Do these studies take into account second order effects? For example, I would imagine with poor people having more money from a minimum wage, there would also be more spending on consumption, potentially mitigating employment effects.
Second order effects are minimal at best. Lower income workers are the least likely demographic to purchase local goods from small businesses (small businesses tend to have higher prices, but other benefits, than large box stores or online). Most of the increase in wages will go to Walmart, Target, Amazon, Auto Makers, etc... all large corporate entities. Their profits do not help the local community at all. The number of Walmart stores (and therefore employees) is based on number of purchasers, not how much they purchase. Food and Rent are fixed, but subject to preference. Preference for nicer apartments and better food will drive up demand and thus prices (if not by companies raising prices due to a higher income clientele, it'll be from eliminations of lower cost rentals).
There is a reason that Amazon pushes for $15/hr wages. 1) Its what they are already paying their employees (through public pressure) and a Fed. $15 min wage reduces the competitive advantage of companies with lower wages 2) Amazon has more automation and fewer employees per $ sold than anyone, and raising min. wage hurts all their competitors.
Food and rent are NOT fixed anything that costs go up will just be passed on and soon that 15 an hour will only buy what 12 did and the people who did not get a 3 dollar bum get to buy less seems lose lose
I can’t help but feel the sole reason why a minimum wage lacks noticeable disemployment effects is because employers are still able to adjust by increasing intensity, reducing hours, and cutting perks. What this would suggest though, is that while nominal pay increases, the value of what they’re receiving from their job will stay precisely the same, up until the point (probably substantially above $15 - really, haven’t a clue where) where employers cannot cut back perks or increase intensity further. It’s not for nothing that Amazon can pay a $15 minimum - they also have quite possibly the strictest, most micromanaged workplace in the US. This is, interestingly, a case for raising the minimum wage - we are squeezing the orange harder now, and getting more production at the same actual cost - and indeed, it is highly possible that humans are biased against explicit costs and overlook non cash wages, and businesses might need a kick in the pants in this. (We see this in government jobs - lower pay is traded for high job security) However, if our goal is to increase the living standards of the poor, then our most direct, and I should think, more efficient way, would be a negative income tax or a wage subsidy program such as eitc. (Not going to go into the perverse incentives of welfare too much - though, perhaps people would be better off if we just scrapped all welfare - no incentive not to produce then!)
And incidentally, I want to commend you for making comments open to non subscribers - as an undergraduate I’m not entirely in control of my finances - and indeed, for making almost the entirety of your blog publicly available. Good, informed, informative, and rip-roaringly entertaining work.
I mean, you could fight for it! (If you want to see someone then, make use of a mirror! :) My main concern is that a minimum wage results in no actual increase in compensation, simply in a shifting of forms. In that case it’d be like choosing between immersing your whole arm in hydrochloric acid, or merely up to forearms in both (yes, only one arm is better. I’m certain you understand the picture which I’m trying to paint here, however)
A somewhat unrelated thought - I’ve been unimpressed with the notion that minimum wage employers are monopsonostic. (Really? A monopoly on employment? When you have a dozen stores in one strip mall, let alone a community? Perhaps it is monoposonistic if you have the mobility of a snail or an especially unmotivated tortoise, but for a human possesed of legs, bicycles, automobiles and other such mobility enhancers? Hardly!) But, perhaps I have been looking at it the wrong way. Perhaps it is not that employers are limited - it’s that there is a perpetual glut of people with unusual preferences for being less productive. (What an indelicate way of saying that. What I mean to say is that you are going to be doing below 15 an hour work as an adult if and only if you either lack skills to earn more, or have a preference for job itself- and in the former case, the preference here is the present situation over more skills - though, I’ll confess, it is not entirely fair. Most cognitive skills are innate, stemming from your genetics, and it’s hardly fair for anyone to be poor purely on account of what they were born with. (An aside of an aside - perhaps we should consider paying people meet certain criteria very large sums of money not to have children.))
Of course, is it really then a glut? Plainly the costs of self improvement out-weigh the perceived gains, and people choose to do behaviors that make them poor. Why should we try to change people from doing what they want to do? It takes nothing away from anybody else for me to choose to work less or work less productively, so long as we do not then compensate me for my sloth.
(And last of all, it feels relevant to the whole thing but I don’t know quite where to slip it in - I dispute addiction being a disease - as it is simply a preference other people don’t like. Who would be willing to abandon their family, to renounce them forever? Very few - yet we do not call those who love addicts to their family, and neither do we celebrate family abandonment, or incarcerate those who spend time with their kids.)
> Most cognitive skills are innate, stemming from your genetics, and it’s hardly fair for anyone to be poor purely on account of what they were born with.
No they're not!! They are caused by environment and parental nutrition.
Not all jobs are for seasoned grown ass men and women. My first job was working at a shoe store, I didn't like the pay, I got a new job. By the time I was 18, I was at 10 an hour. I could've gotten an even higher wage but college makes you unavailable more often and most employers who pay alot want availability. Teens and Students don't have that so we get cut, make every job high paying, then young people won't be able to get a job then in the long run less prepared for work and less likely to get a higher paying job they'll need in the future.
Worth being useful employee. Worth employing and working to be a valuable employee to your employer. What did you think worth meant a town in Wisconsin?
Well if you mean economic worth then it is just empirically false that no worker is “worth” less than a living wage. In a labor market and absent government intervention, lots of people wouldn’t have the skills and experience required to bring enough value to an employer to be able to earn anything above $3 per hour. That’s why I asked the question in the first place. The claim is blatantly false if that’s what you mean by worth.
By learning skills or a trade. Apprenticeships require 3 things. A want to learn, timeliness, and dependability. Plumbers, welders, electricians, etc.. are all skill trades that will willing hire high-school graduates if they have a drive to learn. If you cant teach your kids the drive to be ambitious and the want to be successful then you have failed as a parent.
