9 ms·

Minimum Wage and Job Loss: One Alarming Seattle Study Is Not the Last Word

moritzplassnig 9y ago
You can find the original study (from the University of Washington) here: http://www.nber.org/papers/w23532 http://www.nber.org/papers/w23532 And the UC Berkeley study here: http://irle.berkeley.edu/files/2017/Seattles-Minimum-Wage-Experiences-2015-16.pdf http://irle.berkeley.edu/files/2017/Seattles-Minimum-Wage-Ex...
jessaustin 9y ago
Comparing the losses (in yellow) with the gains up to $19 (in maroon) suggests that... If they're going to pick such non-intuitive colors, why not just have a grayscale graphic? Does this help the colorblind?
- deleted 9y ago
  [deleted]
cheald 9y ago
David Neumark (who is no stranger to minimum wage research - it's his area of expertise: http://www.nber.org/authors/david_neumark http://www.nber.org/authors/david_neumark) astutely observed that Card-Kreuger has been widely deployed to exactly that effect (https://twitter.com/NeumarkDN/status/888134129945952256 https://twitter.com/NeumarkDN/status/888134129945952256), effectively being used to say "MW is settled, now stop arguing about it". I'm of the opinion that far too many people on both sides of the issue argue their positions from ideology rather than empiricism, to our collective detriment. The headline is right - one alarming study isn't the final word, nor should it be. But we seem to be rather quick to let one study confirming our biases to be "the final word" when it confirms our priors, and rather quick to dismiss it as "just one study" when it contradicts them. Neither position is intellectually honest, and if we truly want to help the most vulnerable, we have to do it in ways that are backed by the evidence.
- noobermin 9y ago
  But, I mean, it isn't really an open question is it? My impression is that MW actually has little effect if any on jobs is the scientific consensus. After a 1 minute google, bam, figure 1, a cluster at 0.[0] [0] http://cepr.net/documents/publications/min-wage-2013-02.pdf http://cepr.net/documents/publications/min-wage-2013-02.pdf
  - conanbatt 9y ago
    The paper is very interesting! Really want to take the time to read it. Bear in mind there is a matter of degree. > The weight of that evidence points to little or no employment response to modest increases in the minimum wage. What will define "modest"? In argentina, minimum wage is almost median real income. 40% of workers work under the table. Id be extremely surprised that lower minimum wage wouldn't increase formal employment tremendously.
- downandout 9y ago
  The problem with older studies (such as Card-Kreuger) is that technology has advanced to the point where it is possible to replace at least some minimum wage workers, either through outright automation or increased productivity of other workers. Smart business owners will calculate the costs of replacing an employee with technology, and recalculate them whenever the variables change significantly (such as when the minimum wage is increased). If the numbers check out, minimum wage workers can and will lose their jobs. So, minimum wage increases, worker's comp changes, tax increases, etc. today may indeed spur job losses where that may not have been true before. We are in a brave new world.
  - boomboomsubban 9y ago
    This isn't new. The Card-Kreuger study was performed at a point when many of these companies were first introducing computers for various logistics tasks, increasing productivity and replacing some jobs. Further, if you say that old studies aren't reliable because it's a brave new world, the predictions you make due to some numbers are also unreliable.
jostmey 9y ago
I remember my last visit to Baltimore. I saw a lot of homeless people. I saw a lot of buildings in need of repair. There were people needing work and work needing to be done (fixing buildings). I was left wondering what was preventing the economy from functioning. Every side of an argument has an element of truth. Businesses will not pay people more than they must, which can be a problem if people don't have enough money to buy propping up the economy. And for every rich philanthropist, there's probably ten donald trumps.
- jackvalentine 9y ago
  I'm not sure how accurate the little graph google gives you when you search "baltimore population" is, but it looks like the population is falling. Less people means less commerce which means less demand for buildings. Perhaps those rundown empty buildings have not enough value for someone to invest in fixing them up (and therefor, have no incentive to employ people to do so).
- kitcar 9y ago
  You may be assuming incorrectly that there is work that needs to be done - if there is no one who wants to pay to use the building, there is no reason to fix it (i.e. just because an asset exists doesn't mean there is demand for it)
  - c0nducktr 9y ago
    And you may be assuming those who wish to fix and use the building have the capital required to do so.
- boona 9y ago
  > Every side of an argument has an element of truth. Agreed. To have an honest discussion about minimum wage, it's important to recognize that it's two things at the same time. First, it's a minimum wage which most people are familiar with, but second it's also a law that makes it illegal for low skilled workers to get jobs. Yes, we're helping some people earn a better living, but we're also not allowing people to work if an employer or employee aren't creative enough to find a way to make them more productive. It's a trade off, and that's one reason why it's more complicated that most people realize and why a dialog needs to be created around the topic.
bsder 9y ago
At the very least, the "control group" in this study seems problematic: "But a quick look at the data suggests something else may be going on. Between the second quarters of 2014 and 2016, earnings in Seattle grew by an incredible 21 percent, as opposed to 6 percent in parts of Washington outside the Seattle area. And the first quarter of 2016 was exactly when the very large gap in overall wage growth between Seattle and rest of the state (where the control group comes from) really opened up, coinciding with the timing of the job loss found by the University of Washington team. At this point we don’t know enough, but clearly there are some missing pieces to this puzzle." And, I'm kind of surprised they are matching to the rest of Washington rather than against Vancouver, Tacoma or Spokane only. The rest of Washington is so different that I just can't imagine it being a useful "control".
