Seattle’s higher minimum wage is actually working fine

https://www.washingtonpost.com/news/posteverything/wp/2017/06/27/seattles-higher-minimum-wage-is-actually-working-just-fine/

by hprotagonist • 9 years ago

228 283 9 years ago

washingtonpost.com

sparkling2• 9 years ago

"You cannot make a man worth a given amount by making it illegal for anyone to offer him anything less. You merely deprive him of the right to earn the amount that his abilities and situation would permit him to earn, while you deprive the community even of the moderate services that he is capable of rendering. In brief, for a low wage you substitute unemployment. You do harm all around, with no comparable compensation." - Henry Hazlitt

handojin• 9 years ago

You should attribute your quotes.

sparkling2• 9 years ago

A mis-paste ;)

michaelmrose3• 9 years ago

Except for the part where this doesn't seem to be actually happening

elif• 9 years ago

in a fictional world with unresponsive labor markets

pjmorris• 9 years ago

On the other hand, you can make a man worth much more than any given amount by making it legal to create new bank balances out of thin air (central banking). This, too, deprives him of the right to earn the amount that his abilities and situation would permit him to earn, while forcing his community to continue to be subject to the services he did not earn on his own. In brief, for a high wage you substitute over-employment. You do harm all around, with no comparable compensation (though it will be pitched otherwise). Interesting disparities we have at opposite ends of the income scale.

JoshTriplett2• 9 years ago

I think you'd find that many people who would agree with the quote at the top of this thread will also agree that this is a bad idea as well (at the least, when used as you describe); your comment is an accurate description of an additional problem to be addressed.

qsymmachus• 9 years ago

"Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people." – Adam Smith

WalterSear• 9 years ago

A quote isn't even anecdata.

nawgszy• 9 years ago

"The Market is a perfect construct that certainly has never employed unscrupulous tactics in order to undercut the masses and pad the pockets of the privileged few" - people who make arguments like this

drak0n1c2• 9 years ago

Correct. Raising minimum wage disenfranchises disabled and less productive workers from finding jobs and deprives them of the social engagement that accompanies work.

chillwaves4• 9 years ago

Outlawing slavery takes away a valuable cash infusion from folks who should be allowed to sell themselves and tap into their unrealized labor equity and potential future gains.

We should also allow the freedom to sell organs. Let's make America free again.

mikestew2• 9 years ago

moderate services that he is capable of rendering

The community is not deprived. Seattle has determined that even the most moderate of services are worth $15/hour. And for all your fancy words, you haven’t addressed anything in the article that disagrees with you.

And finally, it is considered in poor taste to quote someone (in this case, Henry Hazlitt) without attribution. Hell, you couldn’t even be bothered to wrap it in quotations, implying that these are your own words. (This was the case before parent edited it.)

gorpomon• 9 years ago

"Quotes are not arguments. Quotes don't begin to convey the real cost and toll of working for a wage that can't support basic needs and services, let alone an indulgence, which all lives occasionally need. Quotes in no way capture the totality of a human life, its compassion, its motivations, its missteps, its passions, its reasons a person might work a certain job, market forces be damned. Quotes takes take the words and works of people who dedicated their lives to a search for the truth and reduces them to ammunition by people who have plenty, and want to keep it that way. Quotes are intellectually bankrupt. Quotes mirror the bankruptcy of those who wield them to keep a broken status quo. Quotes think you should go talk to a person hustlin' to sell Adidas shoes to get by, rather than post quotes on the internet." -- Quotey McQuoteface

btym• 9 years ago

Could I get a source on this one?

comicjk4• 9 years ago

This supposes a level of knowledge and efficiency which labor markets don't have. Even the boss in most cases doesn't know what the employees are worth per hour, let alone what the employees know. Millions of people, including me, have never negotiated for higher pay; I worked for minimum wage in college despite being obviously worth more. Naturally, a lot of these meek souls wind up as low-wage labor. Is it better that they should rely on food stamps while their employers reap the surplus, or that the government should set a minimum wage? It is likely that some workers really aren't worth $15/hour, and it's even within possibility that some bosses might realize that and fire them. But the net effect on low-wage workers still stands to be much more positive than a crude efficient-market model would show.

daenz5• 9 years ago

I worked for minimum wage in college despite being obviously worth more.

The market didn't think so. If you think you're worth more, you have to push for it, since the market can't read your mind argue on your behalf.

Naturally, a lot of these meek souls wind up as low-wage labor.

That's really the crux of it. People who can't/don't/won't negotiate expect the same income from people who do negotiate and make themselves appealing to employers. Since they don't get it, they're upset, so they try to make laws to mandate everyone gets X. The problem is, they still can't negotiate and sell themselves, so they still make less than the people who do, while the economy adjusts to the new baseline income of X.

nathan_f77• 9 years ago

I would be in favor of removing the minimum wage when universal basic income is implemented. I think that would make sense.

random314• 9 years ago

From https://en.wikipedia.org/wiki/Henry_Hazlitt

Henry Stuart Hazlitt (November 28, 1894 – July 9, 1993) was an American journalist who wrote about business and economics

He attended New York's City College, but left after only a short time ..

bedhead• 9 years ago

The minimum wage is always $0

lordnacho2• 9 years ago

Unpaid interns effectively pay transportation and other associated costs. I've always insisted on paying a little bit to kids who come in to shadow us, and something a bit more substantial for kids who actually sit and do useful work.

mywittyname• 9 years ago

There are companies that pay negative wages. Most notably MLMs.

ABCLAW• 9 years ago

Oh boy. Time to read another page of comments written by people who think that price elasticity is always linear and that markets are always efficient!

wonder_bread2• 9 years ago

^preach

lumberjack• 9 years ago

Seems like otherwise objective open minded people find it hard to admit ignorance and humility when the topic is political. Climate change and economics are always so hotly debated by engineers.

CalChris• 9 years ago

I'm in SV and I've never met an engineer here who was a climate science denier. I've met conservatives (not many) but not a full on earth is cooling denier. On the interweb, sure.

trendia3• 9 years ago

There are studies that avoid assuming perfect, instantaneous markets. They, too, show nuanced but negative long term effects of min wages.

http://voxeu.org/article/long-run-employment-effects-minimum...

crdoconnor5• 9 years ago

"More recently, some researchers (e.g. Dube et al. 2010) exploit differences between counties sitting on each side of a state border where one state raised their minimum wage and another did not. Many, but certainly not all, studies that use these approaches deliver SMALL disemployment effects."

Daniel Aaronson, Eric French, Isaac Sorkin from your article ^^^

Dube et al 2010's ACTUAL result:

"We compare all contiguous county-pairs in the United States that straddle a state border and find NO adverse employment effects"

This a pathetic piece of weasel wording, although not something I'm terribly surprised to see from them specifically.

tdb7893• 9 years ago

How good is the model they are using? They are making all of the conclusions based on a model but data on the model doesn't seem in the scope of the article

WillPostForFood5• 9 years ago

Prices elasticity doesn't need to be linear, nor do markets need to be perfectly efficient for higher labor costs to lead to lower employment. If you want to make an honest argument for higher minimum wage, you need to address the cost of lower levels of employments for the very poor.

rsync• 9 years ago

"Oh boy. Time to read another page of comments written by people who think that price elasticity is always linear and that markets are always efficient!"