Dude, If people like their minimum wage job more than whatever you do for a living, let them put in their 40 hours and enjoy their life. You're no better than anyone in a minimum wage job in fact, the way you talk about being worth what you make, makes you sound like a insecure terrible person.
"For example, a 2019 paper by Arindrajit Dube finds that doubling the minimum wage would result in somewhere between a 2.2% and a 4.5% drop in poverty."
Sorry if I'm misunderstanding but wouldn't a "minimum wage elasticity of the non-elderly poverty rate with respect to the minimum wage ranges between −0.220 and −0.459" mean that a 100% increase in the minimum wage would result in a proportionate decrease in the poverty rate of 22-45% not 2.5% to 4.5%?
So let me ask you a question if a company can pay 15 an hour or send their work to China or somewhere else for 5 an hour how do you expect us to compete in a world wide marketplace I support a worldwide minimum wage for
I was asking a technical question about the elasticity cited in Dube's paper. But most minimum wage jobs are in the non-tradeable service sector. Of course, that could change.
- I'm admittedly a noob here, so I really appreciated your summary of the debate!
- Maybe you did this and I missed this, but shouldn't we distinguish between short-term elasticity and long-term elasticity? Depending on secondary measures taken by regional governments, I can imagine different scenarios where long-term elasticity is smaller than short-term elasticity.
- If people believe raising minimum wage will kill jobs (i.e. we shouldn't raise it) shouldn't they also believe we should get rid of it altogether as it would, in theory, create more job opportunities? I know this is an oversimplification, but it seems like that's what you would conclude based on their model. Like, do they have an example of where lowering the minimum wage would be more beneficial? Or, do they have an example of expanding the minimum wage past a certain point would have more cost then benefits? It seems like specificity would be important.
I own a small sandwich shop. I say abolish federal minimum wage, in my area the wage market has adjusted its self. We lack a workforce here every business is on a skeleton crew, hence wages are higher to attract workers. High school kids are making $10 per hour and up. Business are offering hiring bonuses. On the other hand we have a welfare and disability problem. It's so easy to get the government hand outs than work. That's why our wages are up and the staffing is low.
A free market in wages will fix it's self just like supply and demand, we already see it here we don't need the government sticking their fingers in it. Most of these people in government and economic analysis don't know what a gallon of milk cost or a delivery driver gets paid. There is millions of job positions out there waiting to be filled. Stop feeding the bears (welfare) and nature will fix itself!
Underpaid? You don't even know what the cost of living is and what percentage of his workers are in school? Not everywhere in the US is absurdly overpriced like California.
I know a lot of small business owners and they are all watching this closely. Most people don't realize small business run on very low margins. Doubling the wages will put alot of them in the red, especially when we are struggling to keep doors open during a pandemic. They are not the government and can't magically print more money. Most say they will have to raise prices 30 or 40%, and cut staffing by similar numbers.
Then you have to take cost increases into account too. If I make 21 an hour now, ill make 21 an hour after the 15 dollar minimum goes into effect. So instead of 3 times minimum wage, ill make 140% of it. Pushing me out of middle class and closer to poverty. I'll also be paying 5 for gas and milk, rent will go up utilities will go up.
So we get 30% of people who were making minimum wage making nothing and the middle class not making enough to stay out of poverty. An increase is due, but needs to be inclined with inflation. More 9 to 10 per hour, or were going to have one hell of a recession.
Why is that? And who decides what a “decent” wage is? What you’re really saying is this: If a business owner can’t pay his employees a wage I — or some politicians ideologically aligned with me — have chosen more or less at random (regardless of whether some workers are willing and able to work for a wage less than that), then said business owner shouldn’t be allowed to put food on his table by running a company.
Why do you get to decide what the terms of private transactions between willing parties that don’t infringe on anyone else’s rights should be?
Exploiting how? The fact that someone chooses to take the job demonstrates that that job pays more than they could get working with anyone else, or working on their own. How is something that benefits every person involved exploitative?
You think everyone at walmart want to make 7.25? You think it's fair that even if that's the only job they could get they deserve to be paid that much? That's why there are regulations. The problem is the corporations dictate a lot of the regulations. The minimum wage should be over $20. Keep telling yourself that you pay people enough.
You all live in some fantasy world where people all have good intentions. You're either playing dumb or are sheltered af. A world as you explain wouldn't last a minute.
People don’t have to have good intentions - they merely have to be self interested. I’m quite certain that people at Walmart would prefer to be paid more if it meant no change. So would everyone. Unfortunately, that would require being more productive, which someone people do not want to do enough.
How many businesses have you owned do you even understand competition overhead and expense if you're not not competitive those jobs no longer exist think before you speak
You didn’t defend your claim. You just repeated it with a slightly different wording. Who are you to decide who does and who does not deserve a business based on nothing but your own subjective opinions regarding how much workers (most of whom you know nothing about) should get paid?
It has nothing to do with politics. It has to do with protecting people. Even if a person is desperate for a job they don't deserve to be underpaid. You sound like a scummy capitalist. So yeah people have to be protect from people like you.
As I mentioned in my response the original article. I have a great job freelancing that allows me to work 15 hours a week while earnings more than most people do working 40 hours a week.
And I can work while sitting in bed. And I was able to get that job in large part because I first got other freelance jobs that hardly paid me anything but allowed me to get my foot in the door and acquire some experience and build a portfolio.
But you would have “protected” me from those jobs. Because you know better than me what’s good for me. And I’d still be sitting over at that other job I hated with a passion.
You probably are someone immune to the market, supported by someone else. Never have ever accomplished anything. No one who has to take care of people or who signs paychecks from week to week would ever think like this. Your employment was probably white collar for government, such as teaching with ample time off for recreation. You really have no grasp of reality, living off others’ labor and planning. Kindly stick to what you know about. Everyone else is laughing at you, as you sound like an adolescent no one can reason with on an adult subject.
No sorry I work 8n a factory 50 hours a week to try to maintain my bills after idiot's like you from your ivory tower convince the masses with your bullshit I've often wondered how people can protest if they actually have a job
Oh wow you nailed it. Also teaching isn't white collar. You showed just how little you know about life with that comment. Actually you couldn't be further from the truth. Nice try though with your idiotic conservative ideals.
