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Old 08-10-2016, 09:07 AM  
FishingRod FishingRod is offline
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Seattle’s minimum wage revisited.

The results of a study of Seattle's recent hike in the minimum wage should be a cautionary tale to anyone advocating a nationwide $15 minimum wage. (AP)

TERRY JONES
8/09/2016




Raising the minimum wage is one of those wonderful-sounding ideas that, whenever tried, unfortunately never quite works the way it was promised. To its credit, the Washington Post has noticed.

The Post recently highlighted a new study from a group of economists who were commissioned by the city of Seattle to look at that city's minimum wage hike from $9.96 an hour to $11.14 an hour. What they found was enlightening.

To begin with, the economists said, some of the workers weren't helped at all, since their pay would have likely gone up anyway with experience and tenure on the job.

But the city didn't bargain for what happened to other workers it had sought to help: "Although workers were earning more, fewer of them had a job than would have without an increase," the Post said. "Those who did work had fewer hours than they would have without the wage hike."

Indeed, depending how it's calculated, the economists found that the minimum wage hike that sounded so generous when passed resulted in somewhere between a $5.54 a week raise and a $5.22 a week reduction in pay.

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In comments that sounded as if they came straight out of an Econ 101 text, the Post concluded that "Increasing the minimum wage increases the costs of hiring workers. As a result, employers must accept reduced margins or customers must pay steeper prices. If employers cannot stay in business while paying their staff more, they will either hire fewer people or give their workers fewer hours. As a result, even if wages per hour increase workers' total earning could decline."

Dead on. That's exactly what happened. And as University of Washington economist Jacob Vigdor, one of the authors of the Seattle study, noted, some businesses simply avoid paying the minimum-wage tax altogether by automating and letting low-end, unskilled workers go — as is now happening in some fast-food chains and at supermarkets.

Yet, such foolishness seems to have infected the Democratic Party, with its now near-ubiquitous "Fight For $15" campaign. As a piece in IBD highlighted right after the Democratic Party Convention's call for a massive hike in the minimum wage, forcing sharply higher wages on troubled local economies where the median wage is low can have a devastating effect.

"The most absurd plank to appear in either party's platform this year is the Democrats' call to 'raise the federal minimum wage to $15 an hour over time and index it,' " wrote Oren Cass, a senior fellow at the Manhattan Institute and author of "Is A $15 Federal Minimum Wage Appropriate?" "It is policy written for the nation's very wealthiest enclaves, but incoherent for economically distressed regions."

The tragic irony of this is that those who are worst hurt by a higher minimum wage are those with little education or training, mostly minorities, immigrants and the young. They get priced right out of the labor market by the well-meaning nanny-staters who want to impose a one-size-fits-all minimum wage on the entire country — regardless of the damage it does.

It's really a matter of basic logic. Any time someone raises the price of something — anything — those who consume it use less, all things being equal. That also happens when government requires businesses to pay more for labor than the market demands. In doing so, government helps to create unemployment, idleness and long-term dependence on welfare, especially for the most vulnerable people in the workforce.

The folks at the Legal Insurrection blog site really nailed the rancid politics of it: "Yes, Obama and Democrats are aware of this, and no, they do not develop policies that address the reality of minimum wage hikes and their measurable failure; instead, they focus on 'feel good, sound good' policies that appease the masses, harm businesses, and displace workers."

That this destructive policy is a plank in a major political party's platform is nothing short of a national disgrace.


http://www.investors.com/politics/co...mum-wage-hike/

TERRY JONES | terry.jones@investors.com |  @IBD_Tjones
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Old 08-10-2016, 09:39 AM   #2
Direckshun Direckshun is offline
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I'll leave aside the fact that Investors Business Daily is a conservative site when it discusses politics to break down the substance of the article, which isn't unreasonable.

First of all, there are downsides as well as upsides to raising the minimum wage. That much is indisputable. And the author here would be more credible in making that case if he wasn't just making shit up:

Quote:
Originally Posted by FishingRod View Post
To begin with, the economists said, some of the workers weren't helped at all, since their pay would have likely gone up anyway with experience and tenure on the job.
I cannot find anywhere in the article about the study or the study itself that backs up this assertion. It's made up to fit the narrative Terry Jones and IBD want to sell.