WheelsAtLarge 9y ago
I'm a supporter of people earning a living wage. The problem with raising the minimum wage is that no matter what the minimum is it will never be enough. Nobody want's to earn minimum after you've worked at the same place for years and have someone new come in and earn the same on the first day on the job. Once minimum hits everyone wants a raise too and inflation picks up, eventually the problem returns. It's human nature. Additionally technology will be brought in to reduce costs by reducing jobs. The fix is to give every one that needs it an income credit. Right now it's only possible through the federal income tax, but you need to qualify, but it should also be in the state income tax too and the qualifications should be income only. Let's say you worked 2080 hours for the year then for every hour you worked you should get some amount that will raise your income to some agreed on minimum. This has the benefit of stopping the tit for tat raises.
almonj 9y ago
Minimum wage is a terrible and tyrannical idea. Government has no place to say what any employer can offer for any kind of work. It is more manipulation and fakery, just shifting things around to seem like something is getting better but in reality it makes things worse. Every government program has this effect. All government workers are bad people. All government jobs promote abusive relationships and oppression. To improve the economy and working wages, get rid of all government programs. Instantly a huge amount of wealth will be gained and productivity will skyrocket. It is very important to remember: nothing the government does is good. What is the minimum amount of manipulation and lies it takes to cover up a problem? This is the question every government worker ponders every day of their job. Every one of these people are lying, scheming, delusional sub-humans. They manipulate and they lie, they shuffle things around and create busy-work for disgusting twisted crab-people.
- sctb 9y ago
  Hacker News is for civil and substantive discussion, not inflammatory ideological rants. Please don't post like this here. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
axaxs 9y ago
It kind of is. I'm not against a higher minimum wage...in fact I welcome it. But let's be honest, it's going to crush small businesses and force larger ones into automation. The real problem is that this cuts into the unskilled lifeline. Unskilled labor is dying, these people must learn a trade. I have no hypothetical solution for those unable or unwilling, sadly, outside of UBI which presents its own issues.
- neilwilson 9y ago
  Try creating jobs and pay people for doing them. Look around and you'll see there is much to do. It's not hard once you get beyond the mistaken idea that the private sector creates jobs. It doesn't and doesn't want to. It creates them only because it has to.
microcolonel 9y ago
Minimum wage laws don't tend to increase real wages, at best they reduce hours. In some cases (data indicates this in Seattle) the reduction in hours overshoots the increase in rates. Labour has a utility to employers, and if the employee can not provide utility that the employer can translate into more than a minimum wage's worth of value, then they simply can not be hired for that rate at that time. I am taking time away from work right now, which is possible due to my frugal lifestyle and fairly high skills. I would love to do part time work to keep me on my feet, even below minimum wage. There are endless things around town that I'm sure somebody is willing to pay something for. There is no such thing as a living wage, there might be such a thing as a living salary. Due to good planning, my expenses are tiny, my living income would be maybe two thirds of the U.S. poverty threshold (in the U.S. I could still afford health insurance at or below the poverty line with my other expenses), and that's in a real city.
known 9y ago
Does minimum wage provide impetus to https://en.m.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs https://en.m.wikipedia.org/wiki/Maslow%27s_hierarchy_of_need...
neilwilson 9y ago
The problem is one of perspective, and looking at the problem from the wrong point of view. We want jobs replaced by technology. That is, after all, one of the reasons we're all in this technology game. It is what drives forward productivity and leads to an improved standard of living. The issue is seeing the private sector as the creator of jobs. It is not. It creates jobs only as a side effect of investing capital. If a capitalist can get the entire job done by machine, they will do - unless human labour is very, very cheap. So to get the investment effect we need labour to be expensive. And that means that the private sector isn't the place to look for jobs in the long term. The public sector has to create them so there are always more jobs that there are people: https://medium.com/modern-money-matters/running-a-modern-money-economy-ada9682a5fb9 https://medium.com/modern-money-matters/running-a-modern-mon... Then the private sector has to compete for labour, and will choose to invest to eliminate jobs more often than not. The issue was best described by Kalecki in the 1940s. "It is true that profits would be higher under a regime of full employment than they are on the average under laissez-faire, and even the rise in wage rates resulting from the stronger bargaining power of the workers is less likely to reduce profits than to increase prices, and thus adversely affects only the rentier interests. But 'discipline in the factories' and 'political stability' are more appreciated than profits by business leaders. Their class instinct tells them that lasting full employment is unsound from their point of view, and that unemployment is an integral part of the 'normal' capitalist system." http://web.archive.org/web/20170202134920/http://mrzine.monthlyreview.org/2010/kalecki220510.html http://web.archive.org/web/20170202134920/http://mrzine.mont...

