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The article is a bit misleading. The minimum wage is $11/hr. in Seattle and will reach $15 for large businesses by next year, and by 2021 for small businesses.

The article is a bit misleading. The minimum wage is $11/hr. in Seattle and will reach $15 for large businesses by next year, and by 2021 for small businesses. Amazon by itself is bringing in thousands of people per year, none at the minimum wage. To attribute a good economy in Seattle to a minimum wage is a non-sequitur. I find it curious though how some can think raising pay by fiat will help the poor. If this were really so why would there be a schedule to phase it in slowly over 7 instead of immediately? I think part of the reason is that it is expected for natural monetary inflation to cancel out the effect of the min wage increase. If we assume 2% target inflation from the FED then that would be a 15% reduction in buying power of the dollar, reducing the burden on businesses for the increase in wage price. With phased-in increases we tend to see effects that are within the error of margin. Naturally if there was an overnight price increase on anything there would be immediate measurable ramifications, which is probably why the phase-ins are always slow. If people truly thought the effects were positive then they would push for the changes to be as immediate as possible to leave no room for doubt about the effect of the policy. Meanwhile the homeless situation in Seattle is getting progressively worse. With the increase in minimum wage, some people are paid more, but at the expense of some poor people not being able to acquire a job at all. Certainly we could find a better way of handling things.