"The whole point of minimum wage is to reduce poverty. Many papers find that it does do this. For example, a 2019 paper by Arindrajit Dube finds that doubling the minimum wage would result in somewhere between a 2.2% and a 4.5% drop in poverty. That’s not a knockout blow, but it would be substantial, since the overall poverty rate is around 12%."
Please be careful!
Dube (2019) writes in footnote 2: "Most results in this paper are for the non-elderly population; so, when I refer to “the poverty rate,” I am referring to the poverty rate among those under 65 years of age."
In fact, the increase in prices due to the $15 MW policy will mostly hurt the non-working poor (elderly on pension, people on disability insurance, etc.).
It is not obvious to me there is empirical evidence that MW reduces poverty!
Independently, after identifying the winners and losers, the next question is how to value the gains and looses of winners and losers. Is it straightforward? I do not think so... so how can we safely conclude MW is a good policy?
To clarify my opinion. I am convinced the MW policy is a powerful tool for redistribution, but (most likely) needs to be complemented with other policies to compensate the non-working poor.
None of this takes on account of the price of everything going up. Do you really think employers are just going to eat this cost out of their own pockets? They will pass it down in higher prices which will still mean minimum wage will not be enough! It's a starting point not a staying point, learn skills and some yourself and make more money or find another job that pays more.
Small business here... 39% tax on corporations...$15 minimum wage.. Mandated health insurance... I can make a prediction you're going to lose 50% of your small businesses. Most small businesses pay more than minimum wage to begin with. We couldn't afford Obama care and it reduced our full time workers to 30 hours or less. All these politicians should be required to take business and economic classes. This is planned to eliminate all small businesses so all the large corporations can take over. Large corporation should not be allowed to donate money to political preferences.
If large corporations can afford to take better care of their workers than y'all, then we should just let them take over. Sorry, but the well-being of workers takes precedence over the preservation of some vague decentralized mom-and-pop Americana aesthetic.
Why are you all so married to a NATIONAL minimum wage. You concede that is doesn't make sense, but then insist that we should have one anyway because we'll eventually adjust to a % of median wage. 1. I've never seen an actual bill in Congress set the minimum wage regionally. 2. Why not start with a bill with a % of median wage from the beginning?
In 2019, the median wage for hourly workers in KS was...$15. So Dube's estimate suggests that a minimum wage above $8.85 per hour would start to have significant employment effects in Kansas. Dube, the economist who thinks minimum wage cuts impact employment the way Laffer thinks tax rate cuts impact tax revenue.
As for monopsony power. Sure frictions exist in the market because current employers know productivity better than potential employers, but the labor market is much farther from single buyer than competition. It is not as if every MSA outside of the East and West Coasts are one traffic light downtowns. Wichita, KS MSA has 640 thousand people. According to QCEW there are 1,824 retail trade establishments and 1,319 establishments in accommodations and food. How much monopsony power could they have in labor markets. Their residual supply and MC of Labor curves might not overlap, but they are probably pretty close. Wichita's RPP is only 87.9. A fraction of NYC's 125.7, whose $15 minimum wage is perfectly fine for everybody.
I don't even object to a modest increase in the minimum wage, but this all feels like a noble lie. Convince people there are no costs, because they don't understand that the loss in jobs is worth the increase in wages of those still employed. Yet, the expert analysis is very myopic. Let the states figure out the minimum wage. They may not make optimal decisions, but at least they are actually considering the markets that are being impacted.
The real empirical question should simply be "What is the Elasticity of Demand for low-skilled Labor?" The answer shouldn't be "It depends, are we estimating the impact of immigration, minimum wage, or tax incidence?"
The current minimum wage proposal in Congress raises it to $15 after a few years, but after that actually does become regional and adjusts it based on local median wages.
The Nordic sectoral bargaining model would also be fine here; they don't have minimum wage laws at all. (although they should probably have a small one)
Complete garbage. Making a minimum wage 15 an hour will cause a severe spike in price for consumers as business owners will have to pass the cost on to maintain any profit. What you only account for is big corporations that have been proven to actually not be the driving force.behind economics. They are the anchors for economic boost while small to midsized companies drive the economy up and they will cease to exist or be forced to cut hours or spike prices which in turn would push people to buy from big corps that buy cheap knockoffs from foreign entities that have half the life span of the original product. In essence you would destroy small to mid size businesses to reap a temporary boost of lowering poverty levels until said businesses closed and laid off millions with no job prospects. Instead of using unskilled high minimum wage, you leave it lower and give options for people to learn a trade or skill and find a better job. Instead your wanting to reward the lazy, unambitious people that don't want to strive for anything better.
How about the the government go after all the executive's that payouts at the end over of every year that goes way into the millions of dollars. They all act like if it was not for them the companies would go under, plus paying some kid $15 to flip burgers is just stupid
What about the racial impact of minimum wage laws? Its odd that it isn't discussed much here, given that the left is obsessed with racial impact in many other policy realms. My biggest beef with the minimum wage is what it does to minorities in inner cities. UC Irvines David Neumark is especially poignant on this and how it disproportionally harms the most marginal in society - especially Blacks from inner cities. Everyone intuitively understands why say the teenage unemployment is so high given minimum wage laws, but the Black urban youth is suffering from the same impact of the minimum wage, and will have much more long term negatives because of it. I'd be for a minimum wage if it was somehow pegged to the Black/White unemployment gap, for example. But when it comes to issues that greatly benefit unions (public schools, public services, and the minimum wage) the left suddenly doesn't care about racial impacts.
I was skeptical about whether a $15 minimum wage would really pass, but it’s been the cool thing to talk about lately...so maybe the winds are changing
So will start with the personal antidote.
My brother-in-law, owns a small business/fast food restaurant. He is a Greek immigrant, and he is completely against the minimum wage increase of course. Then again, he is a cheap bastard on everything. He has already said that he will just raise prices. Of course if it’s phased in over a period of time, she raise his prices occasionally anyway.
