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[quote=Anonymous][quote=Anonymous][quote][Post New]01/20/2021 08:02    Subject: Re:How much raise should my wife ask for now with Biden and $15/h minimum wage? [Up]
Anonymous

Anonymous wrote:

You people fail to grasp basic economics. An increase in minimum wage puts pressure on all pay. Do you all think the prices of goods and housing will remain the same? Of course not. If labor goes up prices go up and we all end up back in the same boat again. Of people can afford more house that's what they will do. It has the exact same impact low interest rates have had on housing the more money people can spend on housing the more they will. However it's not like housing conditions get any better as a result. Many people at this point are living in shit shacks.

Of course this is exactly how it works. Even when the grumblings of a minimum wage increase in MoCo was coming through years ago, I sat on the board of a directors at a company where our hiring suddenly became more expensive and more difficult. The company was in an industry that pays relatively lower wages because many of the workers are not very skilled. But OPs argument was exactly what numerous potential hires and current employees kept saying - "eventually minimum wage is going to be $15 so I'm not working for $16." Keep in mind this was 2016 or so where the minimum wage was still around $11. So, it doesn't even actually require an ACTUAL increase in minimum wage to drive wages up and make hiring difficult at higher levels. I have a friend in another state where they are contemplating raising the minimum wage significantly. When they do so, he will be in a similar position as OPs wife. He coincidentally also works as university staff. He literally told me last year, "if I had known this is what would happen with minimum wage, I don't think I ever would have gone to college." The absurd increase in the minimum wage is going to have a variety of unintended negative consequences. That's not to say there won't also be positive consequences - of course it's good that somebody can work a job and afford food and rent. But, the question is, how long will it take for that person to be replaced by an LCD touch screen or a computer? As for me, yes, I do think that if I was making 10 times what the janitors were and now I will only be making 5 times what the janitors are, yes I also expect a raise. Sorry that's just life.

sorry, but real economists do not agree with you. this is not how it works. I only took a handful of econ classes with Alan Krgueger but even back then he showed that the neoclassical model was just that, a model and real world data disproved it.

The other thing you are all missing is that you are focused on raising other wages (lets call them median wages for now) if the minimum wage goes up. but what has actually happened over the past 50 years is that the gap between minimum and median has increased hugely. Median wages have risen while minimun have not. You were all okay with making more money even as the working poor stagnated, but now that there's an attempt at rectifying this situation, making it more equal, you want your wages raised to track. The rising tides of the middle and upper class did not rise the boats on the bottom, and now that someone wants to rescue them from sinking you think, no way, not unless my boat rises too.

If you really want to increase the quality of life and your economic power, you should be voting for politicians who will do away with the huge corporate tax cuts and instead put funds toward universal health care and college which will not only equalize things but address the very high costs of health care that businesses currently bear as well as insane college and health care costs that middle class families shoulder, despite having a good income. It will also create a healthier society and stronger communities, which benefits all of us, esp employers.

Buddy, you're talking to a PhD in economics, although I don't focus on labor. But here's an AER just from a year ago showing substitution of capital for labor and lower employment in industries where they can't pass costs to consumers: https://www.aeaweb.org/articles?id=10.1257%2Faer.20171445&&from=f

But keep trotting out the undergrad econ, it's very enjoyable[/quote]

Right, then you understand that there are major debates in the field of ecoomics and a single study in Hungary is not necessarily the model for the US. But I dont need to tell you because I'm sure you've also read Dube, who is one of the major voices in this field. Here's a far broader study, focused on the US, which suggests the opposite.

https://academic.oup.com/qje/article/134/3/1405/5484905

[/quote]

Umm... that article doesn't suggest the opposite at all. It says there are modest wage spillovers which supports the idea that increasing the minimum wage puts upward pressure on other wages. You could argue that this doesn't make it harder to operate a business or increase costs to consumers, but unlike the Hungarian study, the study you posted did not examine these factors at all. The one thing your study fails to find evidence of (which is not the same as finding evidence AGAINST and most certainly not "the opposite") is that an increase in minimum wage decreases total jobs available at the minimum wage level. The article does, however, find this effect in tradable jobs. Replacing employees with technology takes time, potentially many years, and not all employment is automatable. I do research on automation and its effects on companies and I can tell with very high certainty that the increase in minimum wage has and will continue to result both in outsourcing and in replacement of humans with machines.[/quote]

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