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The Effects of Major Retailers Raising Their Minimum Wages

79 points by rufus_foreman 5y ago

pbronez 5y ago
“Utilizing data from approximately 7 million online job postings between February 2014 and February 2020, the researchers find that a 10 percent rise in average Amazon wages is associated with an increase of 2.3 percent in the average advertised wage at non-Amazon firms in the same labor market.”
- q1w2 5y ago
  Correlation does not equal causation.
  - foxyv 5y ago
    But it does like to wink suggestively.
joshuaheard 5y ago
I was a little confused by the title. A "minimum wage" usually refers to the minimum amount set by government that an employer is required to pay by law. This article refers to private employer's voluntary wage floor, more appropriately called, "a starting wage".
giantg2 5y ago
This seems to be missing some details. Are they comparing to only other large retailers, or non-Amazon employers across industries? Are they only comparing wage increases for minimum wage? The reason I ask is that the increases could be diluted by including non-minimum wage jobs, or jobs in other industries. A .6-1% increase is way less than inflation. I suppose it's better than 0%, but still not a good thing. It seems many workers don't realize (or have no power to change) that they are being paid less if their pay doesn't rise as fast or faster than inflation.
- fortran77 5y ago
  Perhaps part of the reason for inflation is the rising minimum wages.
  - giantg2 5y ago
    Maybe a part, at historical levels. Right now it seems to be driven moslty by monetary policy, supply issues (reduction in competition, increased demand), and labor supply issues (plays into minimum wage in so far that more employers are paying above it).
  - Workaccount2 5y ago
    That's why you also need to take money out of the top to counteract this. A wage crush is ideal, not a wage raise.
    - jimmaswell 5y ago
      What do you mean by wage crush? I can't find any definition.
      - Workaccount2 5y ago
        It's a term I use myself. It's pushing down on higher wages while pushing up on lower wages in effort to concentrate people into middle class. This would also mean that many people who are not even remotely close to "the billionaire class" would get pushed down, so it's not really popular with high-earning coastal liberals, and probably many people here.
        giantg2 5y ago
        But what mechanism would that use? Things like taxes would likely make a limited impact due to raising wages to offset the tax until the point that off-shore is more competitive. Legislative restrictions have been struck down in the past (the $1M CEO restriction of the 80s?).
V__ 5y ago
I, for one, am shocked /s But for real, it's great to have actual data on this.
pydry 5y ago
This paper is a good rebuttal to talking points like this tweet that crop up from time to time: https://i.redd.it/b57t1w5jllb61.jpg https://i.redd.it/b57t1w5jllb61.jpg (I was trying to look up a similarly awful article referencing EMTs earning $minwage + $2 I saw a while back but googlefu is failing me)
- bloqs 5y ago
  I must be missing something because to me that's literally the point - the minimum wage should cause other, more complex work wages to rise?
  - pydry 5y ago
    Yes, the tweet above presumes that they wouldnt and that it would be somehow unfair if a minimum wake hike meant that a teacher got paid minimum wage. Most arguments against raising the minimum wage are bullshit but they all get trotted out regularly because profits are at stake.
  - DocTomoe 5y ago
    If all wages rise (and in turn, cost of living rises accordingly, because now people can afford to pay more rent), nothing will have changed.
    - iso1631 5y ago
      Until you start capturing that increased rent via meaningful land value taxes, perhaps distributed as a UBI
    - bloqs 5y ago
      Right, of course
- stavros 5y ago
  "No it does not. Raise teachers' salaries."
xyzzy4747 5y ago
When people get paid more, the prices of everything go up, including other people's wages. Inflation is often a self-reinforcing cycle.
- leroman 5y ago
  According to a fact you just came up with? Don’t believe it works this way, most money goes to the top earners, raising lower wages should not have that big of an effect as a result.
  - iso1631 5y ago
    Rent is a massive portion of the majority of When two income households became the norm, rather than having more disposable money, the money went into housing costs. Those who owned housing (land) before two-income was normal made out like bandits, but families that didn't are now working 100 hours a week rather than 50 hours a week for the same post-housing income.
  - vorpalhex 5y ago
    Please don't be rude for the sake of being rude. Most views hold that increasing the minimum wage increases the cost of goods and services, in particular food, also increasing downstream things like rent, but it's still a debated point and not settled. [1] [1] https://www.investopedia.com/ask/answers/052815/does-raising-minimum-wage-increase-inflation.asp https://www.investopedia.com/ask/answers/052815/does-raising...
    - leroman 5y ago
      Wording a polarized opinion worded as a fact is an attempt to force this opinion on a discussion is a dishonest move, to say the least. Am I rude here to point out that it's his opinion that somehow came on top?
      - vorpalhex 5y ago
        It is when you are probably wrong and in disagreement with most economists, and don't post any citations or evidence. Like, argue for a minority position, but argue, don't just insult.
shockeychap 5y ago
I found this to be many words with little information. It largely boils down to "when Amazon increases wages, other employers follow suit, to varying extents." There was almost nothing about the myriad of other effects, including things like inflation, effects on already higher wage earners, effects on automation, and more. They touched on the increase in unemployment from competitors, but that was it.
- cowpig 5y ago
  The article just looks like a presentation of some data, whereas the other effects you're talking about would require analysis or speculation.
- ethanbond 5y ago
  Or the most critical consequence: rent. Rent goes up. Landlords get richer, minimum wage earners go back to poverty. Pretty obvious cycle. High paying employer moves somewhere? Rent goes up. Normal employer pays more? Rent goes up.
  - spamizbad 5y ago
    Really shows the power land owners have to capture upside.
    - jjoonathan 5y ago
      The more things change, the more they stay the same.
    - cortesoft 5y ago
      Isn't it more about the inelasticity of housing supply? When demand goes up, prices go up?
      - jjoonathan 5y ago
        Just who do you think relentlessly votes, lobbies, and politicks to ensure that housing supply is inelastic? The tooth fairy?
strife25 5y ago
Reminds me of a recent email I got from a CTO community commenting on the "crazy salary inflation" that's occurring in the tech industry.
linspace 5y ago
> the researchers find that a 10 percent rise in average Amazon wages is associated with an increase of 2.3 percent in the average advertised wage at non-Amazon firms in the same labor market. > When large retailers raise minimum wages, there are also small drops in employment. The estimates range from a 0.4 percent to a 1.3 percent decline in employment If I read correctly then it's a net gain for employees even with worst case drop in employment. I think it's interesting because drop of employment is a usual complaint against raising the minimum wage
wonderwonder 5y ago
Nothing much in this article is groundbreaking, when large employers raise wages, smaller employers of people with similar skillsets are forced to raise wages as well. What is very interesting was the fact that unemployment in the region is only affected by .4 to 1.3 percent. This is not the doomsday scenario pushed by people claiming that raising minimum wage would result in large scale elimination of existing jobs as businesses are forced to fire people just to survive the parasitic employees demanding a living wage.
cs702 5y ago
You can download and read the actual paper here: https://www.nber.org/system/files/working_papers/w29425/w29425.pdf https://www.nber.org/system/files/working_papers/w29425/w294... The researchers collected data from millions of job ads and employee surveys to estimate the spillover effects of Amazon's minimum wage increase to $15/hour, back in October 2018, (a) on other retailers with a physical presence in the same commuting zone, including Walmart, Target, CVS, and Costco, and (b) on the zone's unemployment rate. The main findings are that (1) retailers with a physical presence in the same commuting zone significantly increased their minimum wages, following Amazon's lead; (2) the zone experienced only a very small but quantifiable increase in unemployment; and (3) the authors cannot explain the direction and magnitude of these changes as a function of standard competitive pressures.

