7 ms·

California poised to raise minimum wage to $10

22 points by bchar 13y ago

ethana 13y ago
Why stop at $10? Why not $15? You know people can't live with $10 working at McDee.
- jsnk 13y ago
  Because very smart people with pointy hats know the exact price of the labour just like Soviet Russia was so accurate in predicting price of goods.
- mjn 13y ago
  It's $20 here in Denmark (de-facto, via the union wage-negotiation system) and I have no complaints. It means service-industry things like restaurants are considerably more expensive, but then since everyone makes at least $20/hr, that isn't a huge problem for affordability. It basically makes everyone middle-class.
  - ahallock 13y ago
    It sounds like all that's happened is a form of inflation.
    - elnate 13y ago
      I'm from NZ and lived in Denmark for three months so here's some anecdata. Some prices increased but most are comparable to home, where the minimum wage is approximately half. The only things that are increased greatly are ones with the primary cost in personnel. Clothing and groceries are about the same, fuel too.
      - mjn 13y ago
        That's also my impression. Groceries are about the same as the U.S., restaurants considerably more. It's not general inflation, but specifically an increase in the cost of goods/services where the difference between paying employees $8 or $20 equals a large proportion of the good/service's total costs. For example, a typical 'premium lager' category beer (Heineken or Carlsberg or the like) typically costs $6-10 in a bar, which is somewhat higher than in the US, but a six-pack typically costs $4-7 in a grocery store (tax included), which is somewhat lower than in the US. An interesting aspect is that you can get quality increments relatively cheaply, because you've already paid for the labor: a fancy meal costs maybe 50% more than a burger, and a microbrewed fancy beer in a bar costs maybe 20-30% more than a Carlsberg lager— versus in a store, where the microbrew might be 3-5x the cost of the Carlsberg.
forgingahead 13y ago
Now watch teen unemployment jump, and prepare for a future generation of people who couldn't get early work experience, and so become less employable in the long-run.
- chc 13y ago
  Major corporations will, by and large, have far less trouble dealing with the extra $2 than workers would dealing with the lack thereof.
  - sethammons 13y ago
    80% of the US economy [citation needed - just a stat remembered from school] is small business. Yeah, mega-corp can handle it. Can the small businesses handle it? Harder to say. A twenty person company with minimum wage workers may be hard pressed with a wage increase. Maybe not. Data needed.
- toomuchtodo 13y ago
  Teen unemployment is already running around 22-23 percent: http://www.bls.gov/web/empsit/cpseea10.htm http://www.bls.gov/web/empsit/cpseea10.htm The question is, how many people are working minimum wage jobs who aren't teenagers.
  - elnate 13y ago
    Article says 90% are over 20.
    - wcfields 13y ago
      That's a really depressing number.
    - toomuchtodo 13y ago
      So everyone who claims teenagers are the ones who are going to lose their jobs are very, very wrong. Good to know.
vowelless 13y ago
Here is a map showing minimum wages across the US: http://www.dol.gov/whd/minwage/america.htm http://www.dol.gov/whd/minwage/america.htm
- foobarbazqux 13y ago
  Wow... the inequity seems to be concentrated in the deep south. Something else is concentrated in the deep south too.
  - aroch 13y ago
    And Minnesota...what the hell
  - yetanotherphd 13y ago
    "Something else is concentrated in the deep south too." What are you referring to? It could be republicans, Black people (yes, look at a map), poverty, etc.
    - enraged_camel 13y ago
      He is referring to racism.
  - refurb 13y ago
    What is concentrated? Areas with a low cost of living?
grecy 13y ago
Hilariously, they're talking about $10 in 2016. It will be something around $0.70 less than that, comparing 2013 dollars to 2016 dollars.
crsmithdev 13y ago
$10 might have sufficed over a decade ago.
andyzweb 13y ago
the real minimum wage is $0
AaronFriel 13y ago
I'm going to head off all the armchair economists, including the two* who have already replied as of 15 minutes after the article was posted. http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_br0IEq5a9E77NMV http://www.igmchicago.org/igm-economic-experts-panel/poll-re... Here's a real survey of actual economists, who largely agree, weighted by confidence, that "The distortionary costs of raising the federal minimum wage to $9 per hour and indexing it to inflation are sufficiently small compared with the benefits to low-skilled workers who can find employment that this would be a desirable policy." And, economists are reasonably mixed (split between schools, I believe) on the belief that raising the minimum wage to $9 per hour would make it noticeably harder for low-skill workers to find employment, and no one strongly agreed or disagreed. The evidence, the science, of economics, is mixed, as has been demonstrated by a comprehensive meta-analysis by Doucouliagos and Stanley. You can find a graph and other analysis here: http://www.cepr.net/documents/publications/min-wage-2013-02.pdf http://www.cepr.net/documents/publications/min-wage-2013-02.... So, in summary, economists mostly believe the benefits of raising the minimum wage outweigh the distortionary economic effects, and none were willing to make strong assertions on the effect it might have on unemployment. Everyone, put down your pitchforks and take off your party insignias, let's just raise the minimum wage a bit and see what happens, because it benefits a lot of people and there is scant evidence of a downside for a marginal increase in the wage floor. QED. * Perhaps three, if my sarcasm detector is off?
