Job Losses From Minimum-Wage-Hikes Are Being Underestimated

[Deletedaccount1]

http://www.zerohedge.com/news/2017-0...ated-heres-why
https://www.americanactionforum.org/...s-2017-beyond/

According to this post on Zero Hedge, policymakers are not accurately weighing the costs of minimum wage hikes on unemployment. I recommend reading the entire, short article.

They cite the American Action Forum:

In isolation, the minimum wage increases in 2017 will cost 383,000 jobs;
The entire minimum wage increases currently phasing-in will cost over 2.6 million jobs;
and
Each job lost only leads to an extra $6,900 in total wage earnings across all workers.

The Zero Hedge contributor says:

In reality, minimum wage hikes trigger pay increases across the pay scale, not just for the employees earning minimum wage, because most people make employment decisions based on relative wages and not absolute wages.

Consider, for example, the folks working at a California McDonalds where the minimum wage was $10 per hour in 2016 but is set to increase to $15 over the coming years. Lets also assume that most of the customer service staff earns the minimum pay rate while managers earn $15. Under the methodology above, the manager would never be counted as an 'at-risk' position because his job would never technically fall below the new minimum wage. But, in reality, there's no conceivable world where the manager will simply agree to keep his $15 per hour pay rate once all of his workers have received a 50% pay increase and now make the same as him...instead, he'll run some basic math and conclude he needs to be making $22.50 per hour to have the same 'relative' compensation he had before or he'll just go work as an order taker with less responsibility.

The contributor argues that while average Joes don't need to know complicated econometrics to understand this, policymakers seem to be clueless about theses repercussions on the labor market.

Thoughts?

[Kaleredar]

That seems to be saying people will quit their jobs, not lose their jobs, because they feel they're "worth more" as wages get raised up beneath them.


I thought the republicans raising a tizzy about this were all about telling people what they should be worth based on their job. If a managerial position is deemed to only be worth 15 dollars, shouldn't the managers be happy with that or just get another job?

Wasn't that what the republican's suggestion for people who didn't make enough with minimum wage previously? "Just go get another job?"

[Elegiac]

Thoughts?

BS, because decades upon decades of minimum wage data since the concept was introduced demonstrate no correlation between minimum wage hikes and appreciable gains in unemployment.

What this article is describing is the cascade effect whereby non minimum wage workers up to a certain point have greatly increased bargaining power for their wages relative to before, and push for increases.

[Orbitus]

http://www.zerohedge.com/news/2017-0...ated-heres-why
https://www.americanactionforum.org/...s-2017-beyond/

According to this post on Zero Hedge, policymakers are not accurately weighing the costs of minimum wage hikes on unemployment. I recommend reading the entire, short article.

They cite the American Action Forum:


The Zero Hedge contributor says:


The contributor argues that while average Joes don't need to know complicated econometrics to understand this, policymakers seem to be clueless about theses repercussions on the labor market.

Thoughts?

Haven't dumbasses like Zero Hedge always said that any minimum wage increase was going to cost jobs, but then when it is implemented, it had the opposite effect?

[Captain N]

So Zero Hedge and a website that very clearly in its About Us states it cherishes Center Right Values -- Well at least it comes right out and admits it's going to disregard decades of evidence about minimum wage and job losses being unrelated.

[PosPosPos]

Don't we already know that the far right movement can only draw conclusions which are directly contrary to the evidence they themselves present? They wouldn't be the far right if they couldn't something as simple as this.

[Glorious Leader]

Let me guess the answer is deflation and a "free market". 30 years of this crap and it never seems to die.

[Draco-Onis]

There are decades of hard data on this so it is laughable seeing right wing think tanks try to spin this.

[GennGreymane]

To be honest,

I have a bunch of friends who are in the culinary field. They try to get jobs, but a lot of small businesses don't pay well, roughly minimum, but with a quarter increase every few months. They never get to see the quarter increase because its standard for small restaurants to fire people before any raise can kick in. These places would still be falling apart if minimum wage was 4 bucks an hour.

[Elegiac]

To be honest,

I have a bunch of friends who are in the culinary field. They try to get jobs, but a lot of small businesses don't pay well, roughly minimum, but with a quarter increase every few months. They never get to see the quarter increase because its standard for small restaurants to fire people before any raise can kick in. These places would still be falling apart if minimum wage was 4 bucks an hour.

Burnout strategies are fairly common in a lot of businesses, but its easiest to see in the service sector.

[Wildtree]

Zerohedge? Really? What am I crosschecking that with? Breitbart and Infowars?

Conspiratorial click bait website.

