Help me understand the impact of a $15 minimum wage?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The argument that I hear from those opposed to raising the minimum wage is that it will cause employers to cut jobs.
However, it seems to me that the main impact is that it would cause pressure to raise wages for those currently making between $7.50 and $15 an hour.
Someone who currently makes $15 an hour isn’t going to be happy to find themselves as a minimum wage worker.

So if wages increases, inflation will increase causing those who will be making the new minimum to have roughly the same standard of living as they do now.
At least, that’s how it would seem to play out to me.

Can someone who has a better understanding of economics explain why raising the minimum wage wouldn’t significantly increase inflation, thus negating the benefit of a higher salary.

While wage increases do have a positive correlation with inflation, this is only meaningful in a large economic context. During economic boom cycles, unemployment decreases, wages increase in order to compete for dwindling labor supply in order to address strong consumer demand. This strong demand shifts the demand curve, allowing for higher prices for a given demand level. The result is inflation. If the wage increase is the result of regulations rather than a response to demand, then there is no inflation: increases in price will simply result in less demand. Service/product providers will have the choice of providing an inferior product/service while maintaining price; sell less at a higher price, thus requiring less labor; or figure out some other way to improve efficiency to make up for the labor cost increase.

There is a good case study with NYC car wash businesses. When NYC implemented a $15/Hr wage, carwashing by hand became unprofitable almost instantaneously. People looking for a car wash was simply unwilling to pay for the higher cost. There was no inflation in car washes. What the car wash services ended up doing is firing the hand washers and installing automatic washing machines. The car washers who lost their jobs ran "black market" hand washing service, often for less than minimum wage after you factoring in their equipment and supply costs. These black market car washers are doing the washes on public streets, draining chemicals into the sewer system without any treatment. And of course, the individual car washers are not as efficient as shops in terms of procurement, time management, energy usage, and tax remittance.

of course what happens if we leave the minimum wage low so that the car wash people don't lose their jobs is this: since they cannot actually live on that wage, we have to pay them through social programs like welfare and food stamps. Because a person cannot work more than maybe 18 hours a day. So either we pay by paying more for the service or we pay through taxes. If we leave the wage low, we only have to pay part of their living expenses through salary. if we raise it, we have to pay more. What we cannot do is leave it low and not supplement, so that working people are homeless and without enough food.

We don't *have to*, we choose to as a society. This does not change the fact that the economic value of the carwashing labor is worth less than $15. If we want to affect certain social goals, it's better to implement them through social programs rather than applying heavy handed distortions to the labor market. We already use tax dollars for this specific purpose. Leave minimum wage alone.

We have to if we don't want a revolution. I guess it is a choice. I guess one could choose revolution.

but are you sure that is the right solution? in our society, a person's dignity is tied to work. people on social programs get very depressed. that will have consequences for the stability of our society. We either need to convince people that being on social programs is fine, or help them find a new way to feel worthwhile even if they cannot work but must live off largesse.

[Anonymous]

Anonymous wrote:Its not going to pass, IMO.

Joe Manchin (Senator from West Virginia) is deeply against it. His vote is critical in the Senate. $15 minimum wage requirements would be devastating to his state’s already struggling small businesses. Imagine being a small business owner, barely making ends meet, and your labor costs doubled. Businesses in high cost of living states can absorb more easily, but many service industries are against this proposed legislation. You may raise wage for one worker, but layoff two

WV also is poverty ridden and those people need the wage. His daughter is the president of the company who upped the epi pen price astronomically. He is just another political hypocrite and I am a Dem. He got a hair up his rear because the VP didn't tell him she was going to talk to a WV show. She is the VP and his ego was bruised

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The argument that I hear from those opposed to raising the minimum wage is that it will cause employers to cut jobs.
However, it seems to me that the main impact is that it would cause pressure to raise wages for those currently making between $7.50 and $15 an hour.
Someone who currently makes $15 an hour isn’t going to be happy to find themselves as a minimum wage worker.

So if wages increases, inflation will increase causing those who will be making the new minimum to have roughly the same standard of living as they do now.
At least, that’s how it would seem to play out to me.

