bastards took advantage of them. They make a killing on tho
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Just because you can find an intuitive justification doesn't mean your intuition is correct either. And the fact that the study is flawed and the *other* studies on the same issue that don't have known major flaws point in the opposite direction are pretty good evidence. Time will tell, of course.
A more advanced economics course would explain that a distribution of wealth amongst the poorer increases monetary velocity (simply put: more people can afford to buy simple luxuries), which increases demand for
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Even if the study has flaws, it makes sense in economic theory. .
But showing that the study has flaws gives a large swath of people reason to dismiss it. Those same people will readily accept similarly flawed studies claiming the benefits of min wage.
News for all you idiots; there are pros AND cons to min wage. If you can't see both you are not very intelligent.
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The lie was too transparent, and too easy to shift the blame for failing on someone else. The capitalist lie is much more insidious and personal.
Re:yet it still makes sense (Score:5, Insightful)
...This is taught in introductory economics courses...
...and makes intuitive sense...
... to some people it makes intuitive sense that the earth is flat but gut feelings are not a scientific method.
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The currently real existing capitalist market economy is invariably lopsided against the demand side, to the point where it cannot fulfill its duty. In a working capitalist model, the demand side has to choose between the offered products, choosing the best and thus "rewarding" those that produce what the demand wants, which means that those that do not offer what demand wants have to perish due to a lack of customers.
Now explain Comcast.
Re:yet it still makes sense (Score:5, Insightful)
Imposing a minimum wage that's greater than what results from an efficient market should result in higher pay but fewer workers.
This is where things get muddled. There's a difference between an optimally efficient market and an optimally efficient organization. An optimally efficient organization may do things like pay workers the least amount possible, avoid paying corporate taxes by moving assets to offshore accounts, and automating many jobs. Now, if many workers are give poverty wages, that may pad employment statistics but it certainly doesn't provide the market as a whole with an optimal solution. When people don't have much of a discretionary income they can't buy many things and they certainly can't take out loans (if you want an optimally efficient marketplace, you want people to be able to take out loans because loans are what create more money).
The problem with companies relocating money into offshore accounts to avoid taxes compounds this problem because their poverty-wage workers need welfare to provide them with healthcare, food supplements, and other aid such as childcare that they can't afford with their job. This problem is further compounded by the hoarding of liquid assets by executives. Without a strong progressive tax system (and all the many loopholes that allow one to avoid the intentions of our weak progressive tax system), those who make the most have such a surplus of liquid assets that most of them just sit in a bank account. While this looks good on paper, as the interest they gain increases the money supply, this surplus of money doesn't help the economy because it's not being exchanged on the marketplace. This is the problem with wage disparity. If executives made less and low-wage workers made more, then more money would be exchanged in the economy and it would create more wealth. It's a fallacy to assume that corporations and millionaires reinvest their excess profits. At some point one has all they need/want and excess wealth just gets hoarded in bank accounts.
Finally, when it comes to automating new jobs, this rarely (if ever) results in the remaining jobs reaping the benefits of the increased efficiency. The money saved goes to the top, to those executives who are already hoarding more money than they come close to spending.
The problem with a lot of the formulas you learn in introductory economics is they are based off assumptions. Furthermore, economics can make an abstraction of human life. What may look good on paper can be a miserable existence for many. I find economics to be an extremely interesting field that provides tools for evaluating systems that cannot be adequately assessed using science, but perspective is necessary when applying these ideas. Too often we can't see the forest for the trees.
Re:yet it still makes sense (Score:5, Interesting)
This is actually a known and well understood problem in engineering disciplines. The optimum for an entire process is NOT the same as the optimum for each part of a process. Usually the two are not even related. That is why we have things like Whole Process Optimization. This was a basic part of my classes for chemical engineering and drilled home in quite a number of assignments and projects.
What I don't get is why is this a surprise to people in other fields or in economics. If you want a system to work efficiently you have to optimize for the entire system not just tiny parts of it. With society that is a very complex problem and requires a lot of analysis so you do have to simplify to some extent but the more variables you take into account and MEASURE the more likely the system is to work.
Right now I see companies doing what is best for them and then trying to justify that it means it is also best for the system. This is a losing proposition and without some kind of external correction the system will end up tearing itself apart.