[NED funded]

I'm not sure why people shat on the article.

1.Decades of economic rsearch are contradictory, people misread that graph. Most of the studies that say they are no significants effects on employment are focused on slight increases to minimum wages not to a double in the federal minimum wage. Enphasis to significant as in there are negative effects but not so much. The CBO has a nice paper in which they present the effects of certain minimum wage proposals. https://www.cbo.gov/publication/44995#section0

If you are that interested in the concensus see here. https://www.epionline.org/wp-content...ge_07-2007.pdf

2. The minimum wage will help poor people argument is kinda murky. Around 50% of minimum wage employees are under the age of 24 are mostly relatively well of. It does increase their income though.

3. Something I've never seen adressed is the fact that business are going to become more selective on who they hire. They will look for more skilled workers making it difficult for young people to acces entry level jobs.

[Orlong]

That seems to be saying people will quit their jobs, not lose their jobs, because they feel they're "worth more" as wages get raised up beneath them.


I thought the republicans raising a tizzy about this were all about telling people what they should be worth based on their job. If a managerial position is deemed to only be worth 15 dollars, shouldn't the managers be happy with that or just get another job?

Wasn't that what the republican's suggestion for people who didn't make enough with minimum wage previously? "Just go get another job?"

The problem is that the managerial position WAS worth $15 an hour when people working at a convenience store ringing up gas and cigarettes were making $8 an hour. Now those people are also making $15 an hour, who wants to be a manager for the same pay. Managers ARE worth more than a cashier, so why should they be paid the same. Businesses cant afford to pay $8 more per hour for all of the minimum wage people and then $8 more an hour for everyone else too so that pay is commensurate with value of the work being performed

- - - Updated - - -

BS, because decades upon decades of minimum wage data since the concept was introduced demonstrate no correlation between minimum wage hikes and appreciable gains in unemployment.

Thats been historically true, but historically minimum wage has always been increased by amounts less than a dollar at a time and usually 25 cents or less per hour each raise. They were never raised by almost 100%

[Spectral]

I generally don't think any model is all that strong when it comes to wages. The data is a mixed bag and pretty convoluted to interpret - quite often, wage laws are swamped in effect by local conditions to the point where econometrics isn't as useful as it would be in truly natural experiments. Even people that are honest and trying hard tend to see whatever they want in the data.

Economic theory on this becomes really important and reading the best writers on the topic is highly relevant. The problem is that when I say, "economic theory is important", people take that as an invitation to throw out their retarded, uninformed ideas and proclaim that it's as good as what actual economists think. The reality is that unless you've personally burned a lot of hours reading on the topic, you don't even know how little you actually know about the topic.

[melodramocracy]

The problem is that the managerial position WAS worth $15 an hour when people working at a convenience store ringing up gas and cigarettes were making $8 an hour. Now those people are also making $15 an hour, who wants to be a manager for the same pay. Managers ARE worth more than a cashier, so why should they be paid the same. Businesses cant afford to pay $8 more per hour for all of the minimum wage people and then $8 more an hour for everyone else too so that pay is commensurate with value of the work being performed

And workers can't afford to live in many areas with minimum wage as it is now.

[Allybeboba]

I'm not sure why people shat on the article.

1.Decades of economic rsearch are contradictory, people misread that graph. Most of the studies that say they are no significants effects on employment are focused on slight increases to minimum wages not to a double in the federal minimum wage. Enphasis to significant as in there are negative effects but not so much. The CBO has a nice paper in which they present the effects of certain minimum wage proposals. https://www.cbo.gov/publication/44995#section0

If you are that interested in the concensus see here. https://www.epionline.org/wp-content...ge_07-2007.pdf

2. The minimum wage will help poor people argument is kinda murky. Around 50% of minimum wage employees are under the age of 24 are mostly relatively well of. It does increase their income though.

3. Something I've never seen adressed is the fact that business are going to become more selective on who they hire. They will look for more skilled workers making it difficult for young people to acces entry level jobs.

They "shat" on it because it goes against their belief system.

[Draco-Onis]

They "shat" on it because it goes against their belief system.

Or because there are decades of hard data that prove them wrong.

[Allybeboba]

Or because there are decades of hard data that prove them wrong.

Or because people simply believe the site is a biased site. Which people are entitled to their opinions.

[Daelak]

They "shat" on it because it goes against their belief system.

You mean the verifiable fact that all wges are undervalued when tied to production since the 1970's?

[Draco-Onis]

Or because people simply believe the site is a biased site. Which people are entitled to their opinions.

When there is hard data and facts your opinion is as good as people who think the earth is flat.