I guess my concern is, actually it’s not a concern, what about wage compression. Obviously supervisors who were making say $12 an hour, are now going to be paid more. But instead of being paid four dollars more than their workers, now the employer might only pay them one or two dollars over the workers. Is this good? Is this bad? How long does this affect last?
I also wonder about another possible effect. If you’re an employer that has to pay these higher wages, do you get more selective about who you hire? Do you say, well let me hire this community college graduate instead of this GED guy.
Speaking again about the wage compression issue. I can see that at companies with a decent amount of minimum wage earners, it’s forcing the salaries up of everybody. Worker makes 15, supervisor makes 16, manager makes 18, etc.
How much of a knock on effect will that have on employers that don’t have a lot of sub $15 an hour employers? Obviously, or maybe not obviously, they have to compete for labor, so be somewhat competitive. I just don’t know.
And since I don’t wanna get out of bed, could this shock create a recession?
Having said all this, I am completely with Noah here. Life is boring, sometimes you need to just take a fucking chance. Let’s raise the minimum-wage and see what happens. I am 100% in favor.
Crap, one more thing occurred to me. We will call this fantasy land. I would love to see them come by in the minimum wage increase, with new overtime rules. The work week is basically set by the federal government’s employer laws for nonexempt employees. I think they need to slowly start reducing the standard work week in the United States. Make overtime start kicking in at 38 hours, then 36, and then down to 32.
It seems to me that this might the gate the if there are any negative effects of and increase the minimum wage. Americans work too much, automation means that there’s no reason for us to work 40 hours a week. I think we would all be better off if we got three day weekends. Let employers hire a greater number of employees to make up the difference.
Until the price goes up on everything balance out the new cost of employees. Oh ya and if your wage isn't getting a good raise your gonna find yourself implementing cut backs on spending our increasing your credit.
I was thinking the same thing. If people are worried that the total demand for labor hours will fall, then Congress should shorten the work week so the fall doesn't take the form of unemployment.
Relatedly: people under 18 shouldn't be working anyway, so if minimum wage laws hit teenagers especially hard that's a feature and not a bug. Why not just ban paid employment by minors at the same time the minimum wage is raised, to reduce the risk that unskilled adults will see less demand for their labor?
So, a 16 to 18 year old should no longer be allowed to earn money to pay for their own transportation? This is very common in my state to help the young learn basic money management skills as it has all but been removed from the education curriculum.
No, I think paid employment for minors should be illegal. The short-term benefits of extra pocket money don't outweigh the harm done to their school performance and long-term economic prospects. (At least that's my uninformed opinion. Possibly Noah knows of some peer-reviewed research on this subject.)
In my opinion, we should actually go the opposite direction, and reject these paternalistic “protections” for children. If someone wants to work then we should let them work! Let people alone.
This is literally trying to control people's life choices. If a student wants a job let them. This just sounds like another way to handicap our children and make them even less prepared for adulthood. Everyone should be working in college and I think everyone should start working at 16 or 15.
I worked 2 jobs my last 2 yrs of high-school and was still an honor roll student. Life's not all cushy for every 16 to 18 yr. I helped pay the house payment, my car payment and bought food too. Some minors need jobs as much as adults.
I needed to work at the age of 16 so that I could be prepared to support myself at the age of 18. I needed to be able to afford food and housing while putting myself through college. If you had your way, I wouldn’t have been able to provide a roof over my head after high school. My situation was nowhere near as dire as others. Please don’t advocate for this regression.
It's obvious that Jeff's parents paid his way. Or someone besides him. He doesn't know what gives money value. My father wrote that and the answer on a piece of paper and tacked it to the wall of my bedroom. Jeff's didn't.
Shouldn’t that be for them and for their parents to decide? Obviously, some children are too young to work. A two years old can’t get a job. It’s hard to know where the line is.
But we do allow 16 years old kids to drive. 17 years old kids can take out huge loans for college. Some think they should be able to vote. Why not work?
And the benefits of kids that age getting jobs go well beyond the pocket change they earn. That’s actually almost irrelevant. By getting jobs, they learn what a professional work environment is supposed to be like.
They learn to show up to work on time, obey their superiors, prioritize, sacrifice their fun time for a job. Those are all important skills that can allow them to get much better jobs down the road.
Some economists actually argue that the minimum wage reduces the life-time earnings of people because it is more likely to cause unemployment among teens.
By causing unemployment among teens, it takes away these opportunities to build lifelong skills, and that is felt later on when they do enter the job market. So even if it’s true that increases in the minimum wage reduces poverty, it’s still not clear that it’s a net benefit.
Gee I was working at 15 had to have a permit and guess what...they took taxes out. Obviously you weren't. Isn't that what we are supposed to do? Work and pay taxes? Or are you from the let mommy and daddy pay for it culture?
Do these studies take into account second order effects? For example, I would imagine with poor people having more money from a minimum wage, there would also be more spending on consumption, potentially mitigating employment effects.
Yes, they do! Good question!!
Second order effects are minimal at best. Lower income workers are the least likely demographic to purchase local goods from small businesses (small businesses tend to have higher prices, but other benefits, than large box stores or online). Most of the increase in wages will go to Walmart, Target, Amazon, Auto Makers, etc... all large corporate entities. Their profits do not help the local community at all. The number of Walmart stores (and therefore employees) is based on number of purchasers, not how much they purchase. Food and Rent are fixed, but subject to preference. Preference for nicer apartments and better food will drive up demand and thus prices (if not by companies raising prices due to a higher income clientele, it'll be from eliminations of lower cost rentals).
There is a reason that Amazon pushes for $15/hr wages. 1) Its what they are already paying their employees (through public pressure) and a Fed. $15 min wage reduces the competitive advantage of companies with lower wages 2) Amazon has more automation and fewer employees per $ sold than anyone, and raising min. wage hurts all their competitors.