I'll take that over a page of comments from people that are not aware that price elasticity exists.

Progress, yes ?

Karunamon4• 9 years ago

Until you start seeing low-income people in Seattle and around the country taking to the streets to demand lower minimum wages, don’t listen to anyone who tries to tell you otherwise.

The article ending on this note kind of soured the whole thing. The average person will be perfectly okay with higher wages so long as they don't take into account things like inflation and other knock-on effects - and most won't, because those effects are subtle over time.

The money's gotta come from somewhere at the end of the day. And if the company doesn't want to or can't raise prices (franchises are especially hit by this, since a lot of their pricing flexibility is dictated by a corporate office), the next thing to be cut will always be labor.

MaysonL4• 9 years ago

Remember reading an article in Forbes back in the '80s that cited a study comparing the profitability of McDonalds franchises that paid minimum wage, and those that paid somewhat higher. Guess which were more profitable? The ones who paid higher wages.

JustSomeNobody• 9 years ago

At what point does the law of diminishing returns kick in, though? McDonalds fries are good, but not THAT good, so at some point it's just not worth going there any more.

mmmpop2• 9 years ago

I like to think this is because the workers are more inspired to work harder to "earn their keep". I'd say it's more likely the boss is keeping a closer eye on the workers' productivity and insists upon a bit more effort. I think it's a win-win but my lack of faith in humanity (read: cynicism) causes me to worry about those not interested in putting that much effort into a "minimum wage job".

I understand the perceived need for something like a $15 minimum wage but as a guy who has always considered himself quite benevolent when paying subcontractors their actual value, I have a hard time swallowing the whole deal. Again, probably my own shortcomings but it would be interesting to understand how this might affect the attitudes of your typical "minimum wage worker".

mikeash• 9 years ago

Did the study consider the possibility of confounding factors? For example, I'd expect McDonald's locations in wealthier areas to pay higher wages because labor is in higher demand, and be more profitable because their client base is larger.

GhostVII• 9 years ago

Did the study determine which way the relationship went though? Only McDonalds that are making a profit will be able to afford to pay more than minimum wage, a struggling one will obviously not be able to do that very easily.

michaelmrose3• 9 years ago

Companies only hire enough labor to service their need to start with. They either will already cut labor or the can't and still profit.

If minimum wage labor is 20% of your costs and it increases in price by 50% prices you can make up the difference by increasing prices by 10%

j4kp07• 9 years ago

you can make up the difference by increasing prices by 10%

LOL. Beautiful. Just beautiful. With no insight what so ever into the profit margins for a business, you've managed to solve all the Corporate world's problems. LMAO!

Karunamon4• 9 years ago

It's not just a matter of having less people, it's also a matter of having less full timers (which saves on various costs as well as lessens the likelihood of unintentional overtime). Great flexibility for the business, sucks for the employee.

pyroinferno• 9 years ago

I don't think you understood what OP said. He said franchisees do not have the luxury of raising their prices by 10% as their prices are usually out of their control.

crdoconnor5• 9 years ago

You can also make it up by decreasing your profit margin.

Which one happens will probably depend upon the competitiveness of the market in question.

crdoconnor5• 9 years ago

The money's gotta come from somewhere

Profits:

https://www2.warwick.ac.uk/fac/soc/economics/staff/mdraca/mi...

randomfool• 9 years ago

Thrilled that Seattle is giving this a try. Great that it's being analyzed so other areas can learn from and improve upon.

pasquinelli• 9 years ago

i'm dismayed at how thrilled i am to see such an attitude as yours, as if i never expected to see such a thing.

lordnacho2• 9 years ago

My thought as well. There needs to be experimentation for us to learn anything. That goes especially for economics, where you often get ideology instead of evidence.

WillPostForFood5• 9 years ago

It is incredibly difficult to experiment in economics because you can't control for a single variable. If I like minimum wage, I'll look for employment data during a boom to mask the negative effects. If I dislike it, I'll look for data during a bust. That's over simplifying, but it is why we have multiple studies both showing minimum wage helped and hurt.

dlp211• 9 years ago

I just want to point out something that I heard on NPR/Public Radio on my drive home the other night. Essentially the studies that have been done around Seattle show that $15 was probably too high, but when it was raised to $11 it had no noticeable effect.

Now of course, confidence in the studies matter, and I am going to assume the worst and that these studies weren't conducted in the same manner. But if the above holds true, the implications are immense.

aetherson• 9 years ago

It hasn't hit $15 yet. The current studies are on the increase to $13.

The studies when it was $11 didn't show no noticeable effect, they showed mixed effects. Basically, at $11, the studies suggested that it produced losers and winners, and the winners slightly outweighed the losers.

wonder_bread2• 9 years ago

Welcome to the modern news cycle, where alternative realities are only a click away! Sit back and enjoy your daily deluge into the fantasies of some revenue-pressured writer seeking to capitalize on the latest zeitgeists us citizens consume each day as if they are fact.

dailyrorschach• 9 years ago

It's a column/opinion not an article, an not from someone on staff at the Washington Post.

alacombe5• 9 years ago

WaPo is being contradicted by a recent report from the National Bureau of Economic Research...

https://evans.uw.edu/sites/default/files/NBER%20Working%20Pa...

"Using a variety of methods to analyze employment in all sectors paying below a specified real hourly rate, we conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent. Consequently, total payroll fell for such jobs, implying that the minimum wage ordinance lowered low-wage employees’ earnings by an average of $125 per month in 2016"

akl• 9 years ago

Did you read the article? They are literally responding to this study.

coldpie• 9 years ago

It's not a contradiction, they are responding directly to that report.

DiggityDug7• 9 years ago

You should try actually reading the WaPo article. They spend about half the article discussing that exact report.

exclusiv10• 9 years ago

Makes sense.

I have a contractor for one of my companies that I pay $20/hr for doing mostly CMS edits. She's been pressuring me for more hours. We asked her to get more acquainted with Snapchat and other things to get more hours but she pushed back.

We gave her a way to get more hours but she only wanted the easy ones that she already knew. If her rate was less, I'd have her do more things. Time to part ways unfortunately.

MaysonL4• 9 years ago

Take that with a grain or two of salt: see http://www.epi.org/publication/the-high-road-seattle-labor-m...

"Data limitations and methodological problems bias new analysis of Seattle’s minimum wage increase"

mikestew2• 9 years ago

WaPo is being contradicted by a recent report from the National Bureau of Economic Research...

I typically avoid this, as the HN guidelines specifically say not to, but you didn’t read the article, did you? I say this only because the WaPo article, by my reading, is a direct response TO THE VERY ARTICLE YOU REFERENCE.

kurthr• 9 years ago

Sadly no... The Washington Post is explicitly writing about and refers directly to the paper you mentioned in the First paragraph, Last sentence:

Yet the release of a new study this week from a group of researchers at the University of Washington has brought opponents of minimum wage increases out of the woodwork again.