You can find the original study (from the University of Washington) here: http://www.nber.org/papers/w23532 http://www.nber.org/papers/w23532 And the UC Berkeley study here: http://irle.berkeley.edu/files/2017/Seattles-Minimum-Wage-Experiences-2015-16.pdf http://irle.berkeley.edu/files/2017/Seattles-Minimum-Wage-Ex...

jessaustin 9y ago

Comparing the losses (in yellow) with the gains up to $19 (in maroon) suggests that... If they're going to pick such non-intuitive colors, why not just have a grayscale graphic? Does this help the colorblind?

deleted 9y ago
[deleted]

cheald 9y ago

David Neumark (who is no stranger to minimum wage research - it's his area of expertise: http://www.nber.org/authors/david_neumark http://www.nber.org/authors/david_neumark) astutely observed that Card-Kreuger has been widely deployed to exactly that effect (https://twitter.com/NeumarkDN/status/888134129945952256 https://twitter.com/NeumarkDN/status/888134129945952256), effectively being used to say "MW is settled, now stop arguing about it". I'm of the opinion that far too many people on both sides of the issue argue their positions from ideology rather than empiricism, to our collective detriment. The headline is right - one alarming study isn't the final word, nor should it be. But we seem to be rather quick to let one study confirming our biases to be "the final word" when it confirms our priors, and rather quick to dismiss it as "just one study" when it contradicts them. Neither position is intellectually honest, and if we truly want to help the most vulnerable, we have to do it in ways that are backed by the evidence.