Can someone who has a better understanding of economics explain why raising the minimum wage wouldn’t significantly increase inflation, thus negating the benefit of a higher salary.

While wage increases do have a positive correlation with inflation, this is only meaningful in a large economic context. During economic boom cycles, unemployment decreases, wages increase in order to compete for dwindling labor supply in order to address strong consumer demand. This strong demand shifts the demand curve, allowing for higher prices for a given demand level. The result is inflation. If the wage increase is the result of regulations rather than a response to demand, then there is no inflation: increases in price will simply result in less demand. Service/product providers will have the choice of providing an inferior product/service while maintaining price; sell less at a higher price, thus requiring less labor; or figure out some other way to improve efficiency to make up for the labor cost increase.

There is a good case study with NYC car wash businesses. When NYC implemented a $15/Hr wage, carwashing by hand became unprofitable almost instantaneously. People looking for a car wash was simply unwilling to pay for the higher cost. There was no inflation in car washes. What the car wash services ended up doing is firing the hand washers and installing automatic washing machines. The car washers who lost their jobs ran "black market" hand washing service, often for less than minimum wage after you factoring in their equipment and supply costs. These black market car washers are doing the washes on public streets, draining chemicals into the sewer system without any treatment. And of course, the individual car washers are not as efficient as shops in terms of procurement, time management, energy usage, and tax remittance.

of course what happens if we leave the minimum wage low so that the car wash people don't lose their jobs is this: since they cannot actually live on that wage, we have to pay them through social programs like welfare and food stamps. Because a person cannot work more than maybe 18 hours a day. So either we pay by paying more for the service or we pay through taxes. If we leave the wage low, we only have to pay part of their living expenses through salary. if we raise it, we have to pay more. What we cannot do is leave it low and not supplement, so that working people are homeless and without enough food.

We don't *have to*, we choose to as a society. This does not change the fact that the economic value of the carwashing labor is worth less than $15. If we want to affect certain social goals, it's better to implement them through social programs rather than applying heavy handed distortions to the labor market. We already use tax dollars for this specific purpose. Leave minimum wage alone.

A minimum wage job needs to be able to pay its workers enough to feed, clothe and house themselves. As PP noted above, there are only so many hours a day you can work and in this new economy, people ARE expected to support themselves on minimum wage jobs. It is not heavy-handed to correct a real labor issue. With any change, there are consequences, yes. We have lost entire swaths of jobs due to technological changes. But we don't sit on our hands and let allowing businesses big and small thrive by exploiting their labor.(and please, spare us "they have a choice" argument, because they simply don't for a variety of reasons).

There is something seriously wrong in a country where people can put in a hard and honest 40+hours of work a week and still not be able to meet the basics.

[Anonymous]

higher minimum wage = more automation displacing workers and fewer jobs for young people entering the workforce...

Argue as you might that those outcomes are fantasy but this is the truth.

When I was a kid I got my first W2 job at 15 when minimum wage was $2.25. The company had a policy to limit hours to 28 hours per week to avoid paying benefits from what I understood.
My kid just turned 16 and has been having trouble finding a job because many place will only hire people over 18 years old now. I stopped by my old job from high school the other day to ask if they are hiring and was told they still limit hours to 28 per week and will only hire if over 18 with at least a high school degree. The $15 minimum wage will simply lead to more selective hiring which will make the completion for the comparatively fewer entry level jobs more stiff.

[Anonymous]

Anonymous wrote:higher minimum wage = more automation displacing workers and fewer jobs for young people entering the workforce...

Argue as you might that those outcomes are fantasy but this is the truth.

When I was a kid I got my first W2 job at 15 when minimum wage was $2.25. The company had a policy to limit hours to 28 hours per week to avoid paying benefits from what I understood.
My kid just turned 16 and has been having trouble finding a job because many place will only hire people over 18 years old now. I stopped by my old job from high school the other day to ask if they are hiring and was told they still limit hours to 28 per week and will only hire if over 18 with at least a high school degree. The $15 minimum wage will simply lead to more selective hiring which will make the completion for the comparatively fewer entry level jobs more stiff.

