Does minimum wage hike cost us jobs?

Compare historical minimum wages to historical inflation rates, there is no correlation. How can you claim causation?

The claim that raising minimum wage causes inflation is not supported by any real life evidence. Inflation is affected by multiple factors, there is no basis for the assumption that a measured increase in the minimum wage will spur an increase in inflation.

 

It's the same issue that conservatives bring up every time there is any discussion around raising the minimum wage.

They've been bringing it up ever since I was a minimum wage worker a long time ago.

And each time, the scare tactics that the right uses to argue against raising the minimum wage never pan out.

Raising teh minimum wage used to be something that happened routinely. It moved with the rate of inflation and it was not the subject of much controversy.

Until Ronald Reagan decided to politicize it. Ever since, raising the minimum wage has been a partisan fight every time (although NEVER under GOP adminstration's because they won't even consider it).


Of course, the net result is that the minimum wage, which used to mean enough money that someone could support themselves on it, got steadily devalued.

And if you're thinking of doing what conservatives typically do next, which is insist that it's for teenagers, bear in mind that most people on the minimum wage are adults.

 

It mainly costs people with marginal skills jobs. If you currently have 5 fairly unskilled minimum wage workers, and they raise minimum wage by 20%, a business is goign to try to replace those 5 with 4 more productive workers. The unskilled are screwed in that case.

In terms of McDonald's, self-ordering kiosks are on the way, and they are going to be cheaper to operate than a minimum wage worker....

 

I would like to see backup for that claim.

Bearing in mind that 1.7 million of the 3 million MW workers are making LESS than the minimum, and that means they are also earning tips on top of their wage. Tip-earners often earn well in excess of the minimum wage. They also often under-report their tips, so coming to a real number is impossible. If we throw those out of the BLS numbers, (which for purposes of this discussion, we should), then the picture changes a bit.

I would surmise that the majority of the 1.7 million tip-earners are probably not teenagers (20 and over), and the majority of actual MW workers are. But as I said, there is no unbiased data that I've found to back that up either.

(The data I reference comes from the 2014 BLS MW report, HERE.)

 

It's not just about inflation. It's about job loss too.

Not many businesses are in a position to just bend over and take the hit; most are small businesses with razor-thin margins. Large companies are better positioned to just absorb the extra cost, and so small businesses are disproportionately affected. This causes the hated WalMart to gain even more market share, and the mom and pop grocery to let one of their bag boys go work for Sam Walton.

So, an increase of labor cost must be handled by the company in some way. For most, either they will reduce jobs and spread the labor amongst the remaining more-productive workers, or they will increase COGS if their competition allows it, or both. Every avenue most businesses can take to deal with increased labor costs hurts the 93 million unemployed and fixed-income people the most.

 

Table 1 in your link clearly shows that out of the total working at minimum wage, the majority are 20 or older. 16-19 year olds are only 28.8% of the total working AT minimum wage.

 

Like inflation, jobs are affected by multiple factors. Since you've failed to support your inflation claims, please provide data to support your claim that an increase in minimum wage will result in net job loss.

 

http://www.nytimes.com/2014/06/10/upshot/minimum-wage.html?_r=0

 

Having owned a small manufacturing business for almost 50 years you and not the right wingers are right. No business that is successful has more employees than they absolutely have to have. So if it takes 15 to do business, raising min wage, if that business pays min wage, cannot cut employees. They will have to pay them the higher min wage. If all in a sector does this, then the playing field is even for all in say, fast food. There will have to be an adjustment in prices, and all will do it, or an adjustment in profit margins. Business has been spoiled by higher profits than in the past. This has happened since Reagan took office.

When it comes to fast food, automation and heat em products instead of cooking on site has cut back their in store labor force tremendously. When I managed a McDs while attending college, night classes. I had to have 15 employees, during peak periods. Any less than that and service suffered, and that was not acceptable. Today at my local McDs, they have half this number, due to heat em up products no longer cooked on site. So, as McDs cut down on labor, the owners became even more profitable. They did not drop prices, they jus made more money for the owners of the franchise. And this has spoiled many fast food owners.

A min wage adjusted up from 1968 min wages would be around 12 bucks an hour. If business handled those wages back then, of course they can pay that today, when min wage is about 1/2 of what it was in 68 if you adjusted up for just inflation. Add to that the increase in worker productivity and you would be up to around 15 at the minimum. No reason what min wage cannot be 15 bucks. It is just the greedy that do not want to pay it.

 

Shell companies get set up for a multitude of reasons. I have indicated in earlier posts, sometimes it is done for fraudulent reasons. An example would be to open several businesses and kite money through them to create the illusion a business has lots of revenue for the purpose of obtaining loans. I know first hand of 4 different ways in which they can and have been used fraudulently in real estate but I won't detail how it can be done. It happens and happens more frequently than people realize.

Some people create LLC's/S-corps so that they can deduct things they normally would not be able to deduct as an expense on their personal returns without actually engaging in business proper.

