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

[Anonymous]

Anonymous wrote:

Anonymous wrote:Manchin will end up supporting this because for his constituents, its a huge boon.

That said, in places where this has happened at the local level, like Seattle and DC, it has has zero impact on job growth and opportunities.

What is your source?

This headline, “Sen. Joe Manchin (D-W.Va.) said Tuesday that he does not support increasing the minimum age to $15 an hour - a critical roadblock to including the proposal in the final coronavirus relief bill,” was widely reported in multiple news sources just yesterday.

He will support the bill, regardless of the min.age hike, and the GOP WV Gov gave him cover to do it. Bottom line, 70% of the American public want this bill passed, including 30% of republicans. So the dems are appealing directly to the American people even if the GOP in the House and Senate want to continue to be obstructionist.

[Anonymous]

Anonymous wrote:I am a Democrat that supported Biden. But I don't understand why it seems to be $15 or nothing? Can they raise the minimum wage to $10 as compromise? The jump from 7 to 15 seems large, and concerning in terms of job loss and cost of goods. However, I do see the argument of not taking advantage of the lower paid and raising their wages. Why can there not be a happy medium proposed? I have not yet heard of a discussion of compromise.

It's not an immediate rise, it is over several years. The Min Wage has been the same since the early 1990's. Time for it to keep pace like executive pay.

[Anonymous]

Anonymous wrote:

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.

Well, they are going to travel across state lines for abortions and health care as well, so...

[Anonymous]

Anonymous wrote:

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.

DP. The federal minimum wage in the late 80s was $3.35, not $2.25.

[Anonymous]

Anonymous wrote:

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.

Agree. This piece has good info on the dangers of our economic inequality. https://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014

[Anonymous]

Anonymous wrote:

Anonymous wrote:I am a Democrat that supported Biden. But I don't understand why it seems to be $15 or nothing? Can they raise the minimum wage to $10 as compromise? The jump from 7 to 15 seems large, and concerning in terms of job loss and cost of goods. However, I do see the argument of not taking advantage of the lower paid and raising their wages. Why can there not be a happy medium proposed? I have not yet heard of a discussion of compromise.

It's not an immediate rise, it is over several years. The Min Wage has been the same since the early 1990's. Time for it to keep pace like executive pay.

Exactly, 20 years ago a HOS at a DC Private made maybe 250K- 300K a year, now its 850K a year

while the teachers still make the same and the custodial team not even $15/hr

[Anonymous]

“This does not change the fact that the economic value of the carwashing labor is worth less than $15.”

Really? What would you say if I suggested that consumer prices are being subsidized by underpaid labor, and that people actually are willing and able to pay much more than they do for things?

Hmmm.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I am a Democrat that supported Biden. But I don't understand why it seems to be $15 or nothing? Can they raise the minimum wage to $10 as compromise? The jump from 7 to 15 seems large, and concerning in terms of job loss and cost of goods. However, I do see the argument of not taking advantage of the lower paid and raising their wages. Why can there not be a happy medium proposed? I have not yet heard of a discussion of compromise.

It's not an immediate rise, it is over several years. The Min Wage has been the same since the early 1990's. Time for it to keep pace like executive pay.

Exactly, 20 years ago a HOS at a DC Private made maybe 250K- 300K a year, now its 850K a year

while the teachers still make the same and the custodial team not even $15/hr

That's an insane wage for a private HS. $850K is more than most college presidents make operating much larger budgets.

[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

Layoffs have not occurred where this has been implemented although the argument is always that they will. Economists come out on both sides. The challenge for me is that you pay now or pay later, but you pay. Americans end up subsidizing these folks with food stamps and other government programs b/c you can't live on the current minimum wage.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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.

DP. The federal minimum wage in the late 80s was $3.35, not $2.25.

Not to mention that not everything is Snickers and Coke. A years worth of public college was about 800 hours of minimum wage work when that $3.35 minimum wage started, now it's about 1,300.

[Anonymous]

Anonymous wrote:“This does not change the fact that the economic value of the carwashing labor is worth less than $15.”

Really? What would you say if I suggested that consumer prices are being subsidized by underpaid labor, and that people actually are willing and able to pay much more than they do for things?

Hmmm.

I already pay $23 for a full service car wash, as far as I'm concerned that's too much.

[Anonymous]

Anonymous wrote:

Anonymous wrote:“This does not change the fact that the economic value of the carwashing labor is worth less than $15.”

Really? What would you say if I suggested that consumer prices are being subsidized by underpaid labor, and that people actually are willing and able to pay much more than they do for things?

Hmmm.

I already pay $23 for a full service car wash, as far as I'm concerned that's too much.

so wash your own car

[Anonymous]

I’d rather we stopped this “living wage” talk and focus on making essentials like health care and housing more affordable/accessible.

If the 15 does not result in reduced employment, it will result in inflation of things like daycare, food, and housing. Then the 15 will not have as much buying power as it does now. And where does that place people who are already making 15 an hour? Are their wages going to go up too?

If it does result in reduced employment, then that is going to be a larger societal problem. Work is important to human dignity and a sense of purpose.

I also have kids. One will be old enough for a PT job in a year or two. Its already hard enough for young people to get their foot in the door and this will make it harder.

[Anonymous]

Anonymous wrote:I’d rather we stopped this “living wage” talk and focus on making essentials like health care and housing more affordable/accessible.

If the 15 does not result in reduced employment, it will result in inflation of things like daycare, food, and housing. Then the 15 will not have as much buying power as it does now. And where does that place people who are already making 15 an hour? Are their wages going to go up too?

If it does result in reduced employment, then that is going to be a larger societal problem. Work is important to human dignity and a sense of purpose.

I also have kids. One will be old enough for a PT job in a year or two. Its already hard enough for young people to get their foot in the door and this will make it harder.

Not raising the minimum wage hasn't stopped inflation in daycare or housing and it does mean that people making minimum wage have less buying power than they did a decade ago. Plus the history of minimum wage increases doesn't show much correlation with increased inflation, no matter what econ 101 would suggest.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

DP. The federal minimum wage in the late 80s was $3.35, not $2.25.

Not to mention that not everything is Snickers and Coke. A years worth of public college was about 800 hours of minimum wage work when that $3.35 minimum wage started, now it's about 1,300.

That’s less to do with inflation and more to do with the other factors causing college costs to rise far more than inflation.