Increasing the Minimum Wage hurts those most vulnerable in our society.

[Squatch347]

Saw this article today. Seems to back p your point/s quite well:

https://fox17online.com/2019/10/14/t...em-struggling/

“I got that dollar raise but I’m getting $200 less in my paycheck,” said one, employee.


Good intentions can hurt/kill.

You beat me to it :-) I think you are correct that this is just another example of being mugged by reality when you focus on intentions.

From the original CNN article (https://www.cnn.com/2019/10/14/busin...ase/index.html) I liked these quotes:

“I got that dollar raise but I’m getting $200 less in my paycheck,” said one, Heather, who started in November at a Florida store working around 40 hours a week. She’s now below 20 some weeks, she said. “I have no idea how I’m going to pay rent or buy food.”
[…]
Beyond just a drop in earnings that Target workers who spoke with CNN Business have experienced, employees who average fewer than 30 hours of work a week during the year aren’t eligible to qualify for health insurance benefits through the company during annual enrollment season in the spring.

The best part is that it isn't as if this wasn't predicted: https://fee.org/articles/real-world-...harms-workers/

This was also the primary mechanism that was involved in the Seattle example that resulted in lower take-home pay.

[CowboyX]

Retailers often want to have a larger pool of part-time workers making the minimum wage, instead of a smaller group of full-time staffers with benefits and guaranteed hours, said Lonnie Golden, professor of economics and labor relations at Penn State University-Abington.

Fox article

Desire, a Target worker in Virginia, said she used to take home around $800 every two weeks from Target when she worked up to 40 hours a week. Today, after her hours were reduced, she’s making half that. “It’s frustrating because they hired four more people. We’re begging for hours.”

They have plenty of ability to pay. It's simply retaliation at workers who've been there longer and are making more. True, there should be protections against this. Parts of the staff I work with are going through this same things right now.

[Squatch347]

They have plenty of ability to pay. It's simply retaliation at workers who've been there longer and are making more.

This is an argument that a lot of MW advocates have moved away from because it is so easily refuted, but here we are.

Ok; a) Support that they have the ability to pay the higher wages by detailing the estimated cost and where that source of funding would come from with a defense that the impact would be reasonable. b) Support that their actions are based out of retaliation.

[CowboyX]

Ok; a) Support that they have the ability to pay the higher wages by detailing the estimated cost and where that source of funding would come from with a defense that the impact would be reasonable.

Post 662 - "It’s frustrating because they hired four more people. We’re begging for hours.”

They hired four more people not because they needed them to fill hours ("We're begging for hours") so they had the funding.

---------- Post added at 12:46 PM ---------- Previous post was at 12:45 PM ----------

b) Support that their actions are based out of retaliation.

“Target worked me hard from mid-July of 2018 to February 2019, right before my medical coverage was about to kick in,” said Caren Morales, a former Target employee in Diamond Bar, California. She was averaging around 35 to 40 hours a week, she said, and got a letter from the company in February with information about how to sign up for health insurance benefits.

“They cut my hours right then, and so I begged for hours and always went above and beyond.” She quit in May after her hours plummeted to as little as 15 a week.

Retaliation.


I'm actually going to bow out after this. I learned long ago that you've researched this study too extensively to put up any kind of argument.

[SharmaK]

Some news on this today: https://www.axios.com/minimum-wage-j...33eef4bca.html

Job loss predictions over rising minimum wages haven't come true
Eighteen states rang in 2019 with minimum wage increases — some that will ultimately rise as high as $15 an hour — and so far, opponents' dire predictions of job losses have not come true.
What it means: The data paint a clear picture: Higher minimum wage requirements haven't reduced hiring in low-wage industries or overall.

State of play: Opponents have long argued that raising the minimum wage will cause workers to lose their jobs and prompt fast food chains (and other stores) to raise prices.
But job losses and price hikes haven't been pronounced in the aftermath of a recent wave of city and state wage-boost laws.

• And more economists are arguing that the link between minimum wage hikes and job losses was more hype than science.