You do realize that your $2.25 minimum wage back in the 1970s was equivalent to $20-something in 2018, right?

[Anonymous]

Anonymous wrote:

Anonymous wrote:higher minimum wage = more automation displacing workers and fewer jobs for young people entering the workforce...

Argue as you might that those outcomes are fantasy but this is the truth.

When I was a kid I got my first W2 job at 15 when minimum wage was $2.25. The company had a policy to limit hours to 28 hours per week to avoid paying benefits from what I understood.
My kid just turned 16 and has been having trouble finding a job because many place will only hire people over 18 years old now. I stopped by my old job from high school the other day to ask if they are hiring and was told they still limit hours to 28 per week and will only hire if over 18 with at least a high school degree. The $15 minimum wage will simply lead to more selective hiring which will make the completion for the comparatively fewer entry level jobs more stiff.

You do realize that your $2.25 minimum wage back in the 1970s was equivalent to $20-something in 2018, right?

Word. The PP is obviously confusing the root cause. The minimum wage is not why they are more selective in hiring.

[Anonymous]

Anonymous wrote:

Anonymous wrote:higher minimum wage = more automation displacing workers and fewer jobs for young people entering the workforce...

Argue as you might that those outcomes are fantasy but this is the truth.

When I was a kid I got my first W2 job at 15 when minimum wage was $2.25. The company had a policy to limit hours to 28 hours per week to avoid paying benefits from what I understood.
My kid just turned 16 and has been having trouble finding a job because many place will only hire people over 18 years old now. I stopped by my old job from high school the other day to ask if they are hiring and was told they still limit hours to 28 per week and will only hire if over 18 with at least a high school degree. The $15 minimum wage will simply lead to more selective hiring which will make the completion for the comparatively fewer entry level jobs more stiff.

You do realize that your $2.25 minimum wage back in the 1970s was equivalent to $20-something in 2018, right?

My highschool job was in the late 80s. don't think it had an equivalent $20 purchase power. As I recall my go-to snack on my 15 minute break was a 50cent coke and 55cent snickers bar. Thats $1.05 which was 30 about 30 minutes of labor. A coke and snickers bar do NOT cost $10 today.

[Anonymous]

Anonymous wrote:The cost will be passed along to the consumer so the companies can keep making a comparable profit. In some states, the labor input to the price of goods will more than double. Some small businesses will not be able to stay in business because fewer people are willing to spend $7 on an ice cream cone as opposed to $4.50. My family is lower middle class and I know we will have to cut back on things like that if prices go up because our budget is very tight.

I do support an increase in the minimum wage but there are definitely costs.

Your math misses the mark, in part because it is the very rare industry where minimum-wage labor costs make up the bulk of costs of production. To use your example of the ice cream cone, let's say I run an ice cream shop. During a moderately busy time of day, I have two employees working who each earn $7.50 an hour. I sell about 20 ice cream cones an hour at your $4.50 price per cone. If I have to double my employees' salaries, that means I'm paying approximately an extra $15 per hour in labor costs. Spread over 20 ice cream cones, that's an increase of only 75 cents per cone without affecting my bottom line. If I'm marking up labor costs at 100% in setting my price per cone, that's still an increase of only $1.50 per cone, not $2.50. I don't have to mark up the labor increase that much if I'm concerned it will negatively impact demand for my ice cream cones, 75 cents is enough to cover the cost of a $15 minimum wage.

[Anonymous]

Employers will just figure out how to move more people into "exempt"positions.

Minimum wage; schminimum eage"

[Anonymous]

Anonymous wrote:

Anonymous wrote:The cost will be passed along to the consumer so the companies can keep making a comparable profit. In some states, the labor input to the price of goods will more than double. Some small businesses will not be able to stay in business because fewer people are willing to spend $7 on an ice cream cone as opposed to $4.50. My family is lower middle class and I know we will have to cut back on things like that if prices go up because our budget is very tight.

I do support an increase in the minimum wage but there are definitely costs.

