As We've Been Saying, California's Minimum Wage Rises Increase Unemployment

[Theinquisition]

http://www.forbes.com/sites/timworst.../#24304327331b


hmmmmm...shocking (sarcasm)

This is an interesting little tale which illustrates the other side of the minimum wage story. Around here at least the standard side is that when you raise the price of something people buy less of it. Increase the minimum wage and employers will economise on minimum wage labour. This is a terribly simple point and yet people will twist themselves into ever more improbable positions to try to deny it. However, today’s part is about the other side of the story. Raise the price of something through legislation and more people will be willing to supply it. If we pass a law that apples are $2 each and no kidding then apple trees will spring up in every suburban garden and we’ll be buried under a glut of fruit that no one wants to buy at that price but people are absolutely delighted to sell if only they could find a buyer. The same really does happen with labour too as California is showing us:

“
Defying critics of new state regulations, California continued to pad its hefty payrolls in June. Employers added a net 40,300 jobs over the month, the state reported Friday.

But unemployment in California increased to 5.4%, from 5.2% in May. The national unemployment rate also ticked up, to 4.9% in June from 4.7% in May.

More Californians entered the job market in June, which probably explains why the jobless rate increased even though the state added a healthy number of new positions.

“The improvement in the labor market is pulling more people in,” said Mark Vitner, a senior economist at Wells Fargo WFC +0.04%. June is generally a volatile month, said Vitner, because schools let out and some younger workers begin looking for summer jobs.

Well, no, not really, the school let out is not the cause here. Because these are the numbers adjusted for seasonal factors. And yes, school letting out is a seasonal factor, it has been happening at about the same time each and every year for some time now. As is laid out here:

“
In California, the estimated number of people with jobs in June was 18,078,000, down 4,000 from May but up 308,000 from June of last year. The number of unemployed Californians was 1,022,000 in June, up 27,000 from May, but down 160,000 from June of last year. Last June, the state unemployment rate was 6.2 percent.

All these numbers are seasonally adjusted to smooth out hiring binges and busts such as a decline in construction employment during the winter and an increase in holiday hiring.

On a non-adjusted basis, the state unemployment rate jumped a full percentage point — to 5.7 percent in June from 4.7 percent in May.





So, let us add one more thing:

“
On July 1, 14 U.S. cities, states and counties, plus the District of Columbia, will raise their minimum wage in a mid-year burst that reflects the legislative momentum to boost pay floors across the country while federal legislation stalls.

In total, the minimum wage will rise in 15 places: two states – Maryland and Oregon, plus Washington, D.C., Los Angeles County , Calif., and 11 cities. That includes Chicago, eight cities in California and two in Kentucky, according to a new analysis by the right-leaning Employment Policies Institute.

Both the earlier pieces are stating that the higher wages have called more labour supply into the market. Which is fine, no problems with that at all. Yet unemployment is defined those looking for a job but cannot find one. Thus an increased labour supply at this higher labour rate leads to more unemployment

[Xeones]

Why do people keep linking to a site that won't let anyone read?

[obdigore]

So its increasing unemployment because more people are looking for jobs because they get paid more than welfare now?

I fail to see how this is a bad thing.

California added jobs month over month, AND it was in line with a nation-wide unemployment percentage increase. It looks to me like its more likely that the seasonal controls need some tweaking.

This isn't what the 'no minimum wage raise' group has been saying, they've been saying there will be less jobs because employers wont be able to pay employees, which is just a basic lack of understanding of macro economics.

[Masark]

So we should cut the minimum wage to ensure that people don't bother looking for work?

Because that's the only possible interpretation I'm getting from this babbling, except chants of "Hail Market!".

Furthermore.

[Orange Joe]

snip

so let me get this right. The whole country went up .2% in unemployment. Yet in California it's because of the min wage increase?


.........

[Kujako]

so let me get this right. The whole country went up .2% in unemployment. Yet in California it's because of the min wage increase?


.........

No, no... I think he's saying that California caused unemployment to go up EVERYWHERE!

[Nakotsu]

laugh. This is the saddest post of the day.
Thats not why unemployment went up.

[alexw]

- SNIP -

Oh Jesus..... you cannot correlate a tiny short term movement like that to a rise in the minimum wage. Any person trying to do so is selling propaganda nothing else and is not someone you should trust on anything. Moreover rising wages are not like any other rise in price since rising wages do not just reflect a rise in cost but also a rise in demand. So this person trying to compare rising wages with the rising price of say bread either hasn't the slightest clue or is lying to you. Either way if you have the slightest bit of intelligence yourself you'd not pay the slightest bit of attention to his laughable arguments.