firethief 10y ago
> If this were really so why would there be a schedule to phase it in slowly over 7 years until full implementation instead of immediately? The article's premise is that the benefit to the economy from increasing the income of the lowest-earners outweighs the higher costs to businesses. If this is the case, raising the wages overnight would be disastrous, because businesses would have to pay the surprise higher costs before the economy had a chance to strengthen as a result of the greater spending. Implementing the policy faster doesn't just get the same results faster, it gets different results.
- bko 10y ago
  I was shocked to learn that there are more people that earn below minimum wage than there are that earn minimum wage [0]. I don't know if these people are exempt from minimum wage (report doesn't say) or are just being paid under the table. Either way, I fear that these employees may lack legitimacy and legal right afforded to other employees. A higher minimum wage, especially significantly higher, will increase the number of these shadow employees. [0] http://www.bls.gov/opub/reports/minimum-wage/archive/characteristics-of-minimum-wage-workers-2014.pdf http://www.bls.gov/opub/reports/minimum-wage/archive/charact...
gotthemwmds 10y ago
> I find it curious though how some can think raising pay by fiat will help the poor. Er, I don't know how much time you spend around "the poor", but I can guarantee giving them piles of cash money will help, regardless of how much ivory tower logic the average HN reader can spin on it from their $3000/month condo with a Tesla in the garage. I will admit I stopped reading your comment after that sentence.
- godd2 10y ago
  There are people whose labor is worth $8/hr but not $11/hr. Raising the minimum wage will not result in "giving them a pile of cash", it will result in them no longer having a job.
  - calibraxis 10y ago
    It will stimulate the economy to promote more jobs. "There are people whose labor is worth $8/hr but not $11/hr" is a non-sequitur because this fuzzy concept of "worth" varies in time & space. (For example, demand-push inflation will change the numbers.)
    - godd2 10y ago
      > It will stimulate the economy to promote more jobs. It will increase the cost of labor, and result in fewer, more expensive goods and services. We can both claim things all day.
      - lukeschlather 10y ago
        The money doesn't just vanish when you raise the minimum wage. People who make less than about $20/hour are going to be spending pretty close to 100% of any additional income they get. It's fair to suggest it might raise the price of goods and services. All real-world examples of minimum wage hikes I've seen show real wages going up even though inflation does eat some of the gain. But as far as reducing the amount of goods and services available, that isn't really backed up by anything. It's crazy that we're still relearning the lesson that we learned in the first half of the twentieth century, which is that when you raise the wage floor, consumer spending rises, which drives economic growth.
xt00 10y ago
Yea these articles with zero evidence are basically pointless. The unemployment rate being low in most places that are desirable to live such as Seattle generally are short term problems. So give it a couple of years and there will be enough workers. Many people are moving to Seattle now from many other places. The high minimum wage generally won't end up being a huge deal except it just becomes a higher tax on everybody. Basically $7 sandwiches become $8 sandwiches and so on. Also most places that have 2 workers like an espresso stand the manager will see if he can get away with only 1 worker. So you waste more time buying a latte. So the more useful article would be something like, "restaurant owner sees 10% business increase and after surveying his customers finds that nearly all of the new people at the restaurant make minimum wage of $15, also his costs are now higher so his net result in profits is about 5% improvement year over year.. This situation has been anecdotally confirmed by about 15 other restaurants in the area.. All the while the population in that particular area only increased by 2%." I guess journalists are not economists or engineers.. :-/
- RangerScience 10y ago
  > Yea these articles with zero evidence are basically pointless. > Basically $7 sandwiches become $8 sandwiches and so on Do you have non-zero evidence for this prediction? > This situation has been anecdotally confirmed by about 15 other restaurants in the area I guess you have anecdotal evidence for this situation. Is it somewhere we can access it?
  - xt00 10y ago
    Actually maybe it didn't come across clearly, but I was saying it would be ideal if the article actually gave some kind of useful information such as the fake example that I provided. You are actually asking me the exact question I wish to ask of the person who wrote the original article.. basically can they please provide a real example versus the whole "the unemployment rate is low and the minimum wage is high!" and no mention of the obvious correlation vs. causation argument.
  - jayjay71 10y ago
    There's actually a great way to track that - look at the cost of a Chipotle burrito in different cities. The price for a burrito in San Francisco went up with perfect correlation when the wage increased in San Francisco. The reason it's particularly useful for Chipotle is because they are entirely corporate owned, which means there are no franchise owners distorting the data (or rather, franchises are independently owned and many are not well run, and restaurants with lower prices would be used as data points to justify the wage increase when that restaurant may in fact be failing). Not too long ago it was part of my job to analyze the minimum wage hike and how it will effect fast food restaurants. Like most things in the real world, the nitty gritty details are complicated. The gist of it is that fast food restaurants in the United States are going to become even less profitable as the minimum wage increases. And in an industry where it's considered great if your margins are 5%, that can be pretty bad.
hacknat 10y ago
> If this were really so why would there be a schedule to phase it in slowly over 7 instead of immediately? I think part of the reason is that it is expected for natural monetary inflation to cancel out the effect of the min wage increase. If we assume 2% target inflation from the FED then that would be a 15% reduction in buying power of the dollar, reducing the burden on businesses for the increase in wage price. All things being equal? Come on...I doubt it. The inflation will certainly be a bit of help to the businesses, but don't forget that the status quo has been raising the minimum wage piecemeal, and the Washington minimum wage is at quite a differential from Seattle. Also, don't forget that once Seattle's minimum wage is in full effect it's chained to the CPI, so it's not just a raise on the minimum wage it's a permanent minimum wage.
enraged_camel 10y ago
Seattle's minimum wage, once fully rolled out, will be tied to inflation.
lukeschlather 10y ago
Seattle doesn't have a job shortage, Seattle has a housing shortage. Not to say it's easy for poor people to acquire a job, but it's a lot easier to find a job in Seattle than it is to find a place to live.
pessimizer 10y ago
> Meanwhile the homeless situation in Seattle is getting progressively worse. With the increase in minimum wage, some people are paid more, but at the expense of some poor people not being able to acquire a job at all. Without an increase in minimum wage, people with a minimum wage job will still be homeless.
- user5994461 10y ago
  With an increase to minimum wages, the housing price will increase and they'll still be homeless. We could argue that the increase may also impact people who earned more, the one at the limit won't be able to afford their places anymore and will become homeless.
WalterBright 10y ago
Amazon has an estimated 25,000 employees in Seattle, http://www.seattletimes.com/business/amazon/amazon-sales-rise-30-percent-in-3q-but-profit-is-lower-than-expected/ http://www.seattletimes.com/business/amazon/amazon-sales-ris... and has been on a hiring binge lately. Seattle's population is 652,000. Amazon clearly has quite an outsize influence on the city's employment makeup. (Microsoft's campus is in neighboring Redmond, not Seattle. Some years back I read an article claiming that Microsoft had generated some 10,000 millionaires in the Seattle area.)
crdoconnor 10y ago
>With the increase in minimum wage, some people are paid more, but at the expense of some poor people No, at the expense of profit margins. >Certainly we could find a better way of handling things. The only other more direct way to move money from profit margins to the minimum waged would be to raise taxes on profits and effect a direct money transfer. Something tells me that you're not a fan of that either.

