7 ms·

Seattle's minimum wage may actually cost restaurant workers

33 points by Godel_unicode 9y ago

x0137294744532 9y ago
If one can not afford to pay a living wage for these jobs, then these jobs should not have existed in the first place.
- taway_1212 9y ago
  Not everyone is expecting a living wage though. Case in point - I have a family member who's making less than minimum wage (which alone would be barely sufficient to survive), but when she combines this with her husband's income, she's not living terribly bad. If her boss was forced to pay minimum wage and adhere to all other laws, he'd likely close the business and she (my family member) would end up being worse off. The reason why he'd close the business is that it's a shitty clothes shop where the increases employee costs would eat a lot of his (meager) profits.
  - thanksgiving 9y ago
    Why would we be worse off if the shop closed? I can imagine gutting minimum wage in a basic income works but even then I think we'd need workplace safety regulations and so on.
  - alkonaut 9y ago
    > he'd likely close the business and she (my family member) would end up being worse off. This is exactly the train of thought I think is incorrect: Businesses that can't pay workers a living wage should have to shut down. Workers (as a collective, and in the long run - not individuals in the short term obviously) are better off. The idea is that businesses should compete on efficiency, not lower wages. When a business that can't pay a living wage closes, another can take its place that hopefully can. > she combines this with her husband's income This is another reason for having living wages: this persons low wage makes her economically dependent on another person. This might be a happy marriage but what about all marriages that aren't? Living wages means people can leave destructive and abusive relationships too.
    - grondilu 9y ago
      > Businesses that can't pay workers a living wage should have to shut down. This should emerge as a natural consequence of economic reality. If workers can't earn a living from a business, they are supposed to either resign or die (per definition). And the business would have to either increase its wages or shut down. There should be no need to regulate that with laws.
      - alkonaut 9y ago
        There is no need to regulate this with laws if the parties of the labor market are of comparable strength (which is the definition of a functioning market - that the parties involved have some kind of parity). In most parts of the US labor market there is no such power parity between employees and employers - and minimum wage laws are just trying to band aid the problem instead of addressing the root cause. I doubt the US will see scandinavian levels of worker organization any time soon, but a reasonable fix would be to have a social safety network that is so strong that it competes with employment. A non time-limited unemployment insurance that paid a reasonable fraction of the minimum wage (e.g. 50-75%) would likely have a significant effect on the bargaining position of workers.
      - tarboreus 9y ago
        Are there no prisons? Are there no workhouses?
    - taway_1212 9y ago
      > The idea is that businesses should compete on efficiency, not lower wages. When a business that can't pay a living wage closes, another can take its place that hopefully can. In this case, these shops are located in a sort-of marketplace, where there are dozens of shops selling very similar goods. They all effectively share the same customer base and they are all barely functioning, and are only doing that thanks to avoiding all sorts of laws. If they started paying minimum wage, some of them would close, which would increase profits for the rest, allowing them to stay in business. From the workers' perspective though, it would create a bimodal distribution where employees of surviving shops are better off, while the rest is fired. I'm not sure if that's a positive outcome.
- grondilu 9y ago
  Minimal wage is nothing but an instance of price control[1] and "Although price controls are sometimes used by governments, economists usually agree that price controls don't accomplish what they are intended to do and are generally to be avoided." 1. https://en.wikipedia.org/wiki/Price_controls https://en.wikipedia.org/wiki/Price_controls
  - alkonaut 9y ago
    Yup. So having minimum wages to ensure people can make a living wage is exactly the same as having to have price fixing for food to ensure people can eat. It's a knee jerk response to a fundamental problem (that workers make too little in relation to price levels). The problem with the US discourse on the subject is that it's a debate for/against higher minimum wages rather than a debate of "what regulations need to change so that the minimum wage without regulation is a livable wage".
  - DarkKomunalec 9y ago
    You can just as well look at it as an instance of collective bargaining, where workers collectively set the minimum wage they're willing to accept.
  - bryanlarsen 9y ago
    Would you rather have price controls or a subsidy? People that support themselves on jobs that pay less than minimum wage generally need support from the state to live. So a minimum wage is basically a refusal by the state to subsidize business.
