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The thesis seems to be that businesses would pay more if they were smart enough to realize it was in their interests. Since they aren't, raising minimum wage se

by jmugan 2y ago

The thesis seems to be that businesses would pay more if they were smart enough to realize it was in their interests. Since they aren't, raising minimum wage seems to force them to pay more, which actually lowers labor costs because they have less turnover and fewer mistakes by new employees. Maybe. I've always been surprised that more businesses didn't pay more, since a few dollars an hour more would often bring in a much superior employee.

Certhas 2y ago
No, the evidence cited is that a significant portion is also absorbed by companies making lower profits (and a small amount by higher prices). So this is simply also a case of lack of bargaining power of workers.
- jmugan 2y ago
  So you are saying that the pie is not grown by paying more, it's just that the workers are getting a bigger slice. Could be. That didn't seem to be the main point of the article, but that could also be true. I haven't looked at the data carefully.
  - mint2 2y ago
    Not true about the pie not growing. The pie did grow, so it’s a benefit to society. It just didn’t grow enough that giving the employees a larger slice didn’t slightly shrink the owner’s pie. However, The owners pie shrunk less than it would have had the pie not grown due to increased efficiency. I wonder how these studies captures the way the workers have more money that immediately flows back into the economy, benefiting everyone.
    - sbuttgereit 2y ago
      > I wonder how these studies captures the way the workers have more money that immediately flows back into the economy, benefiting everyone. I think you left out the part about, "and at what point that creates inflationary pressure."
      - f1shy 2y ago
        Minimum wage does not increase inflation in any measurable amount. Has been demonstrated over and over in praxis.
      - mint2 2y ago
        deflation is good? Is wage the only cause of inflation we care about? Guess so.
      - bb88 2y ago
        Higher wages should create more demand, and that should create pressure to raise prices. On the other hand, if people were going into debt with high interest credit cards, then it's very possible that demand doesn't actually change. Instead credit card debt gets paid off, or surplus income is banked as savings.
- II2II 2y ago
  > No, the evidence cited is that a significant portion is also absorbed by companies making lower profits (and a small amount by higher prices). From the article: The authors calculated that about 62 percent of the wage increase was absorbed through higher prices, while the rest was likely absorbed by a mix of reduced turnover and, crucially, lower profits for franchisees—hence the massive industry resistance. Bargaining power is undoubtedly an issue here, but the success of the increase in minimum wage can probably be attributed to it being uniform across similar businesses and in an industry that can't exactly move to the next state over (without loosing business).
  - Certhas 2y ago
    Thank you, "small amount by higher prices" was wrong. Should be "most of it by small price increases".
- SideQuark 2y ago
  That article leaves out a lot of result that should have been cited, but they run counter to his narrative and would make the story sell less. The last big CBO analysis on results of min wage does a better job summarizing all the literature. They also made a nice tool to visualize results https://www.cbo.gov/publication/55681 https://www.cbo.gov/publication/55681 The results are pretty much what one should expect.
stonogo 2y ago
This was why Henry Ford paid a decent wage. It turns out to reduce labor costs due to turnover dropping and less time spent training workers.
- deleted 2y ago
  [deleted]
ultrarunner 2y ago
I wouldn't have bought this take in the past. However, currently, right now, I am fighting an uphill battle trying to get a raise for an incredibly bright, thoughtful, attentive employee who directly contributes to the bottom line. One who is embarrassingly underpaid. And one I will probably lose because of this situation, which will ultimately be a costly waste of time and effort to rehire and retrain.
pyuser583 2y ago
The original logic was to discourage “low quality” immigration. H1B visas are an extension of this. H1B visa workers are allowed in the country, but have a minimum wage in excess of 90k.

by jmugan 2y ago

Certhas 2y ago

No, the evidence cited is that a significant portion is also absorbed by companies making lower profits (and a small amount by higher prices). So this is simply also a case of lack of bargaining power of workers.

jmugan 2y ago
So you are saying that the pie is not grown by paying more, it's just that the workers are getting a bigger slice. Could be. That didn't seem to be the main point of the article, but that could also be true. I haven't looked at the data carefully.
- mint2 2y ago
  Not true about the pie not growing. The pie did grow, so it’s a benefit to society. It just didn’t grow enough that giving the employees a larger slice didn’t slightly shrink the owner’s pie. However, The owners pie shrunk less than it would have had the pie not grown due to increased efficiency. I wonder how these studies captures the way the workers have more money that immediately flows back into the economy, benefiting everyone.
  - sbuttgereit 2y ago
    > I wonder how these studies captures the way the workers have more money that immediately flows back into the economy, benefiting everyone. I think you left out the part about, "and at what point that creates inflationary pressure."
    - f1shy 2y ago
      Minimum wage does not increase inflation in any measurable amount. Has been demonstrated over and over in praxis.
    - mint2 2y ago
      deflation is good? Is wage the only cause of inflation we care about? Guess so.
    - bb88 2y ago
      Higher wages should create more demand, and that should create pressure to raise prices. On the other hand, if people were going into debt with high interest credit cards, then it's very possible that demand doesn't actually change. Instead credit card debt gets paid off, or surplus income is banked as savings.
II2II 2y ago
> No, the evidence cited is that a significant portion is also absorbed by companies making lower profits (and a small amount by higher prices). From the article: The authors calculated that about 62 percent of the wage increase was absorbed through higher prices, while the rest was likely absorbed by a mix of reduced turnover and, crucially, lower profits for franchisees—hence the massive industry resistance. Bargaining power is undoubtedly an issue here, but the success of the increase in minimum wage can probably be attributed to it being uniform across similar businesses and in an industry that can't exactly move to the next state over (without loosing business).
- Certhas 2y ago
  Thank you, "small amount by higher prices" was wrong. Should be "most of it by small price increases".
SideQuark 2y ago
That article leaves out a lot of result that should have been cited, but they run counter to his narrative and would make the story sell less. The last big CBO analysis on results of min wage does a better job summarizing all the literature. They also made a nice tool to visualize results https://www.cbo.gov/publication/55681 https://www.cbo.gov/publication/55681 The results are pretty much what one should expect.

stonogo 2y ago

This was why Henry Ford paid a decent wage. It turns out to reduce labor costs due to turnover dropping and less time spent training workers.

deleted 2y ago
[deleted]

ultrarunner 2y ago

I wouldn't have bought this take in the past. However, currently, right now, I am fighting an uphill battle trying to get a raise for an incredibly bright, thoughtful, attentive employee who directly contributes to the bottom line. One who is embarrassingly underpaid. And one I will probably lose because of this situation, which will ultimately be a costly waste of time and effort to rehire and retrain.

pyuser583 2y ago

The original logic was to discourage “low quality” immigration. H1B visas are an extension of this. H1B visa workers are allowed in the country, but have a minimum wage in excess of 90k.