5 ms·

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 lon

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.
    - elnate 13y ago
      Some might, but it's only part of the picture. There are solutions to that as well such as a youth wage.
mikeyouse 13y ago
I don't get this.. Is the theory here that companies have $X in a bucket to pay staff, Employees each make $Y, so X/Y is the number of employees? Because that's not how it happens at all. Companies don't hire more staff than they require. If McDonalds needs 10 employees per shift to operate, they're going to hire 10 per shift no matter if they cost $8/hr or $16/hr. The amount of work determines the number of employees, not the other way around.
- forgingahead 13y ago
  The general principle is that an employee has to cost less than the money they bring in. The best HN-related example is that if you work for a software development firm, and if they bill you out to clients at $100 an hour, your total cost to them (your hourly wage + taxes + healthcare + benefits + extra) has to be less than $100. To properly phrase your example, yes it is depend on "work", but work is dependent on revenue. If McDs needs 10 employees per shift where they generate $800, each employees total cost per shift cannot be more than $80, which works out to about $10 CTC (cost-to-company) per hour in an 8-hour shift. If you now mandate that the worker salary MUST be $12 or higher than $12, McDs is losing money. So you either pray for an increase in business (sales), or cut costs (ie, fire people) and automate. And lower-skilled jobs are easier to automate. It's easier to automate fast-food checkout by having (for example) iPads for people to place their orders, so your human workforce can just be the cooks at the back and the janitorial staff.
  - johnsonman 13y ago
    If you now mandate that the worker salary MUST be $12 or higher than $12, McDs is losing money. So you either pray for an increase in business (sales), or cut costs (ie, fire people) and automate. Or you increase prices. Or a combination of the three.
    - sethammons 13y ago
      You increase prices, yes. You might trim the workforce too. But so does every other business that has a large contingent of low skill, low pay labor. This means that most things that are "made on the cheap" become more expensive. So now, the cost of living goes up for everyone who consumes from that pool of resources. This squeezes middle income families and hurts lower income families. Does the cost of living for which a minimum wage worker rise higher than the wage? I don't know. But with a higher cost of living and potentially greater unemployment, I'm not sure that raising minimum wage is a win. I'm not aware of all the complex reason for why the following is the case, but my brother's mom (I know how odd that may sound) was able to rent an apartment when she was 18 working in fast food without tips. There is _no way in h-e-double-hockey-sticks_ that that could happen anywhere in America today. I'm not convinced that raising minimum wage is the solution -- it could be part of the problem. Models of human behavior and economics can get tricky and counter-intuitive. It is a hard nut to crack; I'll just stick to writing software. Now, if someone wants to pay me to make and become familiar with those models....
vwinsyee 13y ago
Overall teen employment is very, very slightly affected by a minimum wage, after adjusting for spatial and temporal inhomogeneity. At least that's the consensus from most recent articles I've seen on the topic. The consensus is less conclusive on specific effects on minority groups. I've seen at least one paper showing short-term unemployment increase in minority groups. I've also seen at least one paper showing increased employment/earnings in younger, more affluent teens. Some of the recent well-cited studies: http://www.irle.berkeley.edu/workingpapers/166-08.pdf http://www.irle.berkeley.edu/workingpapers/166-08.pdf (2011) Looking at 1990-2009 CPS data: "Including controls for long-term growth differences among states and for heterogeneous economic shocks renders the employment and hours elasticities indistinguishable from zero and rules out any but very small disemployment effects. Dynamic evidence further shows the nature of bias in traditional estimates, and it also rules out all but very small negative long-run effects." http://onlinelibrary.wiley.com/doi/10.1111/j.1467-8543.2009.00723.x/full http://onlinelibrary.wiley.com/doi/10.1111/j.1467-8543.2009.... (2009) "A 10 per cent increase in the minimum wage reduces employment by about 0.10 per cent (see column 4 of Table 3). But even if this adverse employment effect were true, it would be of no practical relevance. An elasticity of −0.01 has no meaningful policy implications. If correct, the minimum wage could be doubled and cause only a 1 per cent decrease in teenage employment."
mprovost 13y ago
Here in NZ there's a minimum wage of $13.75 but there's also a starting out rate of $11 for people under 20 who are in training. So there is an incentive for companies to hire teens and get them started in the workforce.
coldtea 13y ago
>Now watch teen unemployment jump Not even an iota. Businesses need those employees anyway. And the impact of an increased minimum wages is minimal. They pay them less not because paying them more would drive them out of business or really eat into their margins, but just because they can. And it's not just teens. TONS of people work on minimum wage jobs that are older, including over fifty.
- ronaldx 13y ago
  There's an obvious difference: people who have existing minimum wage jobs (your over fifties) likely deserve a pay raise and have the skills and experience and value to justify it. This is a great policy for most people who are in minimum wage jobs. People who don't have those skills and experience (e.g. teenagers) will find it harder to justify their value to job creators, creating a vicious circle as they can't get experience without employment. If I have to pay $10, I'll seek to employ people who are worth $10+. Youth unemployment is 34.6% in California[0] - the next generation of workers can't afford this. [0]http://www.governing.com/gov-data/economy-finance/youth-employment-unemployment-rate-data-by-state.html http://www.governing.com/gov-data/economy-finance/youth-empl...
  - coldtea 13y ago
    >People who don't have those skills and experience (e.g. teenagers) will find it harder to justify their value to job creators It's not like you need "skills" and "experience" for most minimum wage jobs. You just need to be able to take hard work, crazy hours, and living on near (or below) substinence levels. The churn rate is quite high anyway, for experience to matter one iota. >creating a vicious circle as they can't get experience without employment. If I have to pay $10, I'll seek to employ people who are worth $10+. Most people that make minimum wage work their asses off. That's with regard to work amount. As for their benefit to the company, that's more than their salaries anyway. A lower minimum wage will not stop unemployment (whose reasons are completely different than wage demands). It's not like the pressure on companies is wage costs, and since minimum wage is the same in an area, there's no competition to businesses (e.g burger flipping, gas stations, cleaning, etc) from other companies as they all have to pay the same minimum wage. >Youth unemployment is 34.6% in California[0] - the next generation of workers can't afford this. That's because of lost business/industry/etc jobs, and not because businesses couldn't afford the tiny minimum wage that was already there. So the increase wont change anything. Not to mention: economies can also die because greedy owners pay their employees less. That saves some money short-term creates a death spiral of diminishing incomes and less spending all around. There's a reason Henry Ford wanted his pay his employees so that can "afford his cars".
StevenRayOrr 13y ago
I'd disagree with the notion that McJobs necessarily prepare people for future employment. Particularly when there is little in the way of responsibility or consequences. This is not to say that there is nothing to be learned from the fast food grind, but I think we give too much credit to the idea of "early work experience" without sufficient concern for the nature of that experience.
- jurassic 13y ago
  I definitely agree that early work in a McJob is not a good experience or a good use of time for middle-class kids who don't need to work. I have a younger sibling who wanted to work for some extra spending cash and my parents encouraged her to get a fast food job. She was a straight arrow up until then, but her high school performance seriously derailed because of the had-to-work friends (read: highschool dropouts, long-term poor, soft drug users, etc) she met while building tacos at Taco Bell. She finally wised up and made it to community college, but she was in a serious downward spiral for a long time. I know not everyone's experience is like this, but I definitely won't be pushing my kids to get a low-skill low-wage job when I could instead have them investing their time in skill-based hobbies or school.