- jljljl 13y ago
  I came to link the exact study you provided. Here's the executive summary from the CEPR paper: "The report reviews evidence on eleven possible adjustments to minimum-wage increases that may help to explain why the measured employment effects are so consistently small. The strongest evidence suggests that the most important channels of adjustment are: reductions in labor turnover; improvements in organizational efficiency; reductions in wages of higher earners ("wage compression"); and small price increases. Given the relatively small cost to employers of modest increases in the minimum wage, these adjustment mechanisms appear to be more than sufficient to avoid employment losses, even for employers with a large share of low-wage workers." Of course, it's worth noting that the first two impacts listed (reductions in labor turnover; improvements in organizational efficiency) could themselves have an impact on new hires and hours worked.
jrockway 13y ago
Interesting thought: say you're a state that's broke and desperately in need of revenue. What happens if you raise the minimum wage so the extra tax the minimum wage workers are paying covers the deficit?
- Steko 13y ago
  You'd need a large increase because people making minimum wage are a small part of the income tax base (many don't pay taxes on net). Large increases to the minimum wage would tend to be counterproductive at least in the short term.
mullingitover 13y ago
I'd really like to see an experiment conducted that can put the whole debate to rest: raise the minimum wage in half of the states, lower it in the other half. Run this experiment for three years and compare the results, and apply the strategy with the best outcome to the rest of the country.
- anatari 13y ago
  The result of this experiment would be mostly useless unless the results were stark and causation can be traced back to this policy via other methods. It doesn't control for the millions of other factors that could affect the outcome.
- grecy 13y ago
  This has been more or less done, on a more global scale. Have a look at the minimum wage in every developed country compared to America. Now have a look at the standard of living for the average person on the street in all those countries compared to America. You have your answer. Comparatively, America is a developing country.
- thetrb 13y ago
  I don't think that would help much. Let's say you have 7$ minimum wage in one state and 10$ minimum wage in a neighboring state. I would think it's very likely that more low end jobs get created in the 7$ state compared to the other. However, if all states have a 10$ minimum wage then there's no easy substitute, except for going to another country, but that's much more complex.
- panarky 13y ago
  This is exactly what the cited research in the original post did. It looked at contiguous US states, where one raised the minimum wage and one did not. It measured the gain or loss in jobs with all these "natural experiments". This study found minimal effects on employment when comparing the states that raised minimum wages against those that did not.
pkaler 13y ago
Instead of raising the minimum wage, I'm a proponent of increasing the Earned Income Tax Credit. https://en.wikipedia.org/wiki/Earned_Income_Tax_Credit https://en.wikipedia.org/wiki/Earned_Income_Tax_Credit Rather than paying people more to flip burgers, I think it's better policy to top them off with cash and incentivize them to earn more money by getting better jobs. The EIC is a form of Negative Income Tax that was originated by Milton Friedman. http://www.econlib.org/library/Enc1/NegativeIncomeTax.html http://www.econlib.org/library/Enc1/NegativeIncomeTax.html
- dragonwriter 13y ago
  > Instead of raising the minimum wage, I'm a proponent of increasing the Earned Income Tax Credit. https://en.wikipedia.org/wiki/Earned_Income_Tax_Credit https://en.wikipedia.org/wiki/Earned_Income_Tax_Credit Adding a state-level EIC would be considerably more administratively complex for California than changing the level of the existing minimum wage -- which, even granting for the sake of argument that such an approach would be desirable ignoring administrative costs, might strongly disfavor that approach. > The EIC is a form of Negative Income Tax No, its not. The EIC is a means-tested social welfare program that has a benefit curve inconsistent with a negative income tax (particularly, it has ranges where more qualifying income increases the beneft, and ranges where it decreases the benefit, whereas the subsidy from a negative income tax is strictly non-increasing with additional income.)
kyledilger 13y ago
That's fine, I'll replace a part-time employee with an unpaid intern to even it out.