Food and rent are NOT fixed anything that costs go up will just be passed on and soon that 15 an hour will only buy what 12 did and the people who did not get a 3 dollar bum get to buy less seems lose lose
You're claiming that nobody gets richer because they get paid more. That would be a good argument for communism if it was true.
I can’t help but feel the sole reason why a minimum wage lacks noticeable disemployment effects is because employers are still able to adjust by increasing intensity, reducing hours, and cutting perks. What this would suggest though, is that while nominal pay increases, the value of what they’re receiving from their job will stay precisely the same, up until the point (probably substantially above $15 - really, haven’t a clue where) where employers cannot cut back perks or increase intensity further. It’s not for nothing that Amazon can pay a $15 minimum - they also have quite possibly the strictest, most micromanaged workplace in the US. This is, interestingly, a case for raising the minimum wage - we are squeezing the orange harder now, and getting more production at the same actual cost - and indeed, it is highly possible that humans are biased against explicit costs and overlook non cash wages, and businesses might need a kick in the pants in this. (We see this in government jobs - lower pay is traded for high job security) However, if our goal is to increase the living standards of the poor, then our most direct, and I should think, more efficient way, would be a negative income tax or a wage subsidy program such as eitc. (Not going to go into the perverse incentives of welfare too much - though, perhaps people would be better off if we just scrapped all welfare - no incentive not to produce then!)
And incidentally, I want to commend you for making comments open to non subscribers - as an undergraduate I’m not entirely in control of my finances - and indeed, for making almost the entirety of your blog publicly available. Good, informed, informative, and rip-roaringly entertaining work.
Same here. Really appreciate it, Noah.
Thanks!! Glad you're enjoying it.
Wage subsidies would be neat, but I just don't see anyone fighting for them, so I don't know that they're on the table, sadly...
I mean, you could fight for it! (If you want to see someone then, make use of a mirror! :) My main concern is that a minimum wage results in no actual increase in compensation, simply in a shifting of forms. In that case it’d be like choosing between immersing your whole arm in hydrochloric acid, or merely up to forearms in both (yes, only one arm is better. I’m certain you understand the picture which I’m trying to paint here, however)
A somewhat unrelated thought - I’ve been unimpressed with the notion that minimum wage employers are monopsonostic. (Really? A monopoly on employment? When you have a dozen stores in one strip mall, let alone a community? Perhaps it is monoposonistic if you have the mobility of a snail or an especially unmotivated tortoise, but for a human possesed of legs, bicycles, automobiles and other such mobility enhancers? Hardly!) But, perhaps I have been looking at it the wrong way. Perhaps it is not that employers are limited - it’s that there is a perpetual glut of people with unusual preferences for being less productive. (What an indelicate way of saying that. What I mean to say is that you are going to be doing below 15 an hour work as an adult if and only if you either lack skills to earn more, or have a preference for job itself- and in the former case, the preference here is the present situation over more skills - though, I’ll confess, it is not entirely fair. Most cognitive skills are innate, stemming from your genetics, and it’s hardly fair for anyone to be poor purely on account of what they were born with. (An aside of an aside - perhaps we should consider paying people meet certain criteria very large sums of money not to have children.))
Of course, is it really then a glut? Plainly the costs of self improvement out-weigh the perceived gains, and people choose to do behaviors that make them poor. Why should we try to change people from doing what they want to do? It takes nothing away from anybody else for me to choose to work less or work less productively, so long as we do not then compensate me for my sloth.
(And last of all, it feels relevant to the whole thing but I don’t know quite where to slip it in - I dispute addiction being a disease - as it is simply a preference other people don’t like. Who would be willing to abandon their family, to renounce them forever? Very few - yet we do not call those who love addicts to their family, and neither do we celebrate family abandonment, or incarcerate those who spend time with their kids.)
> Most cognitive skills are innate, stemming from your genetics, and it’s hardly fair for anyone to be poor purely on account of what they were born with.
No they're not!! They are caused by environment and parental nutrition.
https://www.motherjones.com/environment/2016/02/lead-exposure-gasoline-crime-increase-children-health/
Don't raise the minimum wage to fifteen dollars an hour, instead, raise your children to be worth more than fifteen dollars an hour.
They already are
I think the government values people at about $10 million a piece regardless of age/health https://www.npr.org/2020/04/15/835571843/episode-991-lives-vs-the-economy
Better yet, raise your children to understand that no worker is worth less than a living wage.
Not all jobs are for seasoned grown ass men and women. My first job was working at a shoe store, I didn't like the pay, I got a new job. By the time I was 18, I was at 10 an hour. I could've gotten an even higher wage but college makes you unavailable more often and most employers who pay alot want availability. Teens and Students don't have that so we get cut, make every job high paying, then young people won't be able to get a job then in the long run less prepared for work and less likely to get a higher paying job they'll need in the future.
Should we have adult jobs that pay $15/hr and kiddie jobs that pay between the current minimum wage and $15?
Maybe we should have separate pay for jobs at certain levels or fulltime and part time.
Can you define what “worth” you are referring to here?
Worth being useful employee. Worth employing and working to be a valuable employee to your employer. What did you think worth meant a town in Wisconsin?
Well if you mean economic worth then it is just empirically false that no worker is “worth” less than a living wage. In a labor market and absent government intervention, lots of people wouldn’t have the skills and experience required to bring enough value to an employer to be able to earn anything above $3 per hour. That’s why I asked the question in the first place. The claim is blatantly false if that’s what you mean by worth.
By learning skills or a trade. Apprenticeships require 3 things. A want to learn, timeliness, and dependability. Plumbers, welders, electricians, etc.. are all skill trades that will willing hire high-school graduates if they have a drive to learn. If you cant teach your kids the drive to be ambitious and the want to be successful then you have failed as a parent.
If you don't know, please don't have children.
You haven't been around much have you?
Bravo
The way you do that is by not growing up in poverty, and one way you don't grow up in poverty is through higher min wage.
