Friday, September 16, 2016

Minimum Wage Pro/Con

From MP Afraid of Democracy

"Or use California's example, where an initiative DESTROYED the entire public education system in the state at every level,...  a debacle from which the state is only lately beginning to recover,... and a hot-button-issue-of-the-moment initiative on gay marriage ended up costing the state a massive amount of money to seek to defend.

I would FAR prefer that we elect representatives who can take the time to study important issues and devise well-though-out legislation,... than that we allow the latest hot-button issue to be demagogued into law by ignorant people,...  and let's face it, the general public IS ignorant on a whole variety of issues,... some of them are even "deplorable."

The founders were too wise to trust direct democracy.  They knew each other and their friends and neighbors too well for that. Those who would cast aside their wisdom and who regard the checks and balances they devised into our system of turning ideas into laws as "elitist,"... are likely the same people who would NOT bother to study and research important issues,... and would be far too willing to make law based on what they believe must CERTAINLY be true,...  (which is far too often PROVABLY false);... the kinds of people who STILL very willingly fall prey to every snake oil peddler or pied piper they see on TV.

It takes maturity and patience to win what you want the old fashioned way,... but in the end, that's the ONLY way that works." Greg

"I second that whole heartedly... $15/hour sounds great until the businesses start relocating to the first ring suburbs, or using a lot more of those check yourself out scanners. For a community that has such high unemployment, it seems there are some serious pros/cons that need to be evaluated.

I also enjoy / am scared by those "Man on the Street" sketches where he/she asks the typical citizens simple political questions and the people do not know the answers." G2A

"Here's a question just for you, because you follow and pose possible consequences very well.

Would a $15 minimum wage further dislocate low tier labor as it may be the marginal dollar at which many somewhat more qualified people who would not apply at current rate might find $15 personally workable?
So, would raising the minimum reduce unemployment at the targeted lower end---or not? Jim

"Interesting question. So are you proposing that the high unemployment rate for minorities is a self inflicted choice? That they are simply choosing not to work because the jobs do not pay enough to leave unemployment, welfare, cash jobs, or however they are currently paying their bills?

Usually the folks here report that it is employers and society being unfair/biased that is causing that high unemployment rate. Where as I believe that the academic achievement is leaving many of them unqualified for many jobs. (ie that's why I am tough on Parents & Schools)

If your proposal is correct, it may help entice more workers in to the market. But I don't think there are an excessive number of lower income jobs that are going unfilled. And I think the law will pressure some of those jobs to leave Mpls proper.

Please remember that American consumers are the ultimate capitalists, they shop anywhere to save money, get better quality, get better reliability, keep up with trends, etc. So if we arbitrarily raise costs here, they will choose to shop elsewhere.

If you doubt me: checkout the cars on the road, the appliances in the homes, the cell phones in our hands, etc." G2A


John said...

"Let them raise the wage to $15/hr. An hour minimum wage. If it adds jobs and helps with employment then they were right, if it costs jobs and hurts the very folks who voted it in, they asked for it.

Unfortunately it takes years to undo bad policies but folks will have to live with their vote. Maybe if we had a vote you would see the anti $15 dollar folks (small business owners) come out and explain how it will affect their workers.

It is simple economics, if a bakery employs 5 workers at $10 an hour and the owner (who works 55 hours a week) makes $65,000 a year, pays his workers $15 an hour, he now makes less than $15.000 a year.

Somehow, in our need to bad mouth business (you didn't build it, evil business 1%'ers) the public has bought into the lie that small business owners make millions and are greedy.

That is simply not true. If you want to talk about big business in bed with politicians and crony capitalism hurting everyone except DC elites, that is something we need to do." Joe

"Continuing theat Thought. That Owner then needs to decide if they will cut the number of employees / automate, if they can raise prices and/or if they can justify staying in the business in that market.

Now if it is just Mpls that raises the cost, the ability to raise prices will be limited.

If it is all of MN, then many service providers can send the cost increases to the customers in the way of higher prices.

Which then raises the cost of living and doing business in MN for all. Driving all the businesses to make the same decisions shown above. Including the manufacturing firms who compete globally.

It is a thorny complicated issue." G2A

jerrye92002 said...

Going back to econ 101, the 15-or-bust crowd believes that demand for labor is inelastic, that is, that employers want a certain number of employees regardless of cost. It is simply not true, of course; it is a typical liberal fantasy, easily debunked with the simple question, "why not $200/hour?"

Of course, libertarians might ask a different question, "who are you to tell me I can't take a job for whatever pay I want and can get?

John said...

A Libertarian co-worker of mine described an interesting point.