What we're hearing: "The minimum wage increaseis not showing the detrimental effects people once would’ve predicted," Diane Swonk, chief economist at international accounting firm Grant Thornton, tells Axios.

• "A lot of what we’re seeing in politics is old economic ideology, not what economics is telling us today."

The doom-and-gloom that opponents have predicted, "are part of the political policy debate," Jeffrey Clemens, an economics professor at UC San Diego, tells Axios.

• His research for the conservative American Enterprise Institute is often quoted in arguments against minimum wage increases.
• But Clemens told Axios: "People will tend to make the most extreme argument that suits their policy preferences, and it’s not surprising if that ends up being out of whack with the way things unfold on the ground."

Where it stands: Cities and states around the country are taking action as the federal minimum wage — $7.25 an hour — "has remained unchanged for the longest stretch of time since its 1938 inception under the Fair Labor Standards Act," according to a recent paper by the New York Fed.

• Cities like New York, Seattle, Chicago and San Francisco have raised local minimum wages, and individual companies have done so as well: Amazon set its minimum at $15 an hour last year.

As of July: "14 states plus the District of Columbia—home to 35% of Americans—have minimum wages above $10 per hour, as do numerous localities scattered across other states," according to the N.Y. Fed.

• Laws in New York, California, Connecticut, Illinois, Maryland, Massachusetts, and New Jersey will eventually increase minimum wages to $15 per hour.

Axios used Bureau of Labor Statistics data to compare job growth rates in four states with low minimum wages vs. eight states with high minimum wages:

• Since 2016, when California became the first state to pass the $15 minimum wage law, all 12 states have seen growth in restaurant, bar and hotel jobs.
• Three of the four states with job growth higher than the U.S. median have passed laws that will raise the state minimum wage to at least $13.50.
• Three of the five states with the slowest job growth rates did not have a state minimum wage above the federal minimum of $7.25 an hour.
• An outlier was Massachusetts, which had the slowest job growth in the sector and currently has the highest state minimum wage: $12 an hour.

The big picture: A number of peer-reviewed academic studies have found little to no impact on hiring as states and municipalities have raised the minimum wage.

• Rather, such increases are likely to have increased hiring in the strong U.S. economy, Bill Spriggs, chief economist at labor union AFL-CIO, tells Axios.

Yes, but: There could still be negative long-term effects, such as businesses choosing to locate in states with lower minimum wage requirements, according to the N.Y. Fed's study.

• "The danger is extrapolating too far and saying, 'We should raise wages to $30 an hour,'" Swonk says. "The current minimum wage increases were successful because they were regionally based, and not national or one-size-fits-all."

The bottom line: Opposition to higher minimum wage laws is increasingly based in ideology and orthodoxy rather than real-world evidence, economists say.

Not much more to be added here other than I have to agree with the bottom line - that this line of thinking is just about political ideology. However, even then, one can't conclude that MW should be raised to a crazy value and that this should all be done carefully, and slowly and measure changes to ensure we're not doing the poor a disfavor.

[Ibelsd]

So, I think those advocating for MW, the average guy, not the activist, just want some sense of security. I bit of predictability. I don't think it is outrageous for a single person working full-time (or near full-time) even having to do so spread out among several jobs to want some sort of insurance for health, a place to live, and food. I also think we currently spend some amount of money on healthcare as taxpayers to support those who make under a certain threshold or who simply don't have insurance. So, in a sense, corporations/companies use taxes as a sort of subsidy that they can use to justify not offering such a benefit to employees. And, as Squatch mentioned, some companies cannot afford to offer such benefits without some cost to wages and net pay. This is what the Norwegian nations have understood about capitalism. Those nations are actually very pro open market. However, they have structured their economy to attempt to even out some of the highs and lows of that free market. They do this through high taxes and lots of benefits for workers. In exchange, companies have very few regulations. They are free to hire and fire as they please. They are free to conduct business in some of the most unregulated markets on the planet. So, there is an exchange which allows such a system to work. It is about trade-offs. In the U.S., the left wants high regulations and high taxation. The right wants few regulations and low taxation. Perhaps, neither of these are the optimal solution for anyone. I am obviously very much in favor of capitalism and the free market. However, I do understand that this system can be difficult on low-skill labor and those in industries that are in the process of being disrupted. Now, disrupting industry is a wonderful thing, but let's acknowledge that people get hurt. Real people. And, I don't think the free market, in the short-term works well for these people. So, if we want to encourage industry disruption, technology, et al. then we should be willing to help those whose lives get upended by it. I am not for welfare, per se, but I do advocate for the smoothing out of the economy where possible and practical. I think we also need to separate career vs. job. We need to separate the needs of teens and young people with those who are in careers. A coal miner whose job has been displaced due to technology is not the same is a Target worker who is hired seasonally and had their hours cut. So, I do not have all the answers, but I do recognize the need for some change to our current system.