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Even if all externalities are taken into account I don't know if that is enough for whole system optimization. Would that increase our average education level to support a higher tech economy? It would probably fix the roads and other infrastructure at least. I just don't see it as the whole solution. Right now though we do very little of it.
I have only taken a few economics classes in college. What I see in real life though is politicians that have a certain view on the world and then they find/twist some
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I don't think the answer is central planning. Most of the problems I see stem from externalities where a business can push off some of the costs of their doing business onto society. Classic examples would be pollution. If companies had to pay for the FULL cost of the pollution they created the costs of their products would rise. It would also mean that companies that do a better job would create a cheaper product. There are many other examples like walmart helping workers apply for welfare. That allows the
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This is true, but I see that as just another way of hoarding money. It's just that some assets appreciate more than bank interest (real estate, stocks), or in the case of bonds they provide a higher interest rate. While this results in money creation, which is good, the money that's created stays with the wealthy. This is one of the reasons there's such a wealth disparity in the U.S.—when the wealthy do things to create more money, that money tends to stay at the top.
That's kind of the problem (Score:2)
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It only makes sense if you simplify economic theory to a closed system containing only one transaction.
If you actually model everything (for example, workers having more income resulting in more money going to the poorer, in turn resulting in more money being spent in the local economy, in turn resulting in businesses doing more business, and having more money to pay their employees), then it becomes much less clear what the outcome is going to be. In all states that have introduced higher minimum wages so
Makes sense - like a rising tide lifting all boat (Score:3)
Re: yet it still makes sense (Score:2)
It would if their customers having more disposable income didn't also have an impact
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So your arguing, that reality is wrong, because intuition? Sure, why not. Seems to fit a theme nowadays.
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Even if the study has flaws, it makes sense in economic theory.
Only if you ignore all the confounding affects.
If the only things in your system are labor price and work hours, then it behaves as you describe. In the real world, the system is not nearly that closed. There's labor availability, changes in demand for the employer's products/services, changes in economic growth, increased supply of higher-quality workers (people move to get paid more) and so on. There's even the utterly illogical effects such as expectations of the economy in the near future.
Real life i
Re:yet it still makes sense (Score:5, Funny)
Except that it doesn't make sense in economic theory.
Supply-side, Chicago School and Austrian School are not economic theory - they have both been utterly debunked.
For higher wages to drive inflation: the potential profit from new customers (higher-earning workers at other businesses) must be less than the cost of the higher wages. This cannot happen with moderate wage increases -in fact mathematically it only becomes likely at truly insane raises. Otherwise the businesses will make more money by absorbing the cost and selling more goods at lower margins.
For higher wages to drive job-loss -they must be so severe that it's no longer possible to operate the business at all. Contrary to what you think economic theory is - hiring rates are relatively independent from the cost of labour because companies need to meet demand in order to stay in business. The amount of work that needs to be done is therefore the primary driver of hiring. Assuming the company is meeting current demand if the cost of labor goes down the company won't hire more people, so why would they fire people if it goes up ? Both decisions would cost them money ! A company will expand if it can credibly determine that there is unmet demand. Not because workers are cheaper. There's no point in having workers make goods you can't sell, anymore than there is any sense in having to turn customers away because you don't have enough workers to make the goods for all the customers. The impact of labour cost on hiring levels then is miniscule.
In theory the wage increases should, actually, increase demand and make expansion more likely - more people with more money means more of them can potentially be your customers.
All in all - study after study after study has consistently found that moderate increases in minimum wage have a nett-zero effect on employment rates, and this is also born out by historical data.
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You provide such a well thought out and eloquent retort.
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Actually it's nearly but not quite as bad as OP's argument.
Biased summary is biased (Score:5, Interesting)
How is the UW study to be considered flawed for excluding multi-site businesses while the UCB study ONLY looks at restaurants, where in many of which, minimum wage doesn't even apply?
Re: yet it still makes sense (Score:5, Insightful)
This is basically what Ford did in his production plant back when the Model T was the craze. He paid an insanely high wage, which led to very few sick days and near perfect retention, because people would have rather killed themselves than losing a job that paid about twice of what they could otherwise earn. This in turn led to very high productivity because people knew what they were doing, which also led to much higher product quality and very low waste.
Higher wages will make people move to the area if possible, and they will also want to keep their jobs. And people with money spend it, and spend it locally which in turn drives the economy.