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.
  - elnate 13y ago
    Some might, but it's only part of the picture. There are solutions to that as well such as a youth wage.

mikeyouse 13y ago

I don't get this.. Is the theory here that companies have $X in a bucket to pay staff, Employees each make $Y, so X/Y is the number of employees? Because that's not how it happens at all. Companies don't hire more staff than they require. If McDonalds needs 10 employees per shift to operate, they're going to hire 10 per shift no matter if they cost $8/hr or $16/hr. The amount of work determines the number of employees, not the other way around.

forgingahead 13y ago
The general principle is that an employee has to cost less than the money they bring in. The best HN-related example is that if you work for a software development firm, and if they bill you out to clients at $100 an hour, your total cost to them (your hourly wage + taxes + healthcare + benefits + extra) has to be less than $100. To properly phrase your example, yes it is depend on "work", but work is dependent on revenue. If McDs needs 10 employees per shift where they generate $800, each employees total cost per shift cannot be more than $80, which works out to about $10 CTC (cost-to-company) per hour in an 8-hour shift. If you now mandate that the worker salary MUST be $12 or higher than $12, McDs is losing money. So you either pray for an increase in business (sales), or cut costs (ie, fire people) and automate. And lower-skilled jobs are easier to automate. It's easier to automate fast-food checkout by having (for example) iPads for people to place their orders, so your human workforce can just be the cooks at the back and the janitorial staff.
- johnsonman 13y ago
  If you now mandate that the worker salary MUST be $12 or higher than $12, McDs is losing money. So you either pray for an increase in business (sales), or cut costs (ie, fire people) and automate. Or you increase prices. Or a combination of the three.
  - sethammons 13y ago
    You increase prices, yes. You might trim the workforce too. But so does every other business that has a large contingent of low skill, low pay labor. This means that most things that are "made on the cheap" become more expensive. So now, the cost of living goes up for everyone who consumes from that pool of resources. This squeezes middle income families and hurts lower income families. Does the cost of living for which a minimum wage worker rise higher than the wage? I don't know. But with a higher cost of living and potentially greater unemployment, I'm not sure that raising minimum wage is a win. I'm not aware of all the complex reason for why the following is the case, but my brother's mom (I know how odd that may sound) was able to rent an apartment when she was 18 working in fast food without tips. There is _no way in h-e-double-hockey-sticks_ that that could happen anywhere in America today. I'm not convinced that raising minimum wage is the solution -- it could be part of the problem. Models of human behavior and economics can get tricky and counter-intuitive. It is a hard nut to crack; I'll just stick to writing software. Now, if someone wants to pay me to make and become familiar with those models....