You might notice this by looking cited article link (new study): http://www.nber.org/papers/w23532.pdf

or noticing that all of the NBER writers are from UW, or that their data set is a confidential data set from the Washington Employment Security Department etc, etc...

mmmpop2• 9 years ago

The existence of this Washington Post article was determined yesterday by the existence of an article critical of Seattle's minimum wage in the Wall Street Journal. Andrey Markov is sleeping soundly in his grave.

MegaButts• 9 years ago

And don't forget the Washington Post is owned by Jeff Bezos, who owns Amazon, which is in Seattle.

OrwellianChild• 9 years ago

Conspiracy theories aside, WaPo published the initial release of the working paper yesterday (June 26) with a favorable headline: A ‘very credible’ new study on Seattle’s $15 minimum wage has bad news for liberals [1]

[1] https://www.washingtonpost.com/news/wonk/wp/2017/06/26/new-s...

awinter-py4• 9 years ago

words missing from this article: 'delivery', 'outsource', 'manufacturing', 'offshore', 'manual labor'.

Seattle is the headquarters of starbucks (low-wage high-labor coffee shipped from overseas) and amazon (manufactured goods shipped from wherever). They can raise the minimum wage because a big piece of their economy is already happening elsewhere.

jhall14682• 9 years ago

That's true of almost all extremely large companies, so I'm not sure I understand your point. Those two companies still only represent a small portion of the entire Seattle workforce.

awinter-py4• 9 years ago

I'm not talking about the people who work at sbux/amzn, I'm talking about the people who don't work in seattle because of import/export activity: factory workers and coffee growers.

ared383• 9 years ago

Convenient of this article to ignore that the Berkley study only looked at food service workers while the UW study looked at a much wider range of jobs than previous studies.

I'm sickened by my "pro science" party rushing to ignore results that don't agree with our ideological intuitions. Obviously the UW study has flaws. Let's give economists a little time to figure out WHY the results are so different from previous studies before we draw any conclusions.

ender7• 9 years ago

If both studies are so flawed, it seems indefensible to draw _any_ conclusions right now.

thehardsphere3• 9 years ago

Maybe if you limit your scope to this single event. There is a large body of prior evidence and theory to suggest that disemployment was likely to occur from such a large increase in the minimum wage, so I don't think it's really proper to act as though two studies represents our entire universe of human knowledge about these sorts of policy changes.

cwyers9• 9 years ago

The UW study was actually able to duplicate the results of previous studies, and had an explanation of why the results were different -- previous studies haven't actually known what wages people were getting and what hours they were working. This study did. Much better data gives you the ability to ask better questions. There are still possible flaws with the UW study, but the UW study addresses many criticisms in advance, and is much more worth a read than this WaPo article.

Shivetya3• 9 years ago

will be curious is this pro article gets flagged off as fast as the previous story which wasn't supportive.

last i checked the UW was requested by the city and journalist and .gov email addressed users all have access to the study, so this claim that its not available is the first indication the WAPO article is nothing more than predisposed piece, meaning they had an outcome and went searching for support of it. the ideology of WAPO is well known so any other result than this could not occur

frgtpsswrdlame7• 9 years ago

The UW study was actually able to duplicate the results of previous studies

That's not really true. The negative effect on employment demonstrated in the UW study is much larger than most previous studies have shown.

There are still possible flaws with the UW study, but the UW study addresses many criticisms in advance

I believe it's much more than "possible" flaws and some of them are really quite damning. I don't think many people that read this criticism by Michael Reich (the author of the Berkeley study) could conclude that the UW study is really worth considering.

[pdf] http://irle.berkeley.edu/files/2017/Reich-letter-to-Robert-F...

NotSammyHagar• 9 years ago

I've read the UW study didn't count employees in chains, that had to pay the higher minimum wages, and that was a significant amount of the people subject to the new min wage.

downandout5• 9 years ago

Agreed. The facts borne out by the University of Washington study are what they are. The counterpoints in this article appear weak, and designed to support a specific political point of view held by the Washington Post and many of its readers. They are essentially saying that the Berkley study used a different methodology, and that they like the Berkley methodology better (because it produced results they agree with).

Cherry picking studies that support your own point of view isn't journalism, and it is irresponsible. It's done by both sides, and has helped create the dismal state of political discourse in the US.

tanderson926• 9 years ago

Cherry picking studies that support your own point of view isn't journalism

This is in the opinion section.

crdoconnor5• 9 years ago

I'm sickened by my "pro science" party rushing to ignore results that don't agree with our ideological intuitions.

It's possible it's valid, just as it was possible that all those studies that cast doubt on global warming were valid.

Both are, of course, are very profit friendly results.

redthrowaway• 9 years ago

Convenient of this article to ignore that the Berkley study only looked at food service workers while the UW study looked at a much wider range of jobs than previous studies.

And the UW study was consistent with the Berkley study--for food service workers. It appears food service workers really weren't hurt by the increase, but non food service workers were.

lend0003• 9 years ago

Exactly -- economics is a science. I don't pretend that the world is perfectly modeled by classical macroeconomic laws, but the burden of proof is on the pro-minimum wage camp to disprove the laws of supply and demand in this situation (labor market), rather than the other way around.

If you are not familiar with what classical economic laws would suggest about a minimum price control on labor (minimum wage), it would

1. reduce the demand for labor

2. create deadweight loss (net value changing hands decreases)

The politicization and down-voting of ideas that people (particularly liberals, in this case) disagree with has a chilling effect. As Warren Buffett says, the human mind is best at interpreting all information such that prior conclusions remains intact.

WillPostForFood5• 9 years ago

I agree with your point about burden of proof, but economics is not a science. Setting aside economics and science, common sense demands the burden of proof go to those who say raising wages won't decrease demand.

tuna-piano4• 9 years ago

Not sure why you're being down-voted.

It's of course disingenuous (and insane) to say that raising the minimum wage will not cause deadweight loss. Everyone needs to understand that raising prices of almost anything will reduce the amount of that thing demanded. When price goes up, people buy less. Wages are just price and labor is a thing that people buy.

The more complicated issue, which democrats and republicans both ignore, is the elasticity of demand. Democrats love saying "Minimum wage increases are good, and they've been proven not to affect the demand for low-wage labor!" and republicans say "Minimum wage increases are bad, and they've been proven to increase unemployment!"

The real question is not if demand for labor will decrease (it will), the question is how much less low-wage labor will be purchased with a certain increase in the minimum wage, and whether policymakers consider this tradeoff good.

http://ftp.iza.org/dp3150.pdf

JoshTriplett2• 9 years ago

Also see http://econlog.econlib.org/archives/2017/06/yudkowsky_on_my.... for a detailed explanation of how this particular topic tends to get people talking past each other.

(The tone of that explanation does come across as elitist, because it's intentionally exaggerating to demonstrate how people "hear" certain explanations as insensitive when they're not.)

ared383• 9 years ago

I don't pretend that the world is perfectly modeled by classical macroeconomic laws

Understatement of the century. Would you tell someone working at CERN "I don't pretend Newton's laws are perfect, but..."?

the burden of proof is on the pro-minimum wage camp to disprove the laws of supply and demand in this situation

Which previous studies of the minimum wage have consistently done (well, more accurately shown that the deadweight loss is more than offset by increased wages). That's the whole reason this article is interesting.

Helmet• 9 years ago

This is utterly incorrect and not at all what the neoclassical micro/marco economic laws suggest.