Some people create LLC's so that they can accelerate the transfer of assets gift and estate tax free to heirs while they are still alive because of the manner in which fractional interests in businesses are valued under their percentage of the whole. An example would be if you want to transfer a $280K property to someone and get it out of your estate and retain your unified credit, it would take 20 years under the current per year exemption amount of $14K, but washing it through an LLC might allow you to complete those transfers in 15 years.

 

Everybody used to want to be an investment banker. Now everybody wants to be a tax cheat.

 

Good posts.

 

My point was that some see mandatory nation wide min wage increase as a bad thing...and as pointed out by a previous poster...it really is. (DC our min wage is 10.50, but making that nation wide where in Utah Texas, or big a lot of states where there's only community's of about 700..It is obviously a bad thing) but no national min wage is a lot worse...because it wont decrease cost of living, but only make more people suffer. Less people using all there income on only what they need, but not on what boost the overall economy is really just a bad thing. SO! (<---next paragraph now, and I really hate to used the overplayed walmart scenario...but.)

As Walmart demonstrates, IF they had actually payed there workers there community's living wage salary's,(as determined based on housing costs) they may have stimulated there local economy where ever they built each one of there stores, to bring in more customers to shop in walmart....but that's to slow a money maker, short sighted...what ever. (I don't care what ever works, the local markets shoulda adjusted properly...they didn't now there dead.)
Instead they receive assistance from the national government via there Company platform of making sure all there food produce, food stocking, food sales, and food management team receive SNAP/Food stamps.New placement of buildings get community tax dollars for temporary construction jobs. They knew what they were doing and yea...They have a team to deal with any government interference. so they never needed your vote in there affairs. (and by they...i kinda mean most billion dollar company's that still maintain there billions.)

Look at what OPEC did to your supply and demand argument.
Look at what Ford motors did for himself...just being a good community business person.
I'm not worried about the bottom % they're good for now, I pay taxes...if they or even a family member cant even collect the free money then there's truly is no help for them.

What does your supply and demand mean is there is 49.5%supply, and 49.5%demand...but only 1% controls all the trade currency?

 

You speak as though a MW increase is a demonstrably bad thing. In reality the national economy has improved with each increase. That was counterbalanced by republican actions supressing workers wages and benefits, the incredible inequities between workers and managment as example. Everywhere Walmart set up, several others stores had to close resulting in a net job loss. Their minimum wage workers survive only by government handouts . We are subsidizing Walmart as a result. I find that unconscionable. Sam Walton promised that he would sell only American made products and at the lowest prices. The Waltons flushed those promises down the toilet in a hurry.

 

What is minimum wage for? I wonder if most folks even know this. It doesn't seem to make folks have a good living.

 

The robots are coming.

 

Huh? I don't get where you're going with this.

 

They're here. Robotic ovens, RFID checkout, and zero labor factories are already here. Most simple contracts are now built with automation; many newspaper articles we read are made the same way; the MOOC model in education is taking off. Online stores, self assembling geometries, self driving vehicles, expert systems and 3D printing are changing retail, construction, delivery, medicine, auto repair...

When we get to the point where human 'work' is largely or entirely a function of short term contracts the idea of wage, must less minimum wage, isn't going to be an issue.


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Inflation is a money supply issue. It is not caused by minimum wage. The reason that minimum wages do not cause much more significant unemployment is because of inflation, rather than the other way around. On the other hand, it does hurt people who are already marginalized as minimum wage regulations outlaw low skill jobs that they might otherwise take in order to supplement their income. The quasi-religious do-gooders who support minimum wage don't really care about those people; they think they can perform miracles with the stroke of a legislator's pen, and that's all that matters.

 

Minimum wage doesn't change that. I've been through 3 minimum wage hikes in my life. Not one of them made my life any better and almost all actually made it worse. How is this you ask I never worked for minimum wage. In my life time what ever minimum wage is your living hand to mouth until you make 2.5 to 3 times minimum wage. At 10.50 you need to make between 26 and 31.50 an hour to be comfortable and there are very few blue collar jobs that are worth that sort of money to any employer with a functioning brain. Hence today most blue collar workers are living hand to mouth and another minimum wage hike and most of them will do about as well to go file for a government hand out.

 

Makes sense. Can you explain how things got worse for you? Folks could learn from this example please.

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Ok. Now I see what the other poster was going wiith it. YES!! The robots are coming and it's inevitable.

 

Haven't the robots been coming for centuries?

When was the first automated loom developed? 1830s?

 

It's feel good legislation used to earn votes from the economically ignorant who have good intentions (do-gooders) and who believe that the law of supply and demand can be circumvented by passing laws.

 

Put it this way when you hike minimum wage, you hike costs and that cost has to be made up somewhere. For the small businessman disproportionately affected by such hikes he has four choices. He can take a lifestyle hit which essentially means screwing over his wife and kids, he can reduce investments in his business which means it grows slower and hires fewer people over time, he can increase prices, or he can buy a machine to do things with less man hours. What usually happens is a combination of these things varying from business to business.

 

*shrug* You could argue we've been doing it since we first developed tools.​

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