vwinsyee 13y ago

Overall teen employment is very, very slightly affected by a minimum wage, after adjusting for spatial and temporal inhomogeneity. At least that's the consensus from most recent articles I've seen on the topic. The consensus is less conclusive on specific effects on minority groups. I've seen at least one paper showing short-term unemployment increase in minority groups. I've also seen at least one paper showing increased employment/earnings in younger, more affluent teens. Some of the recent well-cited studies: http://www.irle.berkeley.edu/workingpapers/166-08.pdf http://www.irle.berkeley.edu/workingpapers/166-08.pdf (2011) Looking at 1990-2009 CPS data: "Including controls for long-term growth differences among states and for heterogeneous economic shocks renders the employment and hours elasticities indistinguishable from zero and rules out any but very small disemployment effects. Dynamic evidence further shows the nature of bias in traditional estimates, and it also rules out all but very small negative long-run effects." http://onlinelibrary.wiley.com/doi/10.1111/j.1467-8543.2009.00723.x/full http://onlinelibrary.wiley.com/doi/10.1111/j.1467-8543.2009.... (2009) "A 10 per cent increase in the minimum wage reduces employment by about 0.10 per cent (see column 4 of Table 3). But even if this adverse employment effect were true, it would be of no practical relevance. An elasticity of −0.01 has no meaningful policy implications. If correct, the minimum wage could be doubled and cause only a 1 per cent decrease in teenage employment."

mprovost 13y ago

Here in NZ there's a minimum wage of $13.75 but there's also a starting out rate of $11 for people under 20 who are in training. So there is an incentive for companies to hire teens and get them started in the workforce.

coldtea 13y ago

>Now watch teen unemployment jump Not even an iota. Businesses need those employees anyway. And the impact of an increased minimum wages is minimal. They pay them less not because paying them more would drive them out of business or really eat into their margins, but just because they can. And it's not just teens. TONS of people work on minimum wage jobs that are older, including over fifty.

ronaldx 13y ago
There's an obvious difference: people who have existing minimum wage jobs (your over fifties) likely deserve a pay raise and have the skills and experience and value to justify it. This is a great policy for most people who are in minimum wage jobs. People who don't have those skills and experience (e.g. teenagers) will find it harder to justify their value to job creators, creating a vicious circle as they can't get experience without employment. If I have to pay $10, I'll seek to employ people who are worth $10+. Youth unemployment is 34.6% in California[0] - the next generation of workers can't afford this. [0]http://www.governing.com/gov-data/economy-finance/youth-employment-unemployment-rate-data-by-state.html http://www.governing.com/gov-data/economy-finance/youth-empl...
- coldtea 13y ago
  >People who don't have those skills and experience (e.g. teenagers) will find it harder to justify their value to job creators It's not like you need "skills" and "experience" for most minimum wage jobs. You just need to be able to take hard work, crazy hours, and living on near (or below) substinence levels. The churn rate is quite high anyway, for experience to matter one iota. >creating a vicious circle as they can't get experience without employment. If I have to pay $10, I'll seek to employ people who are worth $10+. Most people that make minimum wage work their asses off. That's with regard to work amount. As for their benefit to the company, that's more than their salaries anyway. A lower minimum wage will not stop unemployment (whose reasons are completely different than wage demands). It's not like the pressure on companies is wage costs, and since minimum wage is the same in an area, there's no competition to businesses (e.g burger flipping, gas stations, cleaning, etc) from other companies as they all have to pay the same minimum wage. >Youth unemployment is 34.6% in California[0] - the next generation of workers can't afford this. That's because of lost business/industry/etc jobs, and not because businesses couldn't afford the tiny minimum wage that was already there. So the increase wont change anything. Not to mention: economies can also die because greedy owners pay their employees less. That saves some money short-term creates a death spiral of diminishing incomes and less spending all around. There's a reason Henry Ford wanted his pay his employees so that can "afford his cars".

StevenRayOrr 13y ago

I'd disagree with the notion that McJobs necessarily prepare people for future employment. Particularly when there is little in the way of responsibility or consequences. This is not to say that there is nothing to be learned from the fast food grind, but I think we give too much credit to the idea of "early work experience" without sufficient concern for the nature of that experience.

jurassic 13y ago
I definitely agree that early work in a McJob is not a good experience or a good use of time for middle-class kids who don't need to work. I have a younger sibling who wanted to work for some extra spending cash and my parents encouraged her to get a fast food job. She was a straight arrow up until then, but her high school performance seriously derailed because of the had-to-work friends (read: highschool dropouts, long-term poor, soft drug users, etc) she met while building tacos at Taco Bell. She finally wised up and made it to community college, but she was in a serious downward spiral for a long time. I know not everyone's experience is like this, but I definitely won't be pushing my kids to get a low-skill low-wage job when I could instead have them investing their time in skill-based hobbies or school.