For the sake of brevity, you are not making the proper distinction between demand and quantity demanded - a change in the price of labor does not change the DEMAND for labor.

taw55• 9 years ago

Exactly -- economics is a science

Nope. To anyone who still hasn't gotten the memo: neoclassical econ is mystery religion dressed up in poor mathematics[1]. If we held other sciences to the same norms as economics we'dd still be living in the dark ages.

[1] http://tinyurl.com/debunking-economics-digital

nemo44x4• 9 years ago

I'm sickened by my "pro science" party

They aren't any more "pro-science" as any other party. For instance, it's notable how the science of biology has been excluded from women's and gender studies university programs for many years now.

Like any other political group they will use what they can to advance an agenda with whatever tools are out there. If they need science for one argument they'll use it while conveniently avoiding it for others. If you need "morality" for one you use it when convenient and avoid when not. It's all politics that do this unfortunatly.

ch4s34• 9 years ago

The "the science of biology" is also excludes from physics, computer science, languages, classics, English, political science, etc. What's your point? Are you implying that an academic field that studies the gender constructs of society is somehow intrinsically anti-science?

monocasa5• 9 years ago

I at least am skeptical of their claims mainly because there's a very well established case of publication bias in the space of the effects of minimum wage increases.

[PDF Warning]

https://www.ctdol.state.ct.us/lweab/Doucougliagos%20&%20Stan...

jjtheblunt• 9 years ago

which party is "pro science"?

bsder• 9 years ago

If your data isn't available, you're going to get these kinds of critiques.

With the data available, people could see how strong the various effects are and how much "p-hacking" it is susceptible to.

peterjlee• 9 years ago

*Berkeley

MaysonL4• 9 years ago

See, for example, this: http://www.epi.org/publication/the-high-road-seattle-labor-m...

eagsalazar22• 9 years ago

What do the models say? I'm not an economist but I always feel like decisions and debates like this are based mostly on people's limited ability to reason about a very complex system (and probably more so, their biases and personal interests).

A minimum wage is likely to have a complex and unexpected impact. So what can be modelled? What experiments have been done where we can simply observe the impact?

Also what are the goals and how are they prioritized? Do the rights of wealthy individuals to keep every penny of their earnings outweigh (I hate that I can't use 'trump' anymore) a societal goal of eliminating poverty or making sure the poor have a decent standard of living (health care, education, safety, etc)? Obviously everyone wants both these things (right?) but how are the weighted?

Aaagghhh!! (Our world is so far away from anything sane I just can't stand it this morning.)

Mikeb85• 9 years ago

The models say that a rising minimum wage would decrease demand for labour. Of course, how much it affects actual unemployment depends on how much labour was previously demanded and supplied. The thinking of course is that aggregate income among low earners makes up for the increased unemployment, and the extra spending power they have improves the economy as a whole, leading to less unemployment than a linear relationship between minimum wage and unemployment would suggest.

Edit - at the very end I should add, "assuming the demand for labour actually increases aggregate income for those workers affected". If a min wage hike is too severe or unemployment already too high, you might not be better off in the end.

eagsalazar22• 9 years ago

More fundamentally, I wonder if this just boils down to an oversupply of inexpensive labor (or shortage of low skill work depending on your perspective)? Would be interesting to see what the models predicted if we removed a huge portion of cheap latino laborers that currently occupy almost all minimum wage jobs in every state I've lived in (CA and WA) in service and agriculture.

BTW, for people who are economists, are there models out there that are freely available where people can tweak variables like that? Would be fun as hell to play around with.

(Just to be clear, I am not a Trump supporter in general. Heh.)

DavidWoof2• 9 years ago

I'm more or less sympathetic to the idea that the Seattle minimum wage experiment can be having negative effects. Card/Krueger has to have a limit somewhere, and I suspect certain jurisdictions are approaching or exceeding that limit.

That said, excluding multi-location employers from a minimum wage study just seems to me to be so obviously flawed as to border on pure dishonesty.

I'm truly curious how things like this happen. Did UW publish this as a reasonable study with limited findings only to find the press massively misreported it? Or did the desire for media coverage lead the researchers to overstate the findings just to get in the press? I personally don't think political bias drove this. It looks like researchers at UW made a perfectly reasonable small limited study that added a small amount to our knowledge, but then either the researchers or the university or the press advertised it as an exhaustive answer to a complex question.

john_horton2• 9 years ago

It wasn't dishonest - they didn't have the data for those multi-site employers b/c of how Washington state keeps records. The authors are upfront about this and try to address the limitation by adding a a survey component---they talked to these employers to see if their responses to the MW were different.

DavidWoof2• 9 years ago

I agree with that, so maybe my post wasn't as clear as it could be.

I would say that in the transmission between the study and the mainstream press, something happened that is best described as "dishonest", or at the very least a reckless disregard for nuance. As you point out, and I agree, the study itself doesn't have that problem. The study itself is quite clear on its limitations.

So where's the issue? Is it just the general incompetency of the mainstream press (I could absolutely believe that). Is it the authors crossing every 't' in the study, but then overstating the findings and dropping the caveats in their interviews with the media? Is it the UW PR staff overstating the findings in a way PR staffs are wont to do? A combination of all of these.

I could believe any of those things. But when this study came out a few days ago, I had to read the study itself to have even a remote awareness of what it actually said (and remember, I think the findings are probably correct). And yes, I think that process is best described with the word "dishonest".

bsbechtel• 9 years ago

>That said, excluding multi-location employers from a minimum wage study just seems to me to be so obviously flawed as to border on pure dishonesty.

Please elaborate why. Generally, it is believed larger employers benefit from minimum wage laws because they can afford to pay more while small mom and pop employers can't. This reduces the pool of available employers for workers to choose from.

0xbear2• 9 years ago

If I'm not mistaken the new minimum wage is not yet fully implemented and small businesses got a temporary reprieve.

As to WaPo: the new release of Google News finally lets you ban the news sources you don't like. After removing WaPo, HuffPo, CNN and NY Times, my news feed is borderline useful again. Thank you, Google!

s73ver3• 9 years ago

So what's the difference now between getting your news from there or from Facebook? It sounds like Google News is going to be the same kind of echo chamber that other news sources become :(

Please don't take this as a criticism of your chosen (or dischosen) news sources, as I'm sure I can find someone replying to this thread who is removing the sources you like as well.

0xbear2• 9 years ago

I don't use Facebook, so I wouldn't know. I've come to the conclusion that the function of the media has shifted over time from reporting news to just peddling narratives, all while also showing me irrelevant ads. So I shut off those news sources for which narrative peddling is the primary function. I would shut off Fox, but Google seems to not show anything from them even if they're not in block list. My news feed now mostly consists of science/tech and local news. I like it that way.

kartD2• 9 years ago

Frankly, I'll be happy when the US gets out of this mandatory tipping culture BS.

exclusiv10• 9 years ago

Seriously. If a restaurant cannot pay a fair wage they shouldn't exist.

kartD2• 9 years ago

Yes, please charge me higher menu prices. I shouldn't be responsible for your employees livelihood

alacombe5• 9 years ago

OOTH, it's not as if one of the Berkeley author, Michael Reich, was a long time socialist. From https://en.wikipedia.org/wiki/Michael_Reich:

In 1968, while in graduate school, Reich was a founding member of the Union for Radical Political Economics (URPE).[5] In doing so, as Reich describes in a biographical compilation piece (A Biographical Dictionary of Dissenting Economists),[3] he helped "to organize an influential circle of radical economists." URPE’s agenda, as described by a spokesperson for the group, is to:

"support an American version of socialism, with public ownership of production and a government-planned economy to meet social needs rather than the needs of private profit."

