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>In the 22 instances when the federal minimum wage went up, the change in total private employment after one year was positive 15 out of 22 times >What’s more,

>In the 22 instances when the federal minimum wage went up, the change in total private employment after one year was positive 15 out of 22 times >What’s more, looking more closely at the relative handful of instances in which employment decreased—whether total employment, or employment in our key indicator sectors—it is also clear that those declines were likely driven by factors other than the higher minimum wage. The factor they mention that drove those declines is recession. Good for them for looking at that, but it doesn't look like they checked the flip side of this: those increases in employment they're using as evidence were driven by factors OTHER than the increase of minimum wage. What was the economy growing at during those years where employment went up? If the falls accompany recession, maybe the increases coincide with crests in growth rates. Was employment starting off a low base? Was the growth rate high enough for employers to easily eat the cost increase? How much was the increase and what was the wage increased from? How does it compare to inflation in the area? >Significantly, the study finds that, unlike small wage increases, a $15 minimum wage generates billions in new consumer spending that offsets most of the higher costs to businesses. So they're admitting it doesn't offset all of the higher costs? Why would that then lead to increased employment? I understand that people making minimum wage find it almost impossible to save money, but this doesn't solve that problem. Even if you have more people making $15 an hour, businesses are offsetting that cost by raising prices. It seems like all you've done is create arbitrary inflation. So who's better off after the wage increase? Looks to me like the only winner is the government. They just sneakily mandated nominal tax increase. But even then that's just the short term.

matt4077 9y ago
The consequences are hard to predict because it involves multiple antagonistic feedback loops, and even whatever you define as "value" at the beginning might end up shifting over time. Here's one way of looking at it that I think cuts a bit through all that. It starts with the following assumption: - People earning minimum wage now, as well as people earning the higher minimum wage in the future spend a larger fraction of their income than average. I believe this is almost axiomatically true: Minimum-wage earners by definition have below average income, and the fraction of income that goes into savings and investments rises with income. Now answer the following less-obvious question: What (rough) % of jobs currently paying less than 15$ actually produce value exceeding those 15$? Example: someone at McDonalds get 7.25$/h. Their work serves 16 customers in that hour (in reality they may prepare the food for 30 customers, but split those with a cashier etc, but that doesn't matteR). That means each customer currently pays $7.25/15 = 50c for that labor. Raising the minimum wage would double those costs to $1. Let's say the meal comes out at $12.50 instead of $12. If people still feel they're getting more value out of that meal they will continue to buy. That will result in a net transfer of wealth to below-average earners, who are more likely to spend it, leading to the projected increase in employment. If people balk at the price and start cooking their own food, people working at McDonalds will lose their jobs. In reality it's almost certain to be a combination of both
- arkis22 9y ago
  A real net transfer of wealth only happens if their increase in wages outpaces the increase in costs that they pay because of everyone else's higher wages. Current costs (at least part of them) are a reflection of the cost of unskilled labor. What impact does increasing the nominal cost of unskilled labor have? The relationship between costs and labor haven't changed. I don't think it's logical to think that without changing that relationship you've somehow managed to make them wealthier.
jrs95 9y ago
People already making about what the new minimum wage is will probably be hurt the most by the price increases. Most everyone below it should still benefit even with the price increases. In that sense, minimum wage hikes are sort of a regressive solution to the problem, in terms of where the most harm falls.
- dragonwriter 9y ago
  > People already making about what the new minimum wage is will probably be hurt the most by the price increases. No, because they'll see the next highest (after those currently below the minimum) degree of upward pressure on their wages.
  - jrs95 9y ago
    But how long will that take relative to price increases?
    - dragonwriter 9y ago
      Essentially no time at all. May even be quicker than price level increases, since the upward wage pressure may be felt once the minimum wage increase is set and publicly known, and before it goes into effect, and that leading upward wage pressure may be the first driver of price increases.

matt4077 9y ago

The consequences are hard to predict because it involves multiple antagonistic feedback loops, and even whatever you define as "value" at the beginning might end up shifting over time. Here's one way of looking at it that I think cuts a bit through all that. It starts with the following assumption: - People earning minimum wage now, as well as people earning the higher minimum wage in the future spend a larger fraction of their income than average. I believe this is almost axiomatically true: Minimum-wage earners by definition have below average income, and the fraction of income that goes into savings and investments rises with income. Now answer the following less-obvious question: What (rough) % of jobs currently paying less than 15$ actually produce value exceeding those 15$? Example: someone at McDonalds get 7.25$/h. Their work serves 16 customers in that hour (in reality they may prepare the food for 30 customers, but split those with a cashier etc, but that doesn't matteR). That means each customer currently pays $7.25/15 = 50c for that labor. Raising the minimum wage would double those costs to $1. Let's say the meal comes out at $12.50 instead of $12. If people still feel they're getting more value out of that meal they will continue to buy. That will result in a net transfer of wealth to below-average earners, who are more likely to spend it, leading to the projected increase in employment. If people balk at the price and start cooking their own food, people working at McDonalds will lose their jobs. In reality it's almost certain to be a combination of both

arkis22 9y ago
A real net transfer of wealth only happens if their increase in wages outpaces the increase in costs that they pay because of everyone else's higher wages. Current costs (at least part of them) are a reflection of the cost of unskilled labor. What impact does increasing the nominal cost of unskilled labor have? The relationship between costs and labor haven't changed. I don't think it's logical to think that without changing that relationship you've somehow managed to make them wealthier.

jrs95 9y ago

People already making about what the new minimum wage is will probably be hurt the most by the price increases. Most everyone below it should still benefit even with the price increases. In that sense, minimum wage hikes are sort of a regressive solution to the problem, in terms of where the most harm falls.

dragonwriter 9y ago
> People already making about what the new minimum wage is will probably be hurt the most by the price increases. No, because they'll see the next highest (after those currently below the minimum) degree of upward pressure on their wages.
- jrs95 9y ago
  But how long will that take relative to price increases?
  - dragonwriter 9y ago
    Essentially no time at all. May even be quicker than price level increases, since the upward wage pressure may be felt once the minimum wage increase is set and publicly known, and before it goes into effect, and that leading upward wage pressure may be the first driver of price increases.