Dude, If people like their minimum wage job more than whatever you do for a living, let them put in their 40 hours and enjoy their life. You're no better than anyone in a minimum wage job in fact, the way you talk about being worth what you make, makes you sound like a insecure terrible person.
"For example, a 2019 paper by Arindrajit Dube finds that doubling the minimum wage would result in somewhere between a 2.2% and a 4.5% drop in poverty."
Sorry if I'm misunderstanding but wouldn't a "minimum wage elasticity of the non-elderly poverty rate with respect to the minimum wage ranges between −0.220 and −0.459" mean that a 100% increase in the minimum wage would result in a proportionate decrease in the poverty rate of 22-45% not 2.5% to 4.5%?
Yep! Thanks for catching that! Updated.
So let me ask you a question if a company can pay 15 an hour or send their work to China or somewhere else for 5 an hour how do you expect us to compete in a world wide marketplace I support a worldwide minimum wage for
Minimum wage in Australia is approx 21USD/hour and they're even closer to China, but this doesn't seem to happen.
I was asking a technical question about the elasticity cited in Dube's paper. But most minimum wage jobs are in the non-tradeable service sector. Of course, that could change.
Three Things:
- I'm admittedly a noob here, so I really appreciated your summary of the debate!
- Maybe you did this and I missed this, but shouldn't we distinguish between short-term elasticity and long-term elasticity? Depending on secondary measures taken by regional governments, I can imagine different scenarios where long-term elasticity is smaller than short-term elasticity.
- If people believe raising minimum wage will kill jobs (i.e. we shouldn't raise it) shouldn't they also believe we should get rid of it altogether as it would, in theory, create more job opportunities? I know this is an oversimplification, but it seems like that's what you would conclude based on their model. Like, do they have an example of where lowering the minimum wage would be more beneficial? Or, do they have an example of expanding the minimum wage past a certain point would have more cost then benefits? It seems like specificity would be important.
I own a small sandwich shop. I say abolish federal minimum wage, in my area the wage market has adjusted its self. We lack a workforce here every business is on a skeleton crew, hence wages are higher to attract workers. High school kids are making $10 per hour and up. Business are offering hiring bonuses. On the other hand we have a welfare and disability problem. It's so easy to get the government hand outs than work. That's why our wages are up and the staffing is low.
A free market in wages will fix it's self just like supply and demand, we already see it here we don't need the government sticking their fingers in it. Most of these people in government and economic analysis don't know what a gallon of milk cost or a delivery driver gets paid. There is millions of job positions out there waiting to be filled. Stop feeding the bears (welfare) and nature will fix itself!
Sounds like you underpay your employees and that's why we need welfare. Thanks.
$10 to start a high school kid is underpayment?
I think you should stop trolling. If anyone took your advice their business would go bankrupt.
Underpaid? You don't even know what the cost of living is and what percentage of his workers are in school? Not everywhere in the US is absurdly overpriced like California.
I know a lot of small business owners and they are all watching this closely. Most people don't realize small business run on very low margins. Doubling the wages will put alot of them in the red, especially when we are struggling to keep doors open during a pandemic. They are not the government and can't magically print more money. Most say they will have to raise prices 30 or 40%, and cut staffing by similar numbers.
Then you have to take cost increases into account too. If I make 21 an hour now, ill make 21 an hour after the 15 dollar minimum goes into effect. So instead of 3 times minimum wage, ill make 140% of it. Pushing me out of middle class and closer to poverty. I'll also be paying 5 for gas and milk, rent will go up utilities will go up.
So we get 30% of people who were making minimum wage making nothing and the middle class not making enough to stay out of poverty. An increase is due, but needs to be inclined with inflation. More 9 to 10 per hour, or were going to have one hell of a recession.
If you can't afford to pay your employees a decent wage then you shouldn't have employees. It's simple really.
Why is that? And who decides what a “decent” wage is? What you’re really saying is this: If a business owner can’t pay his employees a wage I — or some politicians ideologically aligned with me — have chosen more or less at random (regardless of whether some workers are willing and able to work for a wage less than that), then said business owner shouldn’t be allowed to put food on his table by running a company.
Why do you get to decide what the terms of private transactions between willing parties that don’t infringe on anyone else’s rights should be?
You know your business isn't actually successful if you are exploiting people.
Exploiting how? The fact that someone chooses to take the job demonstrates that that job pays more than they could get working with anyone else, or working on their own. How is something that benefits every person involved exploitative?
You think everyone at walmart want to make 7.25? You think it's fair that even if that's the only job they could get they deserve to be paid that much? That's why there are regulations. The problem is the corporations dictate a lot of the regulations. The minimum wage should be over $20. Keep telling yourself that you pay people enough.
You all live in some fantasy world where people all have good intentions. You're either playing dumb or are sheltered af. A world as you explain wouldn't last a minute.
People don’t have to have good intentions - they merely have to be self interested. I’m quite certain that people at Walmart would prefer to be paid more if it meant no change. So would everyone. Unfortunately, that would require being more productive, which someone people do not want to do enough.
Again if a business owner can't pay their workers well then they don't deserve a business. Or have less workers.
How many businesses have you owned do you even understand competition overhead and expense if you're not not competitive those jobs no longer exist think before you speak
Ok Paul c.. you try so hard to sound smart and then you don't.
You didn’t defend your claim. You just repeated it with a slightly different wording. Who are you to decide who does and who does not deserve a business based on nothing but your own subjective opinions regarding how much workers (most of whom you know nothing about) should get paid?
Again, if you can't afford employees you don't deserve to run a business with employees.
Not being able to afford employees at a wage YOU and your friends in congress decided isn’t the same as not being able to afford employees.
It has nothing to do with politics. It has to do with protecting people. Even if a person is desperate for a job they don't deserve to be underpaid. You sound like a scummy capitalist. So yeah people have to be protect from people like you.
As I mentioned in my response the original article. I have a great job freelancing that allows me to work 15 hours a week while earnings more than most people do working 40 hours a week.