So he's very clearly biased toward proving minimum wage increase's success.

baby• 9 years ago

You're saying that like it is a bad thing.

adventist• 9 years ago

Maybe because being biased is a bad thing?

JamesBarney• 9 years ago

Should we disregard every capitalist's study that comes out pro-capitalism?

If we chose to follow that rule we would end up with very few studies in economics, and the world would be poorer for it.

tinalumfoil• 9 years ago

Should we disregard every candy company's study that comes out pro-sugar?

Maybe we should, maybe we shouldn't but the studies for sugar and minimum wage spread wide enough that it's easy to see these convenient conflict-of-interests everywhere.

tanderson926• 9 years ago

Why are you attacking the Berkeley authors' honesty with a phrase like "On The Other Hand"? The WaPo piece only addresses the arguments and evidence, not the credibility of the UW authors.

alacombe5• 9 years ago

WaPo bases its argumentation on the Berkeley study.

namlem• 9 years ago

Why would being a socialist mean that he is biased in favor of minimum wage? In no way is minimum wage a requisite for socialism. Plenty of social democratic countries (not technically socialism, I know) have no minimum wage because they have a system of organized labor that renders it unnecessary.

tanderson926• 9 years ago

The GP means that since the author is not literally being paid by capital for a capitalist's desired outcome (e.g. https://www.propublica.org/article/these-professors-make-mor...) their research is biased and conclusions suspect.

fsloth• 9 years ago

People change. I think you need proof of current ideology to make a case. Soviet propaganda pre 1980:s managed to convince a lot of smart people to go ultra left. For instance, one of the most prominent bankers in nordic countries, Bjorn Wahlroos, was originally at far left in his political leanings.[0]

[0] https://en.m.wikipedia.org/wiki/Björn_Wahlroos

alacombe5• 9 years ago

From the wikipedia article:

"Controversy Reich's analyses on the effects of minimum wage increases in his capacity at IRLE have generated controversy and accusations of bias from Los Angeles city legislators. Addressing IRLE's selection to analyze a proposed minimum wage hike in Los Angeles to $15.25, Democratic City Councilman Felipe Fuentes argued that "the selection of U.C. Berkeley, by perception, compromises the possibility of a fair and balanced discussion." Fuentes and fellow Democratic Councilman Mitch O'Farrell asked to reopen the selection process for a research team "so that we can engage in a process that is worthy of our employers, workers and their families, and the well-being of our economy."[14]

In March 2016, the Albany Times Union reported on hundreds of pages of emails from Reich’s research team that showed a close collaboration between the research team and labor union groups that fund the movement to raise the minimum wage. According to the article, “the relationship between academic and funder seemed explicit” with one uncovered email showing that the research team was seeking grant money to support its research "for local groups engaged in work to raise the minimum wage" and “testimony/media work” in California.[15]"

When you are getting accused of bias by Democrats, things are pretty bad.

tobtoh• 9 years ago

So he's very clearly biased toward proving minimum wage increase's success.

You may not have meant it this way, but that sentence implies you have already dismissed any point he makes purely based on what he believes in. Without any evidence, you've implied that any conclusions the author makes are automatically devalued because he will be incapable to undertaking objective research.

Would you write a similar sentence about say a medical researcher? 'Researcher is a member of the medical industry and is very clearly biased toward proving vaccines are safe and necessary'.

(Note: I think it's very important to be aware of influences and biases in hearing opinions - an important part of critical evaluation. Your comment does that for the most part ... it's just the last sentence I have an objection to)

arohner• 9 years ago

Medicine and vaccines are science, socialism is ideology.

daenz5• 9 years ago

Would you write a similar sentence about say a medical researcher?

How about "Anti-abortion activist doctor releases study showing that abortion in unhealthy." Are you telling me you wouldn't place the study under extreme scrutiny? When someone shows their ideological bias, and it happens to be extreme (yes, socialism is extreme), and then they also do science in the same field, it is absolutely appropriate to make their biases known and subject them to extra scrutiny.

EDIT>> Just saw your note that you agree about raising awareness to biases. It sounds like we agree on that.

ori_b2• 9 years ago

This is a very different situation. There is still a huge amount of debate about the actual effects of minimum wage increases. This is not the case for vaccines any more. At this point, the evidence for vaccines is strong enough that pro-vaccine should be the default position. This is not (yet) the case for raising the minimum wage.

As a result, ideological biases are important to flag, and studies possibly affected by bias need to be replicated and cross checked.

elgenie2• 9 years ago

So, let me get this straight: founding a group 49 years ago means that "he's very clearly biased toward proving minimum wage increase's success".

This seems like a lack of familiarity with the scientific method. First, there's a hypothesis about the world. Then, that hypothesis is tested against evidence. The origins of a seasoned researcher's hypotheses about the world and their ideas of what they would like the world to be are not enough to impugn their ability to evaluate others' study design or the integrity of their own hypothesis-testing.

At best, you've provided evidence for "he may be ideologically more pleased with hypotheses supporting the success of minimum wage increases being successfully supported by evidence".

jff• 9 years ago

This seems like a lack of familiarity with the scientific method. First, there's a hypothesis about the world. Then, that hypothesis is tested against evidence. The origins of a seasoned researcher's hypotheses about the world and motivations they would like the world are not enough to impugn the integrity of their own hypothesis-testing or their ability to evaluate others' study design.

And yet the author of the article seems happy to impugn the motivations of the UW researchers, because his ideology does not agree with their results.

isleyaardvark• 9 years ago

That's a pretty classic ad hominem.

enoch_r• 9 years ago

This reminds me of: http://slatestarcodex.com/2014/12/13/debunked-and-well-refut...

There's a complicated issue where theoretical predictions go one way and empirical evidence is mixed. Result: everyone looks at the studies that suggest they're right, and claims that they "debunk" the studies that suggest they're wrong. You get to look at all the weaknesses of the studies you don't like, and ignore the weaknesses of the studies you do like.

In this case of course the UW study was commissioned several years ago by the city of Seattle. Then, apparently, in mid-June, after seeing the results of the UW study (but before they were publicly released), the mayor of Seattle commissioned this second study, this time from UC Berkeley's IRLE.

(Why the IRLE? It certainly couldn't be because their previous work suggests that they very strongly believe the minimum wage has no disemployment effect.)

The IRLE's study said the minimum wage increase had no disemployment effect. Whew. Debunked and well refuted!

Just for fun, you can use this handy guide to see which study has been refuted:

- if you want the minimum wage to increase, then excluding multi-location businesses from their analysis obviously damns the UW study, and proves that their results can be ignored.