noobermin 9y ago
But, I mean, it isn't really an open question is it? My impression is that MW actually has little effect if any on jobs is the scientific consensus. After a 1 minute google, bam, figure 1, a cluster at 0.[0] [0] http://cepr.net/documents/publications/min-wage-2013-02.pdf http://cepr.net/documents/publications/min-wage-2013-02.pdf
- conanbatt 9y ago
  The paper is very interesting! Really want to take the time to read it. Bear in mind there is a matter of degree. > The weight of that evidence points to little or no employment response to modest increases in the minimum wage. What will define "modest"? In argentina, minimum wage is almost median real income. 40% of workers work under the table. Id be extremely surprised that lower minimum wage wouldn't increase formal employment tremendously.
downandout 9y ago
The problem with older studies (such as Card-Kreuger) is that technology has advanced to the point where it is possible to replace at least some minimum wage workers, either through outright automation or increased productivity of other workers. Smart business owners will calculate the costs of replacing an employee with technology, and recalculate them whenever the variables change significantly (such as when the minimum wage is increased). If the numbers check out, minimum wage workers can and will lose their jobs. So, minimum wage increases, worker's comp changes, tax increases, etc. today may indeed spur job losses where that may not have been true before. We are in a brave new world.
- boomboomsubban 9y ago
  This isn't new. The Card-Kreuger study was performed at a point when many of these companies were first introducing computers for various logistics tasks, increasing productivity and replacing some jobs. Further, if you say that old studies aren't reliable because it's a brave new world, the predictions you make due to some numbers are also unreliable.

jostmey 9y ago

I remember my last visit to Baltimore. I saw a lot of homeless people. I saw a lot of buildings in need of repair. There were people needing work and work needing to be done (fixing buildings). I was left wondering what was preventing the economy from functioning. Every side of an argument has an element of truth. Businesses will not pay people more than they must, which can be a problem if people don't have enough money to buy propping up the economy. And for every rich philanthropist, there's probably ten donald trumps.

jackvalentine 9y ago
I'm not sure how accurate the little graph google gives you when you search "baltimore population" is, but it looks like the population is falling. Less people means less commerce which means less demand for buildings. Perhaps those rundown empty buildings have not enough value for someone to invest in fixing them up (and therefor, have no incentive to employ people to do so).
kitcar 9y ago
You may be assuming incorrectly that there is work that needs to be done - if there is no one who wants to pay to use the building, there is no reason to fix it (i.e. just because an asset exists doesn't mean there is demand for it)
- c0nducktr 9y ago
  And you may be assuming those who wish to fix and use the building have the capital required to do so.
boona 9y ago
> Every side of an argument has an element of truth. Agreed. To have an honest discussion about minimum wage, it's important to recognize that it's two things at the same time. First, it's a minimum wage which most people are familiar with, but second it's also a law that makes it illegal for low skilled workers to get jobs. Yes, we're helping some people earn a better living, but we're also not allowing people to work if an employer or employee aren't creative enough to find a way to make them more productive. It's a trade off, and that's one reason why it's more complicated that most people realize and why a dialog needs to be created around the topic.

bsder 9y ago

At the very least, the "control group" in this study seems problematic: "But a quick look at the data suggests something else may be going on. Between the second quarters of 2014 and 2016, earnings in Seattle grew by an incredible 21 percent, as opposed to 6 percent in parts of Washington outside the Seattle area. And the first quarter of 2016 was exactly when the very large gap in overall wage growth between Seattle and rest of the state (where the control group comes from) really opened up, coinciding with the timing of the job loss found by the University of Washington team. At this point we don’t know enough, but clearly there are some missing pieces to this puzzle." And, I'm kind of surprised they are matching to the rest of Washington rather than against Vancouver, Tacoma or Spokane only. The rest of Washington is so different that I just can't imagine it being a useful "control".

WheelsAtLarge 9y ago

I'm a supporter of people earning a living wage. The problem with raising the minimum wage is that no matter what the minimum is it will never be enough. Nobody want's to earn minimum after you've worked at the same place for years and have someone new come in and earn the same on the first day on the job. Once minimum hits everyone wants a raise too and inflation picks up, eventually the problem returns. It's human nature. Additionally technology will be brought in to reduce costs by reducing jobs. The fix is to give every one that needs it an income credit. Right now it's only possible through the federal income tax, but you need to qualify, but it should also be in the state income tax too and the qualifications should be income only. Let's say you worked 2080 hours for the year then for every hour you worked you should get some amount that will raise your income to some agreed on minimum. This has the benefit of stopping the tit for tat raises.