firethief 10y ago

> If this were really so why would there be a schedule to phase it in slowly over 7 years until full implementation instead of immediately? The article's premise is that the benefit to the economy from increasing the income of the lowest-earners outweighs the higher costs to businesses. If this is the case, raising the wages overnight would be disastrous, because businesses would have to pay the surprise higher costs before the economy had a chance to strengthen as a result of the greater spending. Implementing the policy faster doesn't just get the same results faster, it gets different results.

bko 10y ago
I was shocked to learn that there are more people that earn below minimum wage than there are that earn minimum wage [0]. I don't know if these people are exempt from minimum wage (report doesn't say) or are just being paid under the table. Either way, I fear that these employees may lack legitimacy and legal right afforded to other employees. A higher minimum wage, especially significantly higher, will increase the number of these shadow employees. [0] http://www.bls.gov/opub/reports/minimum-wage/archive/characteristics-of-minimum-wage-workers-2014.pdf http://www.bls.gov/opub/reports/minimum-wage/archive/charact...

gotthemwmds 10y ago

> I find it curious though how some can think raising pay by fiat will help the poor. Er, I don't know how much time you spend around "the poor", but I can guarantee giving them piles of cash money will help, regardless of how much ivory tower logic the average HN reader can spin on it from their $3000/month condo with a Tesla in the garage. I will admit I stopped reading your comment after that sentence.

godd2 10y ago
There are people whose labor is worth $8/hr but not $11/hr. Raising the minimum wage will not result in "giving them a pile of cash", it will result in them no longer having a job.
- calibraxis 10y ago
  It will stimulate the economy to promote more jobs. "There are people whose labor is worth $8/hr but not $11/hr" is a non-sequitur because this fuzzy concept of "worth" varies in time & space. (For example, demand-push inflation will change the numbers.)
  - godd2 10y ago
    > It will stimulate the economy to promote more jobs. It will increase the cost of labor, and result in fewer, more expensive goods and services. We can both claim things all day.
    - lukeschlather 10y ago
      The money doesn't just vanish when you raise the minimum wage. People who make less than about $20/hour are going to be spending pretty close to 100% of any additional income they get. It's fair to suggest it might raise the price of goods and services. All real-world examples of minimum wage hikes I've seen show real wages going up even though inflation does eat some of the gain. But as far as reducing the amount of goods and services available, that isn't really backed up by anything. It's crazy that we're still relearning the lesson that we learned in the first half of the twentieth century, which is that when you raise the wage floor, consumer spending rises, which drives economic growth.

xt00 10y ago

Yea these articles with zero evidence are basically pointless. The unemployment rate being low in most places that are desirable to live such as Seattle generally are short term problems. So give it a couple of years and there will be enough workers. Many people are moving to Seattle now from many other places. The high minimum wage generally won't end up being a huge deal except it just becomes a higher tax on everybody. Basically $7 sandwiches become $8 sandwiches and so on. Also most places that have 2 workers like an espresso stand the manager will see if he can get away with only 1 worker. So you waste more time buying a latte. So the more useful article would be something like, "restaurant owner sees 10% business increase and after surveying his customers finds that nearly all of the new people at the restaurant make minimum wage of $15, also his costs are now higher so his net result in profits is about 5% improvement year over year.. This situation has been anecdotally confirmed by about 15 other restaurants in the area.. All the while the population in that particular area only increased by 2%." I guess journalists are not economists or engineers.. :-/