- if you don't want the minimum wage to increase, then including only food-service jobs in their analysis obviously damns the Berkeley study, and proves that their results can be ignored.

cwyers9• 9 years ago

In this case of course the UW study was commissioned several years ago by the city of Seattle. Then, apparently, in mid-June, after seeing the results of the UW study (but before they were publicly released), the mayor of Seattle commissioned this second study, this time from UC Berkeley's IRLE.

That's what really bugs me. They commission the UW study, they see the results, and then they commission this other study hurriedly to release six days before the UW study. If you keep asking the question until you get the results you want, you're going to get the results you want.

haberman• 9 years ago

This reminds me of: http://slatestarcodex.com/2014/12/13/debunked-and-well-refut...

What an excellent essay. I especially liked:

There are many “questions” that are pretty much settled – evolution, global warming, homeopathy. But taking these as representative closes your mind and gives you a skewed picture of academia. On many issues, academics are just as divided as anyone else, and their arguments can be just as acrimonious as anyone else’s. The arguments usually take the form of one side publishing a study, the other side ripping the study apart and publishing their own study which they say is better, and the first side ripping the second study apart and arguing that their study was better all along.

TimJYoung6• 9 years ago

We need to make the EITC (Earned Income Tax Credit) much more generous, removing the necessity for higher minimum wages to fix our demand issues. The EITC has better knock-on effects in terms of increasing competition for labor and serves as an employment subsidy for many small businesses that would, otherwise, not employ anyone. Plus, it is much, much easier to get a "10,000ft view" of the employment/demand situation at the Federal level, as opposed to a hodge-podge of local initiatives.

The EITC is a great tool for efficient re-distribution of resources to working Americans on the lower rungs of the economic ladder. It's efficient and we can turn the knobs to adjust it as necessary to fit our needs, such as not being as generous to teenagers that live in an existing household (something that minimum wage increases do not account for).

The only downside to the EITC is the once-a-year aspect to the distribution. It would probably be wise for us to develop a more reliable distribution of the money so that it provides a more even boost to the worker's regular paycheck.

greedo2• 9 years ago

EITC has a massive downside that you're ignoring. The ability of municipalities to act as laboratories in social policy is essential to effective governance. Seattle can raise their minimum wage far easier than having Congress change the Federal minimum wage. And then we can see how it works in Seattle. Expanding EITC has a huge affect, and is both harder to enact, and if needed, harder to rollback.

davidw• 9 years ago

The minimum wage affects both high school students looking for some extra cash, and people desperately trying to support a family. The latter is where an effective policy would concentrate its help.

I'm not sure what the best answer is.

TimJYoung6• 9 years ago

That's absolutely true for most new Federal economic/tax policies that are relatively untested. But, the EITC has been around since the mid-to-late 70s. We've got loads of data on its effects under all sorts of different economic scenarios, some of which are included here:

http://www.epi.org/publication/ib370-earned-income-tax-credi...

humanrebar2• 9 years ago

I agree that federalism has important benefits we shouldn't ignore, but income tax schemes can be (and are) implemented at various levels of government.

bradleyjg• 9 years ago

The earned income tax credit is essentially a tax credit for low income parents. It isn't billed that way and it isn't technically limited to them, but if you look at the formula, for any tax filer with no children the maximum credit is $506. That's about twenty five cents an hour for a 2000 hour work year, 12.5 for a 4000 hour work year (i.e. for a two earner household). This peak credit is reached at $6,610-$8,270 for a single filer and $6,610-$13,820 for a married couple. It is phased out to zero by $14,880 and $20,430 respectively.

Now maybe when you say we need to make the EITC much more generous you include as part of that fundamentally changing the nature of the program. But it is worth noting what it is and isn't today. And that's a refundable child tax credit, not a general negative income tax program.

TimJYoung6• 9 years ago

Yes, that is what I meant by making it more generous.

neon_electro• 9 years ago

What's your opinion of a universal basic income?

TimJYoung6• 9 years ago

I'm absolutely in favor of something like a UBI (it's very similar to the EITC), but I don't think there's any way to get there, both politically and fiscally, without means-testing.

Shivetya3• 9 years ago

EITC encourages some negative behavior and should actually be axed or corrected. it is not hard to find stories of people only working part of the year so as not to void their EITC money.

a better incentive is to raise the wages of all those earning below certain wage per hour with the money used to fund EITC. We all win this way, people working know they are going to have enough money, we don't have people sitting around with idle time which is not good for them or others and we have the community investing in others through their taxes directly benefit low wage earners regardless where they work. We also take a load off small shops who might be able to withstand a pricier market.

there are really no negatives to boosting hourly income through taxes compared to just handing them money for earning less than X per year

phil213• 9 years ago

EITC should be axed for one simple reason: It allows people to be dishonest when it comes to social spending. EITC is never included, but it's a wealth transfer before any accounting is done so it's never really talked about.

Welfare should be welfare. Taxes should be taxes. This constant cross-subsidization is insane, and at this point absolutely no one has any idea who is paying for what and how much.

TimJYoung6• 9 years ago

I'm cool with that, also. My main requirements are:

1) The benefit should revolve around work. Unless you're disabled and unable to work, any adult should be required to work in order to receive benefits.

2) The phase-out should always be structured so that moving on to higher wages is the obvious preferred choice for a recipient. No benefit cliffs that discourage advancement.

3) The benefits need to be enough to actually make a difference. Otherwise, we're just wasting our money and not improving the situation.

mazelife• 9 years ago

and serves as an employment subsidy for many small businesses that would, otherwise, not employ anyone

It would serve as a generous subsidy to _any_ employer that doesn't want to pay a living wage. It's not clear to me why the federal government should be subsidizing the practices of companies like Walmart, who are already costing the government $6.2 billion in public assistance[1]. But that's effectively what an expanded EITC would do [2].

[1] https://www.forbes.com/sites/clareoconnor/2014/04/15/report-... [2] http://www.princeton.edu/ceps/workingpapers/165rothstein.pdf

TimJYoung6• 9 years ago

I'm not happy about providing subsidies to corporations, either, so if there's a way to prevent this, then I'm all for it. I just don't see how you could do it, so you're left with increasing corporate taxes, etc. as a remedy.

I'm in favor of the minimum wage increases, in principle. I just think that increasing the minimum wage in all of the municipalities that need an increase is going to take too long, and that it's too broad in how it supplements incomes (the teenager issue mentioned already).

cowpig• 9 years ago

It’s not entirely clear why the University of Washington team gets such a weird result — since their data isn’t public, we can’t check it — but it’s worth noting at least two important issues with their study.

I cannot understand how economic studies are supposed to be credible when the data they use is not provided along with their methodology.

Is this for privacy reasons? If so, surely we can come up with obfuscation standards?

dpatru• 9 years ago

The average home price in Seattle is over $670,000.[1] This requires a salary of $182,000 per year [2] or $87.50 dollars per hour. At $15 per hour, a full-time worker cannot afford a house in Seattle. Therefore, to avoid the injustice of a homeless, full-time worker, the minimum wage should raised to at least $87.50 per hour.

[1] https://www.zillow.com/seattle-wa/home-values/ [2] https://www.redfin.com/how-much-house-can-i-afford?utm_sourc...

epistasis• 9 years ago

$670,000 is the average home price, not the minimum home price, so you're chasing the wrong goal.