22 points by bchar 13y ago

ethana 13y ago

Why stop at $10? Why not $15? You know people can't live with $10 working at McDee.

jsnk 13y ago
Because very smart people with pointy hats know the exact price of the labour just like Soviet Russia was so accurate in predicting price of goods.
mjn 13y ago
It's $20 here in Denmark (de-facto, via the union wage-negotiation system) and I have no complaints. It means service-industry things like restaurants are considerably more expensive, but then since everyone makes at least $20/hr, that isn't a huge problem for affordability. It basically makes everyone middle-class.
- ahallock 13y ago
  It sounds like all that's happened is a form of inflation.
  - elnate 13y ago
    I'm from NZ and lived in Denmark for three months so here's some anecdata. Some prices increased but most are comparable to home, where the minimum wage is approximately half. The only things that are increased greatly are ones with the primary cost in personnel. Clothing and groceries are about the same, fuel too.
    - mjn 13y ago
      That's also my impression. Groceries are about the same as the U.S., restaurants considerably more. It's not general inflation, but specifically an increase in the cost of goods/services where the difference between paying employees $8 or $20 equals a large proportion of the good/service's total costs. For example, a typical 'premium lager' category beer (Heineken or Carlsberg or the like) typically costs $6-10 in a bar, which is somewhat higher than in the US, but a six-pack typically costs $4-7 in a grocery store (tax included), which is somewhat lower than in the US. An interesting aspect is that you can get quality increments relatively cheaply, because you've already paid for the labor: a fancy meal costs maybe 50% more than a burger, and a microbrewed fancy beer in a bar costs maybe 20-30% more than a Carlsberg lager— versus in a store, where the microbrew might be 3-5x the cost of the Carlsberg.

forgingahead 13y ago

Now watch teen unemployment jump, and prepare for a future generation of people who couldn't get early work experience, and so become less employable in the long-run.

chc 13y ago
Major corporations will, by and large, have far less trouble dealing with the extra $2 than workers would dealing with the lack thereof.
- sethammons 13y ago
  80% of the US economy [citation needed - just a stat remembered from school] is small business. Yeah, mega-corp can handle it. Can the small businesses handle it? Harder to say. A twenty person company with minimum wage workers may be hard pressed with a wage increase. Maybe not. Data needed.
toomuchtodo 13y ago
Teen unemployment is already running around 22-23 percent: http://www.bls.gov/web/empsit/cpseea10.htm http://www.bls.gov/web/empsit/cpseea10.htm The question is, how many people are working minimum wage jobs who aren't teenagers.
- elnate 13y ago
  Article says 90% are over 20.
  - wcfields 13y ago
    That's a really depressing number.
  - toomuchtodo 13y ago
    So everyone who claims teenagers are the ones who are going to lose their jobs are very, very wrong. Good to know.

vowelless 13y ago

Here is a map showing minimum wages across the US: http://www.dol.gov/whd/minwage/america.htm http://www.dol.gov/whd/minwage/america.htm

foobarbazqux 13y ago
Wow... the inequity seems to be concentrated in the deep south. Something else is concentrated in the deep south too.
- aroch 13y ago
  And Minnesota...what the hell
- yetanotherphd 13y ago
  "Something else is concentrated in the deep south too." What are you referring to? It could be republicans, Black people (yes, look at a map), poverty, etc.
  - enraged_camel 13y ago
    He is referring to racism.
- refurb 13y ago
  What is concentrated? Areas with a low cost of living?

grecy 13y ago

Hilariously, they're talking about $10 in 2016. It will be something around $0.70 less than that, comparing 2013 dollars to 2016 dollars.

crsmithdev 13y ago

$10 might have sufficed over a decade ago.

andyzweb 13y ago

the real minimum wage is $0

AaronFriel 13y ago

I'm going to head off all the armchair economists, including the two* who have already replied as of 15 minutes after the article was posted. http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_br0IEq5a9E77NMV http://www.igmchicago.org/igm-economic-experts-panel/poll-re... Here's a real survey of actual economists, who largely agree, weighted by confidence, that "The distortionary costs of raising the federal minimum wage to $9 per hour and indexing it to inflation are sufficiently small compared with the benefits to low-skilled workers who can find employment that this would be a desirable policy." And, economists are reasonably mixed (split between schools, I believe) on the belief that raising the minimum wage to $9 per hour would make it noticeably harder for low-skill workers to find employment, and no one strongly agreed or disagreed. The evidence, the science, of economics, is mixed, as has been demonstrated by a comprehensive meta-analysis by Doucouliagos and Stanley. You can find a graph and other analysis here: http://www.cepr.net/documents/publications/min-wage-2013-02.pdf http://www.cepr.net/documents/publications/min-wage-2013-02.... So, in summary, economists mostly believe the benefits of raising the minimum wage outweigh the distortionary economic effects, and none were willing to make strong assertions on the effect it might have on unemployment. Everyone, put down your pitchforks and take off your party insignias, let's just raise the minimum wage a bit and see what happens, because it benefits a lot of people and there is scant evidence of a downside for a marginal increase in the wage floor. QED. * Perhaps three, if my sarcasm detector is off?