RangerScience 10y ago
> Yea these articles with zero evidence are basically pointless. > Basically $7 sandwiches become $8 sandwiches and so on Do you have non-zero evidence for this prediction? > This situation has been anecdotally confirmed by about 15 other restaurants in the area I guess you have anecdotal evidence for this situation. Is it somewhere we can access it?
- xt00 10y ago
  Actually maybe it didn't come across clearly, but I was saying it would be ideal if the article actually gave some kind of useful information such as the fake example that I provided. You are actually asking me the exact question I wish to ask of the person who wrote the original article.. basically can they please provide a real example versus the whole "the unemployment rate is low and the minimum wage is high!" and no mention of the obvious correlation vs. causation argument.
- jayjay71 10y ago
  There's actually a great way to track that - look at the cost of a Chipotle burrito in different cities. The price for a burrito in San Francisco went up with perfect correlation when the wage increased in San Francisco. The reason it's particularly useful for Chipotle is because they are entirely corporate owned, which means there are no franchise owners distorting the data (or rather, franchises are independently owned and many are not well run, and restaurants with lower prices would be used as data points to justify the wage increase when that restaurant may in fact be failing). Not too long ago it was part of my job to analyze the minimum wage hike and how it will effect fast food restaurants. Like most things in the real world, the nitty gritty details are complicated. The gist of it is that fast food restaurants in the United States are going to become even less profitable as the minimum wage increases. And in an industry where it's considered great if your margins are 5%, that can be pretty bad.

hacknat 10y ago

> If this were really so why would there be a schedule to phase it in slowly over 7 instead of immediately? I think part of the reason is that it is expected for natural monetary inflation to cancel out the effect of the min wage increase. If we assume 2% target inflation from the FED then that would be a 15% reduction in buying power of the dollar, reducing the burden on businesses for the increase in wage price. All things being equal? Come on...I doubt it. The inflation will certainly be a bit of help to the businesses, but don't forget that the status quo has been raising the minimum wage piecemeal, and the Washington minimum wage is at quite a differential from Seattle. Also, don't forget that once Seattle's minimum wage is in full effect it's chained to the CPI, so it's not just a raise on the minimum wage it's a permanent minimum wage.

enraged_camel 10y ago

Seattle's minimum wage, once fully rolled out, will be tied to inflation.

lukeschlather 10y ago

Seattle doesn't have a job shortage, Seattle has a housing shortage. Not to say it's easy for poor people to acquire a job, but it's a lot easier to find a job in Seattle than it is to find a place to live.

pessimizer 10y ago

> Meanwhile the homeless situation in Seattle is getting progressively worse. With the increase in minimum wage, some people are paid more, but at the expense of some poor people not being able to acquire a job at all. Without an increase in minimum wage, people with a minimum wage job will still be homeless.

user5994461 10y ago
With an increase to minimum wages, the housing price will increase and they'll still be homeless. We could argue that the increase may also impact people who earned more, the one at the limit won't be able to afford their places anymore and will become homeless.

WalterBright 10y ago

Amazon has an estimated 25,000 employees in Seattle, http://www.seattletimes.com/business/amazon/amazon-sales-rise-30-percent-in-3q-but-profit-is-lower-than-expected/ http://www.seattletimes.com/business/amazon/amazon-sales-ris... and has been on a hiring binge lately. Seattle's population is 652,000. Amazon clearly has quite an outsize influence on the city's employment makeup. (Microsoft's campus is in neighboring Redmond, not Seattle. Some years back I read an article claiming that Microsoft had generated some 10,000 millionaires in the Seattle area.)

crdoconnor 10y ago

>With the increase in minimum wage, some people are paid more, but at the expense of some poor people No, at the expense of profit margins. >Certainly we could find a better way of handling things. The only other more direct way to move money from profit margins to the minimum waged would be to raise taxes on profits and effect a direct money transfer. Something tells me that you're not a fan of that either.