    - deleted 9y ago
      [deleted]
    - grondilu 9y ago
      > People that support themselves on jobs that pay less than minimum wage generally need support from the state to live. Unemployment does exist and it is not lethal.
- masterleep 9y ago
  That is like saying, "If a food is not perfectly nutritious according to my pet theory, it should be banned."
  - deleted 9y ago
    [deleted]
alkonaut 9y ago
First - If workers hours can be cut arbitrarily by employers in a response to an increased minimum wage, then FIX that. Even peoplel paid by the hour obviously need contracts that ensure them an amount of work - ideally a guaranteed full time (40/h week) and any less than that should be the choice of the employee. I think increased minimum wages are a good thing but it seems like an attempt to cure the symptoms rather than the cause.
- ubernostrum 9y ago
  Last election, Santa Clara (county, IIRC) had a ballot proposition up to change their labor law so that a business which needed additional hours worked would be required to offer them first to existing employees (potentially putting them over thresholds for things like full-time employment status) before they could hire any additional employees to work those hours. It's a game of whack-a-mole, but if you want to get to living wage + benefits for everyone, that's kind of how you have to go about it, since businesses will always hunt for loopholes.
  - alkonaut 9y ago
    It's also a race to the bottom if you allow counties or even states to have local more "business friendly" employment laws. If every employer in the country was required to offer full time and 20 days paid vacation, then it wouldn't be a competitive disadvantage to do so.
    - randyrand 9y ago
      except for global markets...
- nkristoffersen 9y ago
  Not a very viable solution: but you can apply for unemployment for those missing hours.
- qeternity 9y ago
  Then employers will simply wholesale fire other employees. The point is that when costs go up, the demand curve shifts. Forcing businesses to do otherwise would wreak havoc.
tasuki 9y ago
Working 9.4% less time for 6.6% less income seems like a good trade. Consuming less is the way to sustainability. Consuming less can be aided by earning less.
- pindab0ter 9y ago
  Consuming smarter can also go a long way, but that often requires earning more and is the route most people would like to take. I'd rather have an organic steak than no steak.
masterleep 9y ago
Since basic economic theory predicts the result, the "actually" in the title is unnecessary and shows the bias of the headline author.
- cjg 9y ago
  Economic theory predicts that demand for those employees will fall and that businesses will reduce their hours, but doesn't necessarily predict that each employee will end up with less money overall.
Aron 9y ago
Restaurant workers did fine (under both this NBER study and a prior Berkley one). It was a superset of low-wage employees including those restaurant workers that did poorly overall. This is one of the more interesting results since minimum wage studies in the past have favored studying restaurant workers (for reasons I don't know).
Avshalom 9y ago
>>The report “is problematic” and its conclusions “unwarranted,” he said. Reich co-authored a recent study that argued Seattle’s higher minimum wage did not hurt employment. so of course it may actually not have.
Steko 9y ago
Buried lead: study is hugely problematic. http://irle.berkeley.edu/files/2017/Reich-letter-to-Robert-Feldstein.pdf http://irle.berkeley.edu/files/2017/Reich-letter-to-Robert-F...
ubernostrum 9y ago
Genuinely curious: if employers are simply cutting back hours to save paying the extra wages, what's happening with those hours that aren't staffed anymore? One possibility is that the businesses were already overpaying for labor by staffing more employees for more hours than were needed. But that just turns a minimum-wage hike into a convenient excuse to roll back hours/staff (much as economic downturns tend to be used as a cover for companies to lay off people they no longer needed anyway). Another possibility is that more hours are being assigned to salaried employees since it doesn't cost extra to have them work more. But that would actually be a good thing -- it would increase the demand for salaried full-time employees, and being a salaried full-time employee is much better than being a minimum-wage hourly employee. Another possibility is that businesses are just closing down more often rather than pay people to keep things operating. But that seems unlikely. So what's actually happening?
IcePenguino 9y ago
From what I heard, this report only focuses on stores with a single location - so chains are not represented. http://www.wbur.org/hereandnow/2017/06/26/seattle-minimum-wage-earnings http://www.wbur.org/hereandnow/2017/06/26/seattle-minimum-wa...
kristopolous 9y ago
Increasing your wages decreases your wages! I think this propaganda can be found on cuneiform tablets. What an old old, completely bogus argument. These hypothesis always get flipped when talking about the rich. For them, more money creates an incentive for them to work more! Yes it makes the poor lazy and the rich hard working...right.