The article actually argues that the increase in the minimum wage was not as helpful as initially believed thanks to a strong Seattle economy, which would have boosted the employee's payrolls some of the way to the new minimum wage had it not been raised (but not all of the way).

That said, I've never been a huge fan of the $15/hour minimum wage in part due to facts like this:

Quote:
Originally Posted by FishingRod View Post
the Post concluded that "Increasing the minimum wage increases the costs of hiring workers. As a result, employers must accept reduced margins or customers must pay steeper prices. If employers cannot stay in business while paying their staff more, they will either hire fewer people or give their workers fewer hours. As a result, even if wages per hour increase workers' total earning could decline."
I favor a progressive raise of the minimum wage, and then a mechanism like social security has, where it is raised to keep up with the cost of living. But nearly doubling the minimum wage overnight is not a brilliant idea. It's bold and brash, and those are not the best qualities in economic policy.

There is a significant problem I have with articles that argue that raising the minimum wage increases the progress of automation. There's no evidence for this, simply put. Automation is cheaper than paying $15/hour, sure, but it's also cheaper than paying $8/hour. Walmart pays their employees generally terribly and is still replacing them with checkout machines.

Because there are negative consequences (in addition to very real and well-proven positive consequences) doesn't mean we should throw the baby out with the bathwater. The choices shouldn't be "$15/hour" or "no minimum wage." There are progressive reforms that can mitigate the negative consequences and ones that can enhance the positive ones.
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Old 08-10-2016, 10:25 AM   #3
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[QUOTE=Direckshun;12360651]

First of all, there are downsides as well as upsides to raising the minimum wage. That much is indisputable. QUOTE]

That sir is crazy talk . We all know that raising the minimum wage helps everyone and that lowing taxes or spending is bad for everyone. I’ve read that here many times. I just found this an interesting contradiction of the articles posted a little while back that were asserting there were no downsides to forcing a raise in the Minimum wage. If one looks at the MW adjusted for inflation Seattle is probably pretty close to about right, where we are now is probably a little low and $15 would be high.
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Old 08-10-2016, 10:31 AM   #4
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Where we are now is very low, actually. But your point is taken.

I don't agree with articles posted about $15/hour was the way to go. I don't agree with this article, which fabricated information and trotted out the same silly argument we've seen over and over again.

There is a nuanced discussion to be had on the real benefits and potential pitfalls of raising the minimum wage, but it's probably not on Investors Business Daily. Or at least in this piece.
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Old 08-10-2016, 10:36 AM   #5
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Quote:
Originally Posted by Direckshun View Post
I favor a progressive raise of the minimum wage, and then a mechanism like social security has, where it is raised to keep up with the cost of living. But nearly doubling the minimum wage overnight is not a brilliant idea. It's bold and brash, and those are not the best qualities in economic policy.
Every single plan to raise the minimum wage to that level does include a phrase of smaller jumps.

Seattle full $15.00 minimum wage doesn't start until 2017 for any companies, and for companies with under 500 employees, 2021.
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Old 08-10-2016, 10:37 AM   #6
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Quote:
Originally Posted by Loneiguana View Post
Every single plan to raise the minimum wage to that level does include a phrase of smaller jumps.

Seattle full $15.00 minimum wage doesn't start until 2017 for any companies, and for companies with under 500 employees, 2021.
That's fair.
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Old 08-10-2016, 10:51 AM   #7
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http://money.cnn.com/interactive/eco...ge-since-1938/

If this chart is accurate about $11.00 per hour would put it at an all time high.
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Old 08-10-2016, 12:41 PM   #8
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Old 08-10-2016, 01:04 PM   #9
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I would ask for a raise if I worked on salary and lived in Seattle. I mean they never address this point, the people who want to raise the minimum wage.

Is the worth of these salaried employees decreasing considering their own pay doesn't change?
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