[Crissi]

I'm going to go with the free market alternative: if a business cannot survive a wage increase, they don't deserve to be in business and will make way for businesses that can.

Protecting jobs at all costs isn't really economically beneficial imo

[GennGreymane]

At least you tried Tony

[I Push Buttons]

Minimum wage went up $1 this year!?!!?? My business is now totally not viable!?!?! The sky is falling I must lay off all my employeeeeeeees!?!?!?!??!??!

- Said no one in California this year.

[Kujako]

I'm going to go with the free market alternative: if a business cannot survive a wage increase, they don't deserve to be in business and will make way for businesses that can.

I thought the "free market" meant that businesses rely on the government to subsidize low wages?!

[The Stormbringer]

Minimum wage has been lagging behind inflation to a ridiculous extent. Maybe you don't agree with the fifteen dollars, but to keep up with inflation, that's what it should be. Hell, it's actually not even quite all the way there.

[Orange Joe]

No, no... I think he's saying that California caused unemployment to go up EVERYWHERE!

Honestly at this point I wouldn't put it past him.

[dacoolist]

If the minimum wage doubles - btw which I'm totally cool with - understand that everything will go up in price. People that have no idea what inflation is should stay the fuck out. If you make business's pay their workers more - they have to charge more for their products and sevices, hence causing inflation to rise, and saved money in banks to be worth less.. aka, everyone gets fucked by minimum wage increases.

Sure I make more than min wage.. so do all of you who supposedly make 100's of thousands according to that mmo poll awhile back, so why would you want your phd's to be worthless when inflation hits your 250,000$ in savings and makes it worth half?

[Theinquisition]

I'm going to go with the free market alternative: if a business cannot survive a wage increase, they don't deserve to be in business and will make way for businesses that can.

Protecting jobs at all costs isn't really economically beneficial imo

Well, that would mean that large swaths of small businesses don't deserve to be in business and only big businesses that can absorb the cost over the short term (like wal-mart) should be in business.

All goods and services, from utilities to rent to movie tickets, are subject to inflation. Inflation is more likely to affect the goods and services that poor people use the most. The prices on items like fast food hamburgers and inexpensive clothing from Wal-Mart would likely increase.

If you give a bunch of money to a bunch of people who earn minimum wage for doing jobs that are not that valuable, you have to take that money from somewhere. The attempt to shift money from people who make it in ways that help millions of Americans to people who help a few people by flipping hamburgers, it’s a detrimental effort.

All the products poor people can afford to buy are going to be impacted by inflation. The hamburger is precisely the product that’s going to increase. It’s low end products.

Even folks at the poverty line aren’t truly impoverished. The average person has a microwave, air conditioner, a car, a cell phone, and a television. That would be called middle class 50 years go. The push to hike minimum wage is coming from a place of legislating reality.


- - - Updated - - -

Honestly at this point I wouldn't put it past him.

Insult the person instead create a argument, sadly, I expected more out of you lil joe.

[TrumpIsPresident]

Politicians want companies to pay more.
Companies say they cant afford it and warn of layoffs/cutbacks.
Politicians ignore the realities of business, fan the class warfare flames, and raise the wage.
Businesses layoff workers or cut back their hours to stay in business.
...people say the two aren't connected.

That's an amazing level of self-inflicted denial and I think we need a christen a new meme.

#WageDeniers

[Orange Joe]

Insult the person instead create a argument, sadly, I expected more out of you lil joe.

What was the insult again? I don't remember using any derogatory words in my post. Please point them out to me.

[GennGreymane]

Well, that would mean that large swaths of small businesses don't deserve to be in business and only big businesses that can absorb the cost over the short term (like wal-mart) should be in business.

- - - Updated - - -



Insult the person instead create a argument, sadly, I expected more out of you lil joe.

A lot of small businesses by me cant even handle a much lower minimum wage. They couldnt even handle it when it was much lower. Small business suffers mostly because Wal-mart exists, and target, Khols, and other department stores. They just sell more stuff and its convenient, and you simply cant beat that.

[dacoolist]

Btw, I too want a 14 year old with his first job at mcdonalds to make 15$ an hour - I think that shit's commedy right there

Min wage isn't the issue, the jobs paying adults min wage is the issue. If you're an adult, pay them at least double min wage, if they are a kid (below 18) - pay them 8$/hr... imo unless they live in an expensive area, then maybe 11/hr for the kids at mcdonalds and 22/hr for adults?

Bringing the entire nation to 15$... you may as well throw half your savings in the trash because all goods and services will cost double.