And I can work while sitting in bed. And I was able to get that job in large part because I first got other freelance jobs that hardly paid me anything but allowed me to get my foot in the door and acquire some experience and build a portfolio.
But you would have “protected” me from those jobs. Because you know better than me what’s good for me. And I’d still be sitting over at that other job I hated with a passion.
You probably are someone immune to the market, supported by someone else. Never have ever accomplished anything. No one who has to take care of people or who signs paychecks from week to week would ever think like this. Your employment was probably white collar for government, such as teaching with ample time off for recreation. You really have no grasp of reality, living off others’ labor and planning. Kindly stick to what you know about. Everyone else is laughing at you, as you sound like an adolescent no one can reason with on an adult subject.
No sorry I work 8n a factory 50 hours a week to try to maintain my bills after idiot's like you from your ivory tower convince the masses with your bullshit I've often wondered how people can protest if they actually have a job
Oh wow you nailed it. Also teaching isn't white collar. You showed just how little you know about life with that comment. Actually you couldn't be further from the truth. Nice try though with your idiotic conservative ideals.
You write:
"The whole point of minimum wage is to reduce poverty. Many papers find that it does do this. For example, a 2019 paper by Arindrajit Dube finds that doubling the minimum wage would result in somewhere between a 2.2% and a 4.5% drop in poverty. That’s not a knockout blow, but it would be substantial, since the overall poverty rate is around 12%."
Please be careful!
Dube (2019) writes in footnote 2: "Most results in this paper are for the non-elderly population; so, when I refer to “the poverty rate,” I am referring to the poverty rate among those under 65 years of age."
In fact, the increase in prices due to the $15 MW policy will mostly hurt the non-working poor (elderly on pension, people on disability insurance, etc.).
It is not obvious to me there is empirical evidence that MW reduces poverty!
Independently, after identifying the winners and losers, the next question is how to value the gains and looses of winners and losers. Is it straightforward? I do not think so... so how can we safely conclude MW is a good policy?
To clarify my opinion. I am convinced the MW policy is a powerful tool for redistribution, but (most likely) needs to be complemented with other policies to compensate the non-working poor.
None of this takes on account of the price of everything going up. Do you really think employers are just going to eat this cost out of their own pockets? They will pass it down in higher prices which will still mean minimum wage will not be enough! It's a starting point not a staying point, learn skills and some yourself and make more money or find another job that pays more.
Small business here... 39% tax on corporations...$15 minimum wage.. Mandated health insurance... I can make a prediction you're going to lose 50% of your small businesses. Most small businesses pay more than minimum wage to begin with. We couldn't afford Obama care and it reduced our full time workers to 30 hours or less. All these politicians should be required to take business and economic classes. This is planned to eliminate all small businesses so all the large corporations can take over. Large corporation should not be allowed to donate money to political preferences.
If large corporations can afford to take better care of their workers than y'all, then we should just let them take over. Sorry, but the well-being of workers takes precedence over the preservation of some vague decentralized mom-and-pop Americana aesthetic.
Noah: A friend sent me the link because of the meme at the top. I love it. Thanks.
Why are you all so married to a NATIONAL minimum wage. You concede that is doesn't make sense, but then insist that we should have one anyway because we'll eventually adjust to a % of median wage. 1. I've never seen an actual bill in Congress set the minimum wage regionally. 2. Why not start with a bill with a % of median wage from the beginning?
In 2019, the median wage for hourly workers in KS was...$15. So Dube's estimate suggests that a minimum wage above $8.85 per hour would start to have significant employment effects in Kansas. Dube, the economist who thinks minimum wage cuts impact employment the way Laffer thinks tax rate cuts impact tax revenue.
As for monopsony power. Sure frictions exist in the market because current employers know productivity better than potential employers, but the labor market is much farther from single buyer than competition. It is not as if every MSA outside of the East and West Coasts are one traffic light downtowns. Wichita, KS MSA has 640 thousand people. According to QCEW there are 1,824 retail trade establishments and 1,319 establishments in accommodations and food. How much monopsony power could they have in labor markets. Their residual supply and MC of Labor curves might not overlap, but they are probably pretty close. Wichita's RPP is only 87.9. A fraction of NYC's 125.7, whose $15 minimum wage is perfectly fine for everybody.
I don't even object to a modest increase in the minimum wage, but this all feels like a noble lie. Convince people there are no costs, because they don't understand that the loss in jobs is worth the increase in wages of those still employed. Yet, the expert analysis is very myopic. Let the states figure out the minimum wage. They may not make optimal decisions, but at least they are actually considering the markets that are being impacted.
The real empirical question should simply be "What is the Elasticity of Demand for low-skilled Labor?" The answer shouldn't be "It depends, are we estimating the impact of immigration, minimum wage, or tax incidence?"
The current minimum wage proposal in Congress raises it to $15 after a few years, but after that actually does become regional and adjusts it based on local median wages.
The Nordic sectoral bargaining model would also be fine here; they don't have minimum wage laws at all. (although they should probably have a small one)
Complete garbage. Making a minimum wage 15 an hour will cause a severe spike in price for consumers as business owners will have to pass the cost on to maintain any profit. What you only account for is big corporations that have been proven to actually not be the driving force.behind economics. They are the anchors for economic boost while small to midsized companies drive the economy up and they will cease to exist or be forced to cut hours or spike prices which in turn would push people to buy from big corps that buy cheap knockoffs from foreign entities that have half the life span of the original product. In essence you would destroy small to mid size businesses to reap a temporary boost of lowering poverty levels until said businesses closed and laid off millions with no job prospects. Instead of using unskilled high minimum wage, you leave it lower and give options for people to learn a trade or skill and find a better job. Instead your wanting to reward the lazy, unambitious people that don't want to strive for anything better.