I would also argue that chasing home ownership for everyone, in a city, is the wrong goal. I don't care about owning a home, I care about saving for retirement, and living in a home that's adequate for my family. Home ownership is great for some, I encourage it, but let's not pretend that it's the only way to live.

frgtpsswrdlame7• 9 years ago

If you'd like some real criticism of the UW study, the author of the Berkeley one has published a letter which goes over a lot of the methodological problems.

http://irle.berkeley.edu/files/2017/Reich-letter-to-Robert-F...

Here's the best points, I'd say the UW study is quite problematic.

The UW report excludes multi-site businesses from its dataset, which removes 48 percent of Seattle’s low-paid workforce out of their study.3 This major exclusion raises a big red caution flag about the representativeness of their sample and therefore about the interpretation of their findings. Yet the UW report provides essentially no evidence that their sample is representative of all jobs in Seattle and Washington.

In the UW data set, workers who leave a single-site business for a multi-site business to benefit from the higher wage mandate or because they received a better offer are not counted in the wage gains, but are counted in jobs lost. Seattle's policy essentially sets a higher minimum wage for all multi-site businesses, counting them as large employers.4 The exclusion of multi-site businesses, which is not standard in studies that use these data, may therefore create major biases in their results. Of course, some employees may move from multi-site businesses to single site businesses, but this mobility direction is likely to be smaller. It is not possible to estimate the size of this bias without access to the underlying data.

The UW report focuses only on jobs that had paid less than $19, which surprisingly is much too low. Table 3 of the UW report indicates that the number of jobs paying under $19 in all single-site businesses fell by about 6000 between 2014 and 2016. Yet the number of single-site jobs at all pay levels in Seattle increased by about 44,000 in the same period. This pattern of average higher pay and more employment appears also in food services: a decline of about 150 jobs paying under $19 from 20014 to 2016 and a simultaneous increase of about 4,500 jobs in all pay levels at single-site food service establishments. These numbers represents very good news: Seattle’s pay levels and job numbers both went up, at least among single-site businesses. We want to know, though, how much of this upgrading in overall pay and employment at all pay levels can be attributed just to the minimum wage policy.

The UW report nonetheless finds an unprecedented impact of wage increases on jobs, ten times higher than the average in 942 published minimum wage and non-minimum wage estimates, and triple that of minimum wage critic David Neumark

surfmike2• 9 years ago

It would be interesting to read how many of those criticisms were addressed in the Berkeley study itself.

cwyers9• 9 years ago

This is a hack job, an out-and-out piece of propaganda trying to dismiss a study the author doesn't like the conclusions of.

First, their data exclude workers at businesses that have more than one location; in other words, while workers at a standalone mom-and-pop restaurant show up in their results, workers at Starbucks and McDonald’s don’t.

The UW report actually discusses this:

Multi-location firms may respond differently to local minimum wage laws. On the one hand, firms with establishments inside and outside of the affected jurisdiction could more easily absorb the added labor costs from their affected locations, and thus would have less incentive to respond by changing their labor demand. On the other hand, such firms would have an easier time relocating work to their existing sites outside of the affected jurisdiction, and thus might reduce labor demand more than single-location businesses. Survey evidence collected in Seattle at the time of the first minimum wage increase, and again one year later, increase suggests that multi-location firms were in fact more likely to plan and implement staff reductions. Our employment results may therefore be biased towards zero.

It's irresponsible to criticize the report for not including multi-site employees without mentioning the conclusions of this survey data.

Second, the University of Washington team does not present enough data for us to assess the validity of its “synthetic control” in Washington — that is, the set of areas to which they compare the results they observe in Seattle.

The synthetic controls are probably the most complicated part of the report, and the part that seems the most open to criticism. But the UW report used two different controls for for changes in employment, and both of them lead to similar conclusions about the effects of the minimum wage. It's possible that there are other synthetic controls that yield different results. The WaPo article says that the "Berkely researchers take a better approach" to synthetic controls, but doesn't note that the UW study can't use that approach because the data that enabled the UW study isn't collected nationally.

Also, saying "the new studys' findings are out of step with a large body of research" ignores that the UW paper duplicated the findings of that large body of research, and discussed how the more expressive dataset they had (being able to actually identify low-income workers instead of using a proxy like "restaraunt workers" or "teenagers" is the biggest difference between this and other studies) leads them to different conclusions. And saying the UW study has "important limitations," but not saying the same thing about the Berkely study, which was only able to look at workers in one sector (restaraunts), is a pretty clear indicator of where the author's sympathies lie.

jackweirdy2• 9 years ago

Didn't realise so many HN commenters were anti-minimum-wage

exclusiv10• 9 years ago

I don't think that's an accurate statement. I think it's more about what level is optimal for an area and how we determine it.

drak0n1c2• 9 years ago

The UW researcher, Jacob Vigdor, whose research is dismissed in this article, has responded to common criticisms in this interview: https://www.seattlemet.com/articles/2017/6/26/what-should-we...

karl11• 9 years ago

Two good marginal revolution posts on this: http://marginalrevolution.com/marginalrevolution/2017/06/sea... && http://marginalrevolution.com/marginalrevolution/2017/06/min...

phezzan• 9 years ago

Short version. A member of the San Jose teacher's association thinks one of two academic studies is wrong, because... we already have a consensus.

The one point raised in the article about multi-site employers is acknowledged by the article's favored Berkeley study: "some multi-site businesses report payroll and head counts separately for each of their locations, while others consolidate their data and provide information as if their business operated only at a single location."

Oh and by the way: "This report was prepared at the request of the Office of the Mayor of Seattle."

http://politicalcalculations.blogspot.com/2017/06/the-most-s...

theprop• 9 years ago

"There's lies, there's damned lies, and then there's statistics..." Mark Twain

exclusiv10• 9 years ago

Some considerations of the minimum wage movement:

1) The higher it gets the more likely and quicker the minimum wage jobs will be replaced by AI/robots/automation.

2) The cost gets passed on to the consumer. So if everything costs more and everyone is paying more in taxes, that's not good either. Some companies may keep prices the same and take from profits, but the lower the margins, the less attractive creating and running a business becomes.

3) What works in one area like Seattle won't necessarily work across the country. There has to be a sweet spot in each area and we have to be honest with ourselves to say that the feel-goodness of a higher minimum wage does have its limits. And that limit is what we are debating. We don't need to do a study to know that a $50/hr minimum wage is unreasonable.

In any given city, what minimum wage provides fairness for individuals, businesses AND the local economy as a whole? And how can we develop a model framework for cities across the country to use?

openasocket• 9 years ago

Except it's already like that. If we don't pay workers a living wage they have to use our social safety net programs, such as food stamps. Those programs are funded by the tax payer. So basically the tax payers are already subsidizing companies like Walmart so they don't have to pay a full living wage to their employees. If those companies paid them a full wage the taxpayers would pay less for social welfare programs. I'm also not that sympathetic to the plight of companies like McDonald's when it is earning in excess of $4B in profit in a year.

Obviously, what counts as a fair wage will depend on the local cost of living.

exclusiv10• 9 years ago

That's a good insight. I agree with that point and think every city should propose laws that support a living wage. We just need to understand what that living wage should be in any given city and consider a variety of factors, some short term and some long term.