79 points by rufus_foreman 5y ago

“Utilizing data from approximately 7 million online job postings between February 2014 and February 2020, the researchers find that a 10 percent rise in average Amazon wages is associated with an increase of 2.3 percent in the average advertised wage at non-Amazon firms in the same labor market.”

q1w2 5y ago
Correlation does not equal causation.
- foxyv 5y ago
  But it does like to wink suggestively.

joshuaheard 5y ago

I was a little confused by the title. A "minimum wage" usually refers to the minimum amount set by government that an employer is required to pay by law. This article refers to private employer's voluntary wage floor, more appropriately called, "a starting wage".

giantg2 5y ago

This seems to be missing some details. Are they comparing to only other large retailers, or non-Amazon employers across industries? Are they only comparing wage increases for minimum wage? The reason I ask is that the increases could be diluted by including non-minimum wage jobs, or jobs in other industries. A .6-1% increase is way less than inflation. I suppose it's better than 0%, but still not a good thing. It seems many workers don't realize (or have no power to change) that they are being paid less if their pay doesn't rise as fast or faster than inflation.

fortran77 5y ago
Perhaps part of the reason for inflation is the rising minimum wages.
- giantg2 5y ago
  Maybe a part, at historical levels. Right now it seems to be driven moslty by monetary policy, supply issues (reduction in competition, increased demand), and labor supply issues (plays into minimum wage in so far that more employers are paying above it).
- Workaccount2 5y ago
  That's why you also need to take money out of the top to counteract this. A wage crush is ideal, not a wage raise.
  - jimmaswell 5y ago
    What do you mean by wage crush? I can't find any definition.
    - Workaccount2 5y ago
      It's a term I use myself. It's pushing down on higher wages while pushing up on lower wages in effort to concentrate people into middle class. This would also mean that many people who are not even remotely close to "the billionaire class" would get pushed down, so it's not really popular with high-earning coastal liberals, and probably many people here.
      - giantg2 5y ago
        But what mechanism would that use? Things like taxes would likely make a limited impact due to raising wages to offset the tax until the point that off-shore is more competitive. Legislative restrictions have been struck down in the past (the $1M CEO restriction of the 80s?).

