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

[Anonymous]

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.

[Anonymous]

Inflation per se isn't a problem. Excessive or rapid inflation is, but a slight level of inflation is generally seen as fine, even a sign of a growing economy. So some workers would see their wages increase, over time (most minimum-wage increases are phased in), but it's not like everyone in the country will see their salaries double. And their increased spending power will increase demand for goods and services, boosting the economy.

[Anonymous]

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

[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

This, or just shut down entirely. Even large corporations won't be able/willing to operate at a severe loss and may just decide to close. Anyone been following the story out of Long Beach, CA where two Kroger owned stores will shut down due to the city's new requirement to pay workers an additional $4/hr? The two stores were already underperforming and so management just decided to close them.

[Anonymous]

The total spend of minimum wage workers is not high enough to drive inflation.

[Anonymous]

Econ 101 tells you that raising the minimum wage will reduce employment in minimum wage jobs, but the actual experience of raising the minimum wage is much more mixed. You can find studies that show it does reduce employment, studies that show it doesn't, and generally economists don't agree on this. I don't think there's a good way to know what will happen.

[Anonymous]

Here is a CBO report that will answer your questions. https://www.cbo.gov/system/files/2019-07/CBO-55410-MinimumWage2019.pdf

[Anonymous]

More money in communities in more hands = increased velocity of money and economic activity.

It's a virtuous circle.

[Anonymous]

“The two stores were already underperforming and so management just decided to close them. “

Well not necessarily a bad thing for a big chain to exit and make room for something smaller that will perform better in the niche.

I just think that this discussion requires some nuance—apparently there is research showing no decline in jobs overall. You can find anecdotes, but that’s not data.

[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

It will be phased in, if it passes.

[Anonymous]

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.

[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.

There are definite costs, but the question is whether the benefits exceed them and whether those who should bear them, are.

Smaller businesses are lean to begin with. So yeah, they may increase prices or the owners may see profit losses. Then again, they might not if people in their market have more money in their pockets to spend. It’s going to vary by industry/location etc.

It’s not an open and shut discussion though.

[Anonymous]

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.

[Anonymous]

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.

Right? It causes some movement/redistribution but overall not bad. It’s just that DC and Seattle are quite different than other places. I’d like to see some studies in places where things aren’t as solid.

[Anonymous]

Right now we are subsidizing those companies that only pay $7-8 dollars via the subsidies or safety nets for people living below the poverty line such as food stamps, Medicaid etc. I’d love to have the $15 champions identify what could be saved by the government and tax payers if the minimum wage goes to $15.