Your math misses the mark, in part because it is the very rare industry where minimum-wage labor costs make up the bulk of costs of production. To use your example of the ice cream cone, let's say I run an ice cream shop. During a moderately busy time of day, I have two employees working who each earn $7.50 an hour. I sell about 20 ice cream cones an hour at your $4.50 price per cone. If I have to double my employees' salaries, that means I'm paying approximately an extra $15 per hour in labor costs. Spread over 20 ice cream cones, that's an increase of only 75 cents per cone without affecting my bottom line. If I'm marking up labor costs at 100% in setting my price per cone, that's still an increase of only $1.50 per cone, not $2.50. I don't have to mark up the labor increase that much if I'm concerned it will negatively impact demand for my ice cream cones, 75 cents is enough to cover the cost of a $15 minimum wage.

labor is known but sales are variable. You are not considering the situation where I'm not selling anything but still paying the higher wages. My burn rate is higher which means my business is less viable.

[Anonymous]

Anonymous wrote:The argument that I hear from those opposed to raising the minimum wage is that it will cause employers to cut jobs.
However, it seems to me that the main impact is that it would cause pressure to raise wages for those currently making between $7.50 and $15 an hour.
Someone who currently makes $15 an hour isn’t going to be happy to find themselves as a minimum wage worker.

So if wages increases, inflation will increase causing those who will be making the new minimum to have roughly the same standard of living as they do now.
At least, that’s how it would seem to play out to me.

Can someone who has a better understanding of economics explain why raising the minimum wage wouldn’t significantly increase inflation, thus negating the benefit of a higher salary.

The only reason the value of this is even being debated is because we are a country lead by a Congress - none of whom make less than 150 K a year and the majority of whom are millionaires

And they have the gaul to debate that $15 per hour is too much money to pay- at minimum- to an American worker.

In my experience having travelled much of the world, most " 1st world" developed countries have a higher living wage than the USA AND their citizens get free health care and free college education and 1-2 years paid maternity leave on top of it.

In America, we have people working 16 hours a day doubling up at 2 $7.50/hr jobs, while their kids sit at home on the Internet and we wonder why we have idiots believing in conspiracy theories and storming the capitol.

My god, the average Norweigan makes 100K a year - we can do $15/hr in this country !

[Anonymous]

Anonymous wrote:higher minimum wage = more automation displacing workers and fewer jobs for young people entering the workforce...

Argue as you might that those outcomes are fantasy but this is the truth.

When I was a kid I got my first W2 job at 15 when minimum wage was $2.25. The company had a policy to limit hours to 28 hours per week to avoid paying benefits from what I understood.
My kid just turned 16 and has been having trouble finding a job because many place will only hire people over 18 years old now. I stopped by my old job from high school the other day to ask if they are hiring and was told they still limit hours to 28 per week and will only hire if over 18 with at least a high school degree. The $15 minimum wage will simply lead to more selective hiring which will make the completion for the comparatively fewer entry level jobs more stiff.

so prohibit those practices.

For a CEO who makes 250K to 25 million a year to argue that its breaking his back to pay people $7/hr more is obscene

You say it will lead to automation- ok , lets put that to the test, but tomorrow, you start paying $15/hr

[Anonymous]

Why can't they choose and amount like $15 and scale it to cost of living based on state or region? Wouldn't that be a reasonable compromise? The goal should be a living wage in every state. People should not have to work 2-3 jobs in this country to make ends meet.

[Anonymous]

Anonymous wrote:Why can't they choose and amount like $15 and scale it to cost of living based on state or region? Wouldn't that be a reasonable compromise? The goal should be a living wage in every state. People should not have to work 2-3 jobs in this country to make ends meet.

Good luck getting Red state congressional reps to go along with that. Especially when borders are porous and people will travel across a state line for a higher wage.

[Anonymous]

How about its mandated nationwide $15/hr min wage regardless of PT or FT, by law

and to give businesses a break on fixed costs- here's the big break: Nationalize Health Care-

and , instantly hand businesses back 15K a year per employee in health insurance premiums that are a FIXED COST - the biggest fixed cost keeping wages depresssed in this country is the GREED, and that is what it is, folks, pure greed of the for profit health insurance industry