jljljl 13y ago
I came to link the exact study you provided. Here's the executive summary from the CEPR paper: "The report reviews evidence on eleven possible adjustments to minimum-wage increases that may help to explain why the measured employment effects are so consistently small. The strongest evidence suggests that the most important channels of adjustment are: reductions in labor turnover; improvements in organizational efficiency; reductions in wages of higher earners ("wage compression"); and small price increases. Given the relatively small cost to employers of modest increases in the minimum wage, these adjustment mechanisms appear to be more than sufficient to avoid employment losses, even for employers with a large share of low-wage workers." Of course, it's worth noting that the first two impacts listed (reductions in labor turnover; improvements in organizational efficiency) could themselves have an impact on new hires and hours worked.

jrockway 13y ago

Interesting thought: say you're a state that's broke and desperately in need of revenue. What happens if you raise the minimum wage so the extra tax the minimum wage workers are paying covers the deficit?

Steko 13y ago
You'd need a large increase because people making minimum wage are a small part of the income tax base (many don't pay taxes on net). Large increases to the minimum wage would tend to be counterproductive at least in the short term.

mullingitover 13y ago

I'd really like to see an experiment conducted that can put the whole debate to rest: raise the minimum wage in half of the states, lower it in the other half. Run this experiment for three years and compare the results, and apply the strategy with the best outcome to the rest of the country.

anatari 13y ago
The result of this experiment would be mostly useless unless the results were stark and causation can be traced back to this policy via other methods. It doesn't control for the millions of other factors that could affect the outcome.
grecy 13y ago
This has been more or less done, on a more global scale. Have a look at the minimum wage in every developed country compared to America. Now have a look at the standard of living for the average person on the street in all those countries compared to America. You have your answer. Comparatively, America is a developing country.
thetrb 13y ago
I don't think that would help much. Let's say you have 7$ minimum wage in one state and 10$ minimum wage in a neighboring state. I would think it's very likely that more low end jobs get created in the 7$ state compared to the other. However, if all states have a 10$ minimum wage then there's no easy substitute, except for going to another country, but that's much more complex.
panarky 13y ago
This is exactly what the cited research in the original post did. It looked at contiguous US states, where one raised the minimum wage and one did not. It measured the gain or loss in jobs with all these "natural experiments". This study found minimal effects on employment when comparing the states that raised minimum wages against those that did not.

pkaler 13y ago

Instead of raising the minimum wage, I'm a proponent of increasing the Earned Income Tax Credit. https://en.wikipedia.org/wiki/Earned_Income_Tax_Credit https://en.wikipedia.org/wiki/Earned_Income_Tax_Credit Rather than paying people more to flip burgers, I think it's better policy to top them off with cash and incentivize them to earn more money by getting better jobs. The EIC is a form of Negative Income Tax that was originated by Milton Friedman. http://www.econlib.org/library/Enc1/NegativeIncomeTax.html http://www.econlib.org/library/Enc1/NegativeIncomeTax.html

dragonwriter 13y ago
> Instead of raising the minimum wage, I'm a proponent of increasing the Earned Income Tax Credit. https://en.wikipedia.org/wiki/Earned_Income_Tax_Credit https://en.wikipedia.org/wiki/Earned_Income_Tax_Credit Adding a state-level EIC would be considerably more administratively complex for California than changing the level of the existing minimum wage -- which, even granting for the sake of argument that such an approach would be desirable ignoring administrative costs, might strongly disfavor that approach. > The EIC is a form of Negative Income Tax No, its not. The EIC is a means-tested social welfare program that has a benefit curve inconsistent with a negative income tax (particularly, it has ranges where more qualifying income increases the beneft, and ranges where it decreases the benefit, whereas the subsidy from a negative income tax is strictly non-increasing with additional income.)

kyledilger 13y ago

That's fine, I'll replace a part-time employee with an unpaid intern to even it out.