Tuesday, April 25, 2017

Seattle Minimum Wage Lessons

Peter posted an interesting piece at MinnPost.  Thoughts?


I simply think.  Be careful what you ask for.  You may get it...

13 comments:

Anonymous said...

The people who make the clothes for Ivanka Trump's company work 57 hours a week for a little more than a dollar an hour, and her business is fabulously successful. Is that the economic model we want to import to the United States?

--Hiram

Sean said...

Is there any real evidence that this is causing harm? Especially when no one is yet subject to the $15 wage?

Anonymous said...

Most things have winners and losers. Something that nobody bothers to look at is how wages determine employment decisions. Some jobs are more essential than others. My favorite example is how when Mitt Romney left Bain Capital, he didn't do any work for them for years, but still drew a paycheck from the firm. On the other hand, how long could Bain go on without janitorial services? Who was the more essential employee? Mitt or the janitor?

--Hiram

jerrye92002 said...

What is missing here is that, given a free market in labor, wages will be what is needed to keep necessary employees working. When government arbitrarily sets those wages higher than what the employee returns in services, the employee becomes unnecessary. Simple as that. I would hate to be a business owner in Seattle right now, because I doubt I could find anybody to buy it, which would be my first choice. I probably would not have enough savings to retire and close up shop, which might be my second choice. After that my choices are: to automate the workforce out of existence (what McDonalds and other chains are already doing), add a huge "government surcharge" to the bill (which will probably quickly become illegal) and will make me non-competitive with non-city businesses, outsource the work (not possible in service businesses), or move-- again not practical in a service business. Notice that only NONE of these alternatives guarantee that my employees will all continue working at the higher wage, and many of my employees, even if happy with their current wage, end up with no wages at all. It is absolutely inevitable and wishing it were otherwise, and believing government makes all things possible, always ends up hurting the people it is supposed to help. And then declaring victory.

Anonymous said...

When government arbitrarily sets those wages higher than what the employee returns in services, the employee becomes unnecessary.

This often doesn't determine what people are paid. Bear in mind the Mitt Romney case. He was paid hundreds of millions of dollars in wages for literally doing nothing, for returning no services at all.

--Hiram

jerrye92002 said...

Not true. Either his ongoing compensation was part of his employment contract, or it came as the result of his capital interest in the company. That he did not actually labor for the income at the time received is irrelevant. What matters here is whether government should be setting wages for people independent of what they could earn for the work they do. Or should that be set by the person or company who can judge that value proposition? If you say government, then explain why, wherever the minwage is artificially raised, McDonald's installs ordering kiosks and fires all the counter help?

Anonymous said...

Everybody works under a contract. One side agrees to provide labor, the other side agrees to pay for that labor. It's just the details that vary.

" That he did not actually labor for the income at the time received is irrelevant.'

My point was that the work Romney performed, was not essential.

There is a curious idea that prices we agree pay for things reflect or evaluation of what those things are worth. It seems to me that this idea can't withstand the most basic analysis. How do you determine what a bag of oranges is worth. Do you do some sort of cost analysis? Is there an app for that? Or do you just drop a bag in your shopping cart when you are running low? We routinely pay more for things of little value, and less for things of great value. We do that when we pay more for shortstops than we do for teachers. It's not that there aren't sound economic reasons for that. It's just that those reasons don't reflect a determination of value. Bear in mind, we just spent a half billion dollars on a football stadium which in economic terms, is virtually worthless.

--Hiram

jerrye92002 said...

You have an argument, but it seems meaningless. Personally, I would pay FAR more to a good babysitter than to a great shortstop. My point is that the value of an employee is entirely for the employer to decide. When government gets involved, things just get screwed up-- either devalued or overvalued. To me, a bag of oranges is worth more than a football stadium. The Vikings obviously thought differently, especially if the taxpayers could be forced to pick up half the tab.

Anonymous said...

Personally, I would pay FAR more to a good babysitter than to a great shortstop. My point is that the value of an employee is entirely for the employer to decide.

But is the price for the employer to decide? Or as for shortstops, and babysitters, are prices established by markets?

--Hiram

jerrye92002 said...

Yes, they are established by markets, made up of millions of individual employers and employees. Employees will seek the highest wage offered, while employers seek employees that return a value equivalent to what they are willing to pay, and no more. The market operates so long as these millions of individual "contracts" are made without government intrusion. For example, if somebody desperately needs a person to staff the counter at McDonald's, they are likely to hire a retired person seeking a part-time income, as having the attitude and job skills needed. Their second choice would be a teen looking for part-time work as first employment. So long as the supply of these workers is substantial and the employer can choose among the many willing to work for the wage offered, nothing changes. Let the supply of those willing to work for that wage (perhaps because other jobs pay better), and the McDonald's wage will go up accordingly, as will the price of a hamburger to pay for it. BUT, let government step in and mandate a higher wage and the value of that worker no longer covers what they are paid. Here come the robots, and everybody is out of work. It is inevitable.

Anonymous said...

they are established by markets, made up of millions of individual employers and employees

So where can I go to make a bid on Mitt Romney's no show job?

--Hiram

jerrye92002 said...

You assume the position is open, that the company sees you as qualified and worth the price, and would willingly pay somebody to "not show up." In the market for that job, the price of /your/ value (no offense), probably wouldn't match that of a White Castle burger-flipper.

Anonymous said...

You assume the position is open, that the company sees you as qualified and worth the price, and would willingly pay somebody to "not show up."

If the market is open, I assume I can make a bid. In terms of qualifications, I am just as qualified as Mitt for not showing up to work. But if the market isn't open, I guess I can't. But can market forces operate without markets?

--Hiram