[Squatch347]

Some news on this today

I'd hardly call Axios a reliable source of "news." This article is a great articulation of why. It selectively picks which predictions weren't validated, this discounts the entire class of hypotheses. It would be like saying "well Trump hasn't suspended elections so all the worrying of the Democrats is unreliable."

However, even then, one can't conclude that MW should be raised to a crazy value and that this should all be done carefully, and slowly and measure changes to ensure we're not doing the poor a disfavor.

This is an interesting concession that I don't think applies its own reasoning to its proposed action. You are saying we shouldn't make massive increases to the MW because, presumably, it can hurt the poor. IE the mechanism of wage price controls hurts employment. If that mechanism exists, then you should favor no MW increases. It isn't enough to simply say "let's do it so the harm is so small I can't detect it." That simply implies a deficiency in your measuring technique. Like pooring a bucket of water in a pool. You might not notice the water level rises, but it does.

Similarly, in this case, you might not notice the families that are hurt, but they are.

So, I do not have all the answers, but I do recognize the need for some change to our current system.

A couple of quick thoughts on this. I would also add that the average person, who doesn't have time to think through the subject applies (like all of us do to areas we aren't focused on) stage 1 thinking. IE you think solely of the immediate consequences, not the unintended consequences. I want to raise wages, so I tell people to pay more. I want food to be cheaper so I tell people to charge less.

I don't think that kind of thinking is irrational given that there are far more important matters in almost everyone's individual life, its just incomplete.

I think we all agree that there is room for change and that the current situation is non-optimal. Labor mobility (or, more precisely, lack thereof) and the decline in the private safety net (charities and communities) has caused a lot of problems. The inability to hire/fire easily has caused wage stickiness which means that either some monopsony or some systematic unemployment must creep in (I suspect the latter). Both of which represent societal harm. The lack of robust private safety nets that could provide that dislocation insurance (extended family, local churches, local civic groups, etc) causes a lot of turmoil and also limits mobility. You are less likely to seek a better role if you don't have a community that will help you. Socializing those charities (as you correctly point out the Scandanavian countries have done) is certainly an option. Ideally, I think localized, privatized charities are more effective (having worked at both public economic development institutions and local charities, the contrast seemed striking), but that might not be a feasible outcome with the structure of many local communities currently.

It just seems to me that the big elephant in the room is the compliance cost of employment. When 40 percent of all labor costs are non value added paperwork, that seems like a really easily first step to making things better. If we could just halve that, the effects would be enormous.

[Squatch347]

Laudable for the sheer size of the data set, this is a very robust study that validates earlier discussion in this thread that MW laws tend to affect small businesses, especially small businesses in low income areas which are predominately owned by minority owners. This reinforces the point that the MW prevents minorities from rising out of poverty and hurts economically marginalized communities by denying them not only access to jobs, but to goods and services.

Using intertemporal variation in whether a state’s minimum wage is bound by the federal rate and credit-score data for approximately 15.2 million establishments for the period 1989–2013, we find that increases in the federal minimum wage worsen the financial health of small businesses in the affected states. Small, young, labor-intensive, minimum-wage sensitive establishments located in the states bound to the federal minimum wage and those located in competitive and low-income areas experience higher financial stress. Increases in the minimum wage also lead to lower bank credit, higher loan defaults, lower employment, a lower entry and a higher exit rate for small businesses.

https://www.nber.org/papers/w26523