almonj 9y ago

Minimum wage is a terrible and tyrannical idea. Government has no place to say what any employer can offer for any kind of work. It is more manipulation and fakery, just shifting things around to seem like something is getting better but in reality it makes things worse. Every government program has this effect. All government workers are bad people. All government jobs promote abusive relationships and oppression. To improve the economy and working wages, get rid of all government programs. Instantly a huge amount of wealth will be gained and productivity will skyrocket. It is very important to remember: nothing the government does is good. What is the minimum amount of manipulation and lies it takes to cover up a problem? This is the question every government worker ponders every day of their job. Every one of these people are lying, scheming, delusional sub-humans. They manipulate and they lie, they shuffle things around and create busy-work for disgusting twisted crab-people.

sctb 9y ago
Hacker News is for civil and substantive discussion, not inflammatory ideological rants. Please don't post like this here. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

axaxs 9y ago

It kind of is. I'm not against a higher minimum wage...in fact I welcome it. But let's be honest, it's going to crush small businesses and force larger ones into automation. The real problem is that this cuts into the unskilled lifeline. Unskilled labor is dying, these people must learn a trade. I have no hypothetical solution for those unable or unwilling, sadly, outside of UBI which presents its own issues.

neilwilson 9y ago
Try creating jobs and pay people for doing them. Look around and you'll see there is much to do. It's not hard once you get beyond the mistaken idea that the private sector creates jobs. It doesn't and doesn't want to. It creates them only because it has to.

microcolonel 9y ago

Minimum wage laws don't tend to increase real wages, at best they reduce hours. In some cases (data indicates this in Seattle) the reduction in hours overshoots the increase in rates. Labour has a utility to employers, and if the employee can not provide utility that the employer can translate into more than a minimum wage's worth of value, then they simply can not be hired for that rate at that time. I am taking time away from work right now, which is possible due to my frugal lifestyle and fairly high skills. I would love to do part time work to keep me on my feet, even below minimum wage. There are endless things around town that I'm sure somebody is willing to pay something for. There is no such thing as a living wage, there might be such a thing as a living salary. Due to good planning, my expenses are tiny, my living income would be maybe two thirds of the U.S. poverty threshold (in the U.S. I could still afford health insurance at or below the poverty line with my other expenses), and that's in a real city.

known 9y ago

Does minimum wage provide impetus to https://en.m.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs https://en.m.wikipedia.org/wiki/Maslow%27s_hierarchy_of_need...

neilwilson 9y ago

The problem is one of perspective, and looking at the problem from the wrong point of view. We want jobs replaced by technology. That is, after all, one of the reasons we're all in this technology game. It is what drives forward productivity and leads to an improved standard of living. The issue is seeing the private sector as the creator of jobs. It is not. It creates jobs only as a side effect of investing capital. If a capitalist can get the entire job done by machine, they will do - unless human labour is very, very cheap. So to get the investment effect we need labour to be expensive. And that means that the private sector isn't the place to look for jobs in the long term. The public sector has to create them so there are always more jobs that there are people: https://medium.com/modern-money-matters/running-a-modern-money-economy-ada9682a5fb9 https://medium.com/modern-money-matters/running-a-modern-mon... Then the private sector has to compete for labour, and will choose to invest to eliminate jobs more often than not. The issue was best described by Kalecki in the 1940s. "It is true that profits would be higher under a regime of full employment than they are on the average under laissez-faire, and even the rise in wage rates resulting from the stronger bargaining power of the workers is less likely to reduce profits than to increase prices, and thus adversely affects only the rentier interests. But 'discipline in the factories' and 'political stability' are more appreciated than profits by business leaders. Their class instinct tells them that lasting full employment is unsound from their point of view, and that unemployment is an integral part of the 'normal' capitalist system." http://web.archive.org/web/20170202134920/http://mrzine.monthlyreview.org/2010/kalecki220510.html http://web.archive.org/web/20170202134920/http://mrzine.mont...