33 points by Godel_unicode 9y ago

x0137294744532 9y ago

If one can not afford to pay a living wage for these jobs, then these jobs should not have existed in the first place.

taway_1212 9y ago
Not everyone is expecting a living wage though. Case in point - I have a family member who's making less than minimum wage (which alone would be barely sufficient to survive), but when she combines this with her husband's income, she's not living terribly bad. If her boss was forced to pay minimum wage and adhere to all other laws, he'd likely close the business and she (my family member) would end up being worse off. The reason why he'd close the business is that it's a shitty clothes shop where the increases employee costs would eat a lot of his (meager) profits.
- thanksgiving 9y ago
  Why would we be worse off if the shop closed? I can imagine gutting minimum wage in a basic income works but even then I think we'd need workplace safety regulations and so on.
- alkonaut 9y ago
  > he'd likely close the business and she (my family member) would end up being worse off. This is exactly the train of thought I think is incorrect: Businesses that can't pay workers a living wage should have to shut down. Workers (as a collective, and in the long run - not individuals in the short term obviously) are better off. The idea is that businesses should compete on efficiency, not lower wages. When a business that can't pay a living wage closes, another can take its place that hopefully can. > she combines this with her husband's income This is another reason for having living wages: this persons low wage makes her economically dependent on another person. This might be a happy marriage but what about all marriages that aren't? Living wages means people can leave destructive and abusive relationships too.
  - grondilu 9y ago
    > Businesses that can't pay workers a living wage should have to shut down. This should emerge as a natural consequence of economic reality. If workers can't earn a living from a business, they are supposed to either resign or die (per definition). And the business would have to either increase its wages or shut down. There should be no need to regulate that with laws.
    - alkonaut 9y ago
      There is no need to regulate this with laws if the parties of the labor market are of comparable strength (which is the definition of a functioning market - that the parties involved have some kind of parity). In most parts of the US labor market there is no such power parity between employees and employers - and minimum wage laws are just trying to band aid the problem instead of addressing the root cause. I doubt the US will see scandinavian levels of worker organization any time soon, but a reasonable fix would be to have a social safety network that is so strong that it competes with employment. A non time-limited unemployment insurance that paid a reasonable fraction of the minimum wage (e.g. 50-75%) would likely have a significant effect on the bargaining position of workers.
    - tarboreus 9y ago
      Are there no prisons? Are there no workhouses?
  - taway_1212 9y ago
    > The idea is that businesses should compete on efficiency, not lower wages. When a business that can't pay a living wage closes, another can take its place that hopefully can. In this case, these shops are located in a sort-of marketplace, where there are dozens of shops selling very similar goods. They all effectively share the same customer base and they are all barely functioning, and are only doing that thanks to avoiding all sorts of laws. If they started paying minimum wage, some of them would close, which would increase profits for the rest, allowing them to stay in business. From the workers' perspective though, it would create a bimodal distribution where employees of surviving shops are better off, while the rest is fired. I'm not sure if that's a positive outcome.
grondilu 9y ago
Minimal wage is nothing but an instance of price control[1] and "Although price controls are sometimes used by governments, economists usually agree that price controls don't accomplish what they are intended to do and are generally to be avoided." 1. https://en.wikipedia.org/wiki/Price_controls https://en.wikipedia.org/wiki/Price_controls
- alkonaut 9y ago
  Yup. So having minimum wages to ensure people can make a living wage is exactly the same as having to have price fixing for food to ensure people can eat. It's a knee jerk response to a fundamental problem (that workers make too little in relation to price levels). The problem with the US discourse on the subject is that it's a debate for/against higher minimum wages rather than a debate of "what regulations need to change so that the minimum wage without regulation is a livable wage".
- DarkKomunalec 9y ago
  You can just as well look at it as an instance of collective bargaining, where workers collectively set the minimum wage they're willing to accept.
- bryanlarsen 9y ago
  Would you rather have price controls or a subsidy? People that support themselves on jobs that pay less than minimum wage generally need support from the state to live. So a minimum wage is basically a refusal by the state to subsidize business.
  - deleted 9y ago
    [deleted]
  - grondilu 9y ago
    > People that support themselves on jobs that pay less than minimum wage generally need support from the state to live. Unemployment does exist and it is not lethal.
masterleep 9y ago
That is like saying, "If a food is not perfectly nutritious according to my pet theory, it should be banned."
- deleted 9y ago
  [deleted]

alkonaut 9y ago

First - If workers hours can be cut arbitrarily by employers in a response to an increased minimum wage, then FIX that. Even peoplel paid by the hour obviously need contracts that ensure them an amount of work - ideally a guaranteed full time (40/h week) and any less than that should be the choice of the employee. I think increased minimum wages are a good thing but it seems like an attempt to cure the symptoms rather than the cause.