How about the the government go after all the executive's that payouts at the end over of every year that goes way into the millions of dollars. They all act like if it was not for them the companies would go under, plus paying some kid $15 to flip burgers is just stupid
What about the racial impact of minimum wage laws? Its odd that it isn't discussed much here, given that the left is obsessed with racial impact in many other policy realms. My biggest beef with the minimum wage is what it does to minorities in inner cities. UC Irvines David Neumark is especially poignant on this and how it disproportionally harms the most marginal in society - especially Blacks from inner cities. Everyone intuitively understands why say the teenage unemployment is so high given minimum wage laws, but the Black urban youth is suffering from the same impact of the minimum wage, and will have much more long term negatives because of it. I'd be for a minimum wage if it was somehow pegged to the Black/White unemployment gap, for example. But when it comes to issues that greatly benefit unions (public schools, public services, and the minimum wage) the left suddenly doesn't care about racial impacts.
I was skeptical about whether a $15 minimum wage would really pass, but it’s been the cool thing to talk about lately...so maybe the winds are changing
So will start with the personal antidote.
My brother-in-law, owns a small business/fast food restaurant. He is a Greek immigrant, and he is completely against the minimum wage increase of course. Then again, he is a cheap bastard on everything. He has already said that he will just raise prices. Of course if it’s phased in over a period of time, she raise his prices occasionally anyway.
I guess my concern is, actually it’s not a concern, what about wage compression. Obviously supervisors who were making say $12 an hour, are now going to be paid more. But instead of being paid four dollars more than their workers, now the employer might only pay them one or two dollars over the workers. Is this good? Is this bad? How long does this affect last?
I also wonder about another possible effect. If you’re an employer that has to pay these higher wages, do you get more selective about who you hire? Do you say, well let me hire this community college graduate instead of this GED guy.
Speaking again about the wage compression issue. I can see that at companies with a decent amount of minimum wage earners, it’s forcing the salaries up of everybody. Worker makes 15, supervisor makes 16, manager makes 18, etc.
How much of a knock on effect will that have on employers that don’t have a lot of sub $15 an hour employers? Obviously, or maybe not obviously, they have to compete for labor, so be somewhat competitive. I just don’t know.
And since I don’t wanna get out of bed, could this shock create a recession?
Having said all this, I am completely with Noah here. Life is boring, sometimes you need to just take a fucking chance. Let’s raise the minimum-wage and see what happens. I am 100% in favor.
Crap, one more thing occurred to me. We will call this fantasy land. I would love to see them come by in the minimum wage increase, with new overtime rules. The work week is basically set by the federal government’s employer laws for nonexempt employees. I think they need to slowly start reducing the standard work week in the United States. Make overtime start kicking in at 38 hours, then 36, and then down to 32.
It seems to me that this might the gate the if there are any negative effects of and increase the minimum wage. Americans work too much, automation means that there’s no reason for us to work 40 hours a week. I think we would all be better off if we got three day weekends. Let employers hire a greater number of employees to make up the difference.
Let's not stop at 15 then 65 dollars an hour sounds good to me. It won't affect anything.
Until the price goes up on everything balance out the new cost of employees. Oh ya and if your wage isn't getting a good raise your gonna find yourself implementing cut backs on spending our increasing your credit.
I was thinking the same thing. If people are worried that the total demand for labor hours will fall, then Congress should shorten the work week so the fall doesn't take the form of unemployment.
Relatedly: people under 18 shouldn't be working anyway, so if minimum wage laws hit teenagers especially hard that's a feature and not a bug. Why not just ban paid employment by minors at the same time the minimum wage is raised, to reduce the risk that unskilled adults will see less demand for their labor?
So, a 16 to 18 year old should no longer be allowed to earn money to pay for their own transportation? This is very common in my state to help the young learn basic money management skills as it has all but been removed from the education curriculum.
No, I think paid employment for minors should be illegal. The short-term benefits of extra pocket money don't outweigh the harm done to their school performance and long-term economic prospects. (At least that's my uninformed opinion. Possibly Noah knows of some peer-reviewed research on this subject.)
In my opinion, we should actually go the opposite direction, and reject these paternalistic “protections” for children. If someone wants to work then we should let them work! Let people alone.
This is literally trying to control people's life choices. If a student wants a job let them. This just sounds like another way to handicap our children and make them even less prepared for adulthood. Everyone should be working in college and I think everyone should start working at 16 or 15.
I worked 2 jobs my last 2 yrs of high-school and was still an honor roll student. Life's not all cushy for every 16 to 18 yr. I helped pay the house payment, my car payment and bought food too. Some minors need jobs as much as adults.
I needed to work at the age of 16 so that I could be prepared to support myself at the age of 18. I needed to be able to afford food and housing while putting myself through college. If you had your way, I wouldn’t have been able to provide a roof over my head after high school. My situation was nowhere near as dire as others. Please don’t advocate for this regression.
It's obvious that Jeff's parents paid his way. Or someone besides him. He doesn't know what gives money value. My father wrote that and the answer on a piece of paper and tacked it to the wall of my bedroom. Jeff's didn't.
Shouldn’t that be for them and for their parents to decide? Obviously, some children are too young to work. A two years old can’t get a job. It’s hard to know where the line is.
But we do allow 16 years old kids to drive. 17 years old kids can take out huge loans for college. Some think they should be able to vote. Why not work?
And the benefits of kids that age getting jobs go well beyond the pocket change they earn. That’s actually almost irrelevant. By getting jobs, they learn what a professional work environment is supposed to be like.
They learn to show up to work on time, obey their superiors, prioritize, sacrifice their fun time for a job. Those are all important skills that can allow them to get much better jobs down the road.
Some economists actually argue that the minimum wage reduces the life-time earnings of people because it is more likely to cause unemployment among teens.
By causing unemployment among teens, it takes away these opportunities to build lifelong skills, and that is felt later on when they do enter the job market. So even if it’s true that increases in the minimum wage reduces poverty, it’s still not clear that it’s a net benefit.
Gee I was working at 15 had to have a permit and guess what...they took taxes out. Obviously you weren't. Isn't that what we are supposed to do? Work and pay taxes? Or are you from the let mommy and daddy pay for it culture?