V__ 5y ago

I, for one, am shocked /s But for real, it's great to have actual data on this.

pydry 5y ago

This paper is a good rebuttal to talking points like this tweet that crop up from time to time: https://i.redd.it/b57t1w5jllb61.jpg https://i.redd.it/b57t1w5jllb61.jpg (I was trying to look up a similarly awful article referencing EMTs earning $minwage + $2 I saw a while back but googlefu is failing me)

bloqs 5y ago
I must be missing something because to me that's literally the point - the minimum wage should cause other, more complex work wages to rise?
- pydry 5y ago
  Yes, the tweet above presumes that they wouldnt and that it would be somehow unfair if a minimum wake hike meant that a teacher got paid minimum wage. Most arguments against raising the minimum wage are bullshit but they all get trotted out regularly because profits are at stake.
- DocTomoe 5y ago
  If all wages rise (and in turn, cost of living rises accordingly, because now people can afford to pay more rent), nothing will have changed.
  - iso1631 5y ago
    Until you start capturing that increased rent via meaningful land value taxes, perhaps distributed as a UBI
  - bloqs 5y ago
    Right, of course
stavros 5y ago
"No it does not. Raise teachers' salaries."

xyzzy4747 5y ago

When people get paid more, the prices of everything go up, including other people's wages. Inflation is often a self-reinforcing cycle.

leroman 5y ago
According to a fact you just came up with? Don’t believe it works this way, most money goes to the top earners, raising lower wages should not have that big of an effect as a result.
- iso1631 5y ago
  Rent is a massive portion of the majority of When two income households became the norm, rather than having more disposable money, the money went into housing costs. Those who owned housing (land) before two-income was normal made out like bandits, but families that didn't are now working 100 hours a week rather than 50 hours a week for the same post-housing income.
- vorpalhex 5y ago
  Please don't be rude for the sake of being rude. Most views hold that increasing the minimum wage increases the cost of goods and services, in particular food, also increasing downstream things like rent, but it's still a debated point and not settled. [1] [1] https://www.investopedia.com/ask/answers/052815/does-raising-minimum-wage-increase-inflation.asp https://www.investopedia.com/ask/answers/052815/does-raising...
  - leroman 5y ago
    Wording a polarized opinion worded as a fact is an attempt to force this opinion on a discussion is a dishonest move, to say the least. Am I rude here to point out that it's his opinion that somehow came on top?
    - vorpalhex 5y ago
      It is when you are probably wrong and in disagreement with most economists, and don't post any citations or evidence. Like, argue for a minority position, but argue, don't just insult.

shockeychap 5y ago

I found this to be many words with little information. It largely boils down to "when Amazon increases wages, other employers follow suit, to varying extents." There was almost nothing about the myriad of other effects, including things like inflation, effects on already higher wage earners, effects on automation, and more. They touched on the increase in unemployment from competitors, but that was it.

cowpig 5y ago
The article just looks like a presentation of some data, whereas the other effects you're talking about would require analysis or speculation.
ethanbond 5y ago
Or the most critical consequence: rent. Rent goes up. Landlords get richer, minimum wage earners go back to poverty. Pretty obvious cycle. High paying employer moves somewhere? Rent goes up. Normal employer pays more? Rent goes up.
- spamizbad 5y ago
  Really shows the power land owners have to capture upside.
  - jjoonathan 5y ago
    The more things change, the more they stay the same.
  - cortesoft 5y ago
    Isn't it more about the inelasticity of housing supply? When demand goes up, prices go up?
    - jjoonathan 5y ago
      Just who do you think relentlessly votes, lobbies, and politicks to ensure that housing supply is inelastic? The tooth fairy?

strife25 5y ago

Reminds me of a recent email I got from a CTO community commenting on the "crazy salary inflation" that's occurring in the tech industry.

linspace 5y ago

> the researchers find that a 10 percent rise in average Amazon wages is associated with an increase of 2.3 percent in the average advertised wage at non-Amazon firms in the same labor market. > When large retailers raise minimum wages, there are also small drops in employment. The estimates range from a 0.4 percent to a 1.3 percent decline in employment If I read correctly then it's a net gain for employees even with worst case drop in employment. I think it's interesting because drop of employment is a usual complaint against raising the minimum wage

wonderwonder 5y ago

Nothing much in this article is groundbreaking, when large employers raise wages, smaller employers of people with similar skillsets are forced to raise wages as well. What is very interesting was the fact that unemployment in the region is only affected by .4 to 1.3 percent. This is not the doomsday scenario pushed by people claiming that raising minimum wage would result in large scale elimination of existing jobs as businesses are forced to fire people just to survive the parasitic employees demanding a living wage.

cs702 5y ago

You can download and read the actual paper here: https://www.nber.org/system/files/working_papers/w29425/w29425.pdf https://www.nber.org/system/files/working_papers/w29425/w294... The researchers collected data from millions of job ads and employee surveys to estimate the spillover effects of Amazon's minimum wage increase to $15/hour, back in October 2018, (a) on other retailers with a physical presence in the same commuting zone, including Walmart, Target, CVS, and Costco, and (b) on the zone's unemployment rate. The main findings are that (1) retailers with a physical presence in the same commuting zone significantly increased their minimum wages, following Amazon's lead; (2) the zone experienced only a very small but quantifiable increase in unemployment; and (3) the authors cannot explain the direction and magnitude of these changes as a function of standard competitive pressures.