If those companies paid them a full wage the taxpayers would pay less for social welfare programs.

Maybe. That assumes the poverty line stays the same and nothing happens with the price of other goods those minimum wage earners need to buy. It also assumes there's no impact on 1) number of jobs and 2) number of hours and thus total income as the UW study discusses.

As long as part time employee is allowed you cannot guarantee an income for any given job. So a min. hourly wage doesn't definitively solve the problem of mandating a fair wage as we are discussing.

I'm also not that sympathetic to the plight of companies like McDonald's when it is earning in excess of $4B in profit in a year.

Me either. But McDonalds has already shown a long time ago that they can eliminate min. wage jobs and/or hours by getting consumers to throw away their trash and fill up their own drinks. This is part of the consideration #1 I mentioned.

sedachv3• 9 years ago

The cost gets passed on to the consumer. So if everything costs more

What you are describing is a mythical concept that in economics is called the "price/wage spiral." This is not what actually happens (indeed one of Friedman's central theses was that inflation is driven by monetary policy and not by wage increases or increases in the price of natural resources). There are a bunch of factors that come into play - in a competitive market the salary increases would not be passed on to the consumer but would come from the profit of the business owners, increased automation, product and service substitution, etc.

exclusiv10• 9 years ago

I mentioned it could come from the profit too. If you're a business owner you can forego your margins to account for added costs and run it the exact same. Some businesses like cosmetics have a lot of room to play with. Some don't and it becomes less attractive to be a business owner, having employees, legal risks, lines of credit, etc.

However, many businesses simply respond by upping the price on their menu or adding a surcharge. The price the consumer pays for the same good they received before is now higher. How is that mythical?

Overtonwindow2• 9 years ago

Next week there will be a study refuting the MIT study, then another refuting that study, back and forth. It seems no matter the study academia publishes, and how much it is lauded for its clarity, breadth, and quality, another study will come along ripping it to shreds that another group will heap praise upon.

CobrastanJorji• 9 years ago

You're saying that like it's a bad thing, but so long as each new study is honest criticism of the previous study or brings new information to the table, that sounds like exactly how big questions like this should be handled.

Overtonwindow2• 9 years ago

Fair point. I don't mean it to sound like a bad thing, but I understand and accept that research and science can be bought. For every study supporting something, another study could be done that refutes it. Especially in such a politically charged atmosphere and issue, it gets hard to trust one source over the other. I trust the MIT study more than the UW study, but someone else probably has the completely opposite viewpoint.

thetruthseeker1• 9 years ago

My take away has been that it is not clear beyond doubt that higher minimum wage is better in the long run. If both the studies had agreed that it is better, yes, it makes sense to enthusiastically adopt it. However if studies have results that dont match, then I think there is a reason for caution.

As far as what I understand, only Seattle adopted higher minimum wage, now many people with that minimum wage can get services (may be not directly, but in the supply chain) from other states which don't have the minimum wage which can give the impression that their life has improved. However, if the whole country adopts it, the parameters of that might be different.

I hope somebody sheds a light on wage dilution as well. If somebody was incentivized to learn a skill that pays them 20$ an hour, will that incentive still be there?

cartercole• 9 years ago

the min wage hurts low skilled workers. period.

cybernytrix• 9 years ago

I feel one of the real issues is incentivizing publicly traded companies to beat pressure from Wall street to keep cutting costs and workers be damned attitude. It might be worthwhile to experiment $30 per hour wages for all publicly listed and big companies, including temp workers. Overall it is better for someone to work 4h at $30 instead of 8h at $15.

k__• 9 years ago

I'm more of an UBI fanboi, but it seems MW is working, at least here in Germany.

Turns out, most jobs that had wages below MW were still lucrative for the companies even when paying 8,84€/h

paulMageau2• 9 years ago

Very confused wapo published this: https://www.washingtonpost.com/news/wonk/wp/2017/06/26/new-s...

paulMageau2• 9 years ago

Very confused wapo published this https://www.washingtonpost.com/news/wonk/wp/2017/06/26/new-s...

dragonwriter5• 9 years ago

Publishing analysis/perspective/opinion pieces with different spin on the same underlying news isn't uncommon in publications that aren't simple ideological propaganda mills.

ableton• 9 years ago

A lot of people are getting fired due to increased minimum wage. The employers will take their money and pay it to you and me to build automated solutions that do what the now-too-expensive people once did. That's what McDonalds is finally doing with self-order kiosks.

Shivetya3• 9 years ago

5000 fewer jobs, not in the article is it?

dmccunney• 9 years ago

Whether any government mandated minimum wage boost "works", depends upon who you are. Who benefits from it?

If you are currently in a minimum wage job, you may benefit. You're making more money, because the government says so! (But your employer might just decide wage costs are too high and lay you off...)

If you are unemployed and looking for a minimum wage job, the bar just got raised. The higher the minimum wage is set, the harder employers look at how badly they need the work done. The job they might be willing to pay $10/hour for might not be worth $15/hour to them. Your quest to get a minimum wage job just got harder.

And if you are willing to accept less money, because some money is better than none, it doesn't help you, because employers aren't legally permitted to pay you less, even if you would be happy to accept it. So you likely get a substantial underground economy of "off the books" employees, getting paid in cash that doesn't get reported to the government. And those folks may actually take home more than minimum wage employees because taxes don't get deducted from their wages.

(I live in the NY metropolitan area. I see a lot of that. And there are employers who would pay the higher minimum wage, but the employees don't want to be on the books. Many are undocumented aliens, and being on the books leaves a trail pointing to them and possible deportation.)

If you are the government that mandated the higher minimum wage, you might not benefit financially, because the amount of taxes you see is less than what you might see if minimum wage was lower and more people had minimum wage jobs. (Of course, for government who do this, it's about getting votes, and impact on tax revenue isn't a consideration.)

And bear in mind that what the employee gets in a minimum wage job is rather less than what the employer has to spend. The employer must deduct and remit taxes, and must maintain the appropriate records for legal purposes, and that costs money.

Ultimately, "it takes two to tango". There must be workers looking for minimum wage jobs, and employers offering them. The government can't require employers to hire workers they don't need, and increases in minimum wage will tend to decrease the number of minimum wage jobs available.

Ultimately, minimum wage increases have the effect of decreasing total employment, but this seems to get missed in such discussions.

The goal of minimum wage increases is to insure workers can make a survivable income. But value is relative - something is worth what someone else is willing to pay for it, and that includes the worker's labor. Minimum wage jobs are minimum wage for a reason. They are low skilled/unskilled labor, and what the worker does simply isn't worth that much to those who need it done. What the minimum wage folks need is to be able to acquire the knowledge and skills that are worth more to employers and be able to get better jobs. Increases in minimum wage by themselves don't aid that.

We are seeing all sorts of commentary elsewhere about job losses to automation. The only reason many minimum wage jobs still exist is because it's more expensive up front to automate them than employers want to spend. At some point, minimum wage boosts might just make it worth the employer's while to spend the money needed to automate those jobs. Then what do the job seekers do?

Seattle’s higher minimum wage is actually working fine

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