ubernostrum 9y ago
Last election, Santa Clara (county, IIRC) had a ballot proposition up to change their labor law so that a business which needed additional hours worked would be required to offer them first to existing employees (potentially putting them over thresholds for things like full-time employment status) before they could hire any additional employees to work those hours. It's a game of whack-a-mole, but if you want to get to living wage + benefits for everyone, that's kind of how you have to go about it, since businesses will always hunt for loopholes.
- alkonaut 9y ago
  It's also a race to the bottom if you allow counties or even states to have local more "business friendly" employment laws. If every employer in the country was required to offer full time and 20 days paid vacation, then it wouldn't be a competitive disadvantage to do so.
  - randyrand 9y ago
    except for global markets...
nkristoffersen 9y ago
Not a very viable solution: but you can apply for unemployment for those missing hours.
qeternity 9y ago
Then employers will simply wholesale fire other employees. The point is that when costs go up, the demand curve shifts. Forcing businesses to do otherwise would wreak havoc.

tasuki 9y ago

Working 9.4% less time for 6.6% less income seems like a good trade. Consuming less is the way to sustainability. Consuming less can be aided by earning less.

pindab0ter 9y ago
Consuming smarter can also go a long way, but that often requires earning more and is the route most people would like to take. I'd rather have an organic steak than no steak.

masterleep 9y ago

Since basic economic theory predicts the result, the "actually" in the title is unnecessary and shows the bias of the headline author.

cjg 9y ago
Economic theory predicts that demand for those employees will fall and that businesses will reduce their hours, but doesn't necessarily predict that each employee will end up with less money overall.

Aron 9y ago

Restaurant workers did fine (under both this NBER study and a prior Berkley one). It was a superset of low-wage employees including those restaurant workers that did poorly overall. This is one of the more interesting results since minimum wage studies in the past have favored studying restaurant workers (for reasons I don't know).

Avshalom 9y ago

>>The report “is problematic” and its conclusions “unwarranted,” he said. Reich co-authored a recent study that argued Seattle’s higher minimum wage did not hurt employment. so of course it may actually not have.

Steko 9y ago

Buried lead: study is hugely problematic. http://irle.berkeley.edu/files/2017/Reich-letter-to-Robert-Feldstein.pdf http://irle.berkeley.edu/files/2017/Reich-letter-to-Robert-F...

ubernostrum 9y ago

Genuinely curious: if employers are simply cutting back hours to save paying the extra wages, what's happening with those hours that aren't staffed anymore? One possibility is that the businesses were already overpaying for labor by staffing more employees for more hours than were needed. But that just turns a minimum-wage hike into a convenient excuse to roll back hours/staff (much as economic downturns tend to be used as a cover for companies to lay off people they no longer needed anyway). Another possibility is that more hours are being assigned to salaried employees since it doesn't cost extra to have them work more. But that would actually be a good thing -- it would increase the demand for salaried full-time employees, and being a salaried full-time employee is much better than being a minimum-wage hourly employee. Another possibility is that businesses are just closing down more often rather than pay people to keep things operating. But that seems unlikely. So what's actually happening?

IcePenguino 9y ago

From what I heard, this report only focuses on stores with a single location - so chains are not represented. http://www.wbur.org/hereandnow/2017/06/26/seattle-minimum-wage-earnings http://www.wbur.org/hereandnow/2017/06/26/seattle-minimum-wa...

kristopolous 9y ago

Increasing your wages decreases your wages! I think this propaganda can be found on cuneiform tablets. What an old old, completely bogus argument. These hypothesis always get flipped when talking about the rich. For them, more money creates an incentive for them to work more! Yes it makes the poor lazy and the rich hard working...right.