Now Liberals wholly support the idea that if one raises taxes on cigarettes and liquor, fewer people will smoke / drink.

Yet they seem to deny the point that if government arbitrarily increases the cost of workers, it will reduce the number of workers hired.

I thought it was amusing. :-)

Sean said...

It's not really interesting at all. While it makes for a great talking point, the great thing is that we have empirical data to look at! And what the data shows is the increasing "sin taxes" does in fact have the effect of reducing usage, while minimum wage increases have had very small impacts on employment levels.

John said...

"minimum wage increases have had very small impacts on employment levels"

I think we need to give it a few years to see the impact. Businesses do not respond very quickly to change and the changes have been too scattered / small to trigger much inflation.

Do you have a good example of where the minimum wage has been set at $15/hr and held for ~5 years?

Sean said...

"Do you have a good example of where the minimum wage has been set at $15/hr and held for ~5 years?"

No, because nowhere in the U.S. is the minimum wage $15. Even in the places that have passed it, its actual implementation is years off. But we have data from other minimum wage increases to go off of.

jerrye92002 said...

So long as the minimum wage increase brings that minimum up to what the generally prevailing free-market wage already is, of course you will see a minimum effect. But to suddenly jump far above it, which $15 is, says that we WILL see unemployment and job elimination or business closures. A change of that magnitude simply begs the question of "why not $200?"

jerrye92002 said...

A couple of fast food chains have already announced that they are prepared to eliminate jobs with automation, starting in areas where the minwage is increased. For those folks, going from $8/hr to $0/hr is not going to help them a bit, and it's not a "small" change.

jerrye92002 said...

Here's another question to ask: Where, exactly, will this extra 7-8 $/hour come FROM?

John said...

I know the answer to that one... :-)

It will be just like a sales tax (ie regressive) comes from the wallet of every customer. And since the low income folks spend more of their income, they will be unfairly taxed...

John said...

And of course the folks on welfare and social security will not receive a raise until the CPI is impacted... They will be hurt most.

jerrye92002 said...

That is one right answer, but we need somebody who favors 15 to answer the question, or at least accept or reject your answer.

John said...

I posted a similar comment / question on the original MP article, we will see if anyone has any ideas on how to balance the wants of these various groups.

jerrye92002 said...

Yes, especially since $15/hour is logically indefensible.

Sean said...

I don't support the notion of a nationwide $15 minimum wage, but in high-income, high cost-of-living areas, I don't think it's absurd. A full-time worker earning that for a year would make about 60% of the current national median household income. In Seattle, it would be about 40%, San Francisco about 35%.(And given that most places that have passed this are still five to six years away from actually experiencing the $15 minimum wage, the reaction seems a bit overheated.)

jerrye92002 said...

Sean, in high-income, high-cost-of-living areas the minimum wage IS already higher than the national mandate, no mandates required. The issue isn't what people should be paid or allowed to work for, the issue is whether that is a matter of private contract between employer and employee or whether some federal do-gooder gets to override the free market for everybody? There is no reason to say that everyone must earn median income, because then it ceases to be median income.

Sean said...

I don't think anyone is suggesting that the minimum wage be set to a level where it equals the median household income.

I guess my point of view is that if a city wants to set its minimum wage at $15, then they are free to do that, and they get to see if it works or fails. Isn't that what states and cities are supposed to do? Laboratories of democracy and all that...

I don't think setting $15 as a national standard works.

John said...

I am fine with that, I rarely go downtown and I am not on a fixed income.

jerrye92002 said...

I am not fine with that at all. Just because a city wants to greatly increase unemployment and business failures does not mean they should. And since these effects are entirely foreseeable and inevitable, such city-wide laws should be considered malfeasance in office. And stupid.

John said...

Oh come now. We are supposed to be the supporters of "government at the lowest level". The city level is pretty low.

jerrye92002 said...

Almost correct. We are supporters of government at the lowest levels because it is supposedly BETTER government that way. We don't generally support government at ANY level doing stupid stuff. And before Hiram chimes in, I claim that decisions made by people I did not vote for are not automatically legitimate unless the vast majority of us agree with them. Government at the lowest level should be by consensus, not a tyranny of the tiny majority.

John said...

But if it goes before the citizen voters. Then we would know what the majority wants.

jerrye92002 said...

"Democracy is the theory that the common people know what they want, and deserve to get it good and hard." H. L. Mencken

"Majority rule is two wolves and a sheep deciding what's for dinner."

Normally, we vote for our elected officials, and accept majority rule on the theory that these folks will exercise common sense, at least at the local level. When these local poobahs decide they can override the laws of economics, physics, chemistry and human nature, they exceed the authority granted them by the vote.