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Re: yet it still makes sense (Score:5, Insightful)
That doesn't work any more thanks to entitlements. The reality is that making twice of minimum wage isn't worth it. All it does is reduce your government assistance.
Yes, that's just another argument in favor of MGI. If everyone gets it, not only do we not need a minimum wage at all, but people aren't motivated not to do work so that they can keep their assistance. They won't lose it if they make some money.
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This is basically what Ford did in his production plant back when the Model T was the craze. ....Higher wages will make people move to the area if possible, and they will also want to keep their jobs. And people with money spend it, and spend it locally which in turn drives the economy.
Ford's action was voluntary, not government-mandated.
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Easier yes, but dramatically less accurate. Quite suitable for an introductory class attempting to communicate the basic concepts, but not for anything else.
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If the business didn't have a valid business plan because they didn't properly budget for labor, that just artificially lowers the price of the goods to fake a profit.
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Or, has been found before, the increased business that resulted from the increased minimum wage more than paid for the increased cost of labor.
And fyi, Walmart has also done the opposite multiple times and cut labor (and labor costs) so much that it resulted in a much larger loss of business.
Put it another way. If you give all the profits to one person, they can only buy so many cars, tv's, lattes, etc. If you share the profits with a hundred employees, they can buy 100 cars, a hundred TV's, and a hundre
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for the profit to be real, you just need the COGS to be less than the price the customer is willing to pay for those goods
And the profit margin is often wider than it used to be. If a business can increase profits by lowering labor costs, they will. If they don't have that freedom, they will have to accept a smaller (more fair) profit. At the same time, other businesses that should have failed are being artificially supported with the welfare of cheap labor.
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I need money. Not an occupation. I can find something to do with my time just fine.
If you job doesn't pay decent money, it's worthless and you can as well shut down for all I care because the world is no poorer without your "jobs".
Re: yet it still makes sense (Score:2)
Any economic study will have limitations. You can't do repeatable experiments, and any controlled experiments are usually in toy environments (like undergrad economics classrooms). All else is never equal, many relevant measures are unknown, and the fact that we have way more variables than data points means any model is terribly underconstrained.
As Arnold Kling often points out, most social science has a level of "casual density" that gives a lot of room to explain things the way you like, so economics (
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But feel free to make a baseless one?
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I wonder what the minimum wage is for paid shill?
Re: PopeRatzo is a communist (Score:2)
Higher than the minimum wage for useful idiot, I hear.
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It's hard to buy the whole "raises wages costs jobs" argument when the evidence is to the contrary.
Your single, cherry-picked example considered in the most superficial terms proves nothing.
How many "minimum wage" workers were there in the region before the increases, how many now? (And remember, as the minimum wage increased by 100% over the last ten years it would have scooped up anyone earning between $5.01-$10.00/hr as going from making better than minimum wage to becoming minimum wage workers.
Another point to consider, as the minimum wage increases, it chokes off first-job opportunities, leading to
Re:Liberals trying to poke holes (Score:5, Insightful)
No, what we have here (your message) is a hyper partisan upset the one study that confirms his pre-existing bias turned out to be deeply flawed. Of course this article must seem like a liberal conspiracy! The one (and only) study showing job losses just has to be true.
This same thing happens with anti-vax and climate change denial. People who really want to believe these things cling to a small number of discredited studies and insist the large number of others contradicting their views don't exist.
Numerous states and cities have passed substantial minimum wage increases. Most are still gradually phasing in, many reaching $15 around 2020 to 2022. Plenty more studies will be published over the next several years.
I have a feeling you're going to be quite busy denying more and more of them as liberal conspiracy.
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Oy. Words continue to lose all meaning. A factual report pointing out gaping holes in a study used to make a phony right-wing point ends up being called the conspiracy. And the guy calling it that doesn't even realize that's what he's doing...
What amazes me is that this shit shows up on Slashdot - the site that used to specialize in pointing out skewed sampling and 'tuned to the test' studies of, oh, Microsoft software vs the competition, etc. But make it a subject that can conceivably be categorized as
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So you don't want to account for higher productivity? Companies can actually see advantage to better wages and benefits. It's far more nuanced than "if wage higher then prices higher".
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Who buys your shit? Simple: Everyone not working here. They could earn money, but NOT HERE!
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Only to people who don't understand them. But that's the case with pretty much anything, you can bullshit anyone using a "proof" he doesn't understand.