11 ms·

Seattle votes for $15 minimum wage

53 points by dan_bk 12y ago

dan_bk 12y ago
> A councillor who supported the push said the vote "sends a message heard around the world". Probably the most important aspect here. Don't get ripped off.
arm55 12y ago
At worst, this is a great experiment. This will likely cause a substantial enough gap in pay between Seattle and another similar city that we can analyze the benefits and consequences of artificially increasing min wage.
- corin_ 12y ago
  Is there such a thing as a non-"artificial" minimum wage increase?
  - rcthompson 12y ago
    Yes, there is. If market forces drive wages up, that's a non-artificial wage increase. Just like any other commodity, when labor is in high demand (or in low supply), the price goes up.
    - zo1 12y ago
      The OP asked for a non-artificial minimum wage increase. Not a simple "wage" increase. There is nothing non-artificial about a minimum wage, nor it's increase counterpart.
- jeffdavis 12y ago
  I thought the same thing at first. But to analyze it as an experiment, you really need to determine some objective criteria for success and failure. Each individual may have different criteria, but it's important to come up with the criteria first and then compare them to the results later. Even then, it's unlikely to change many minds. With the economy, it's too easy to find some exceptional event that you can blame for the results not matching your prediction. I think we just have to accept that science can't answer everything, and the economy is probably one of those things that can't be answered.
  - whimsy 12y ago
    Well, the primary goal is, of course, to raise the income of minimum-wage earners. Failure criteria probably include things like a) a marked increase in businesses that rely on minimum-wage earners going out of business relative to other and/or b) a marked increase in unemployment among minimum-wage earners. I don't know what thresholds are reasonable. (Possibly confounding: as minimum wage increases, the available labor pool will also increase.) In the case of Seattle, they commissioned two pieces of research for this ordinance: UW Evans School of Public Affairs study: Local Minimum Wage Laws: Impacts on Workers, Families and Businesses [1] University of California, Berkeley study: Who Would be Affected by an Increase in Seattle’s Minimum Wage? [2] The second paper addresses a lot of the questions I suspect you're interested, and it addresses them with empirical evidence based on previous such experiments in other cities. [1] http://murray.seattle.gov/wp-content/uploads/2014/03/Evans-report-3_21_14-+-appdx.pdf http://murray.seattle.gov/wp-content/uploads/2014/03/Evans-r... [2] http://murray.seattle.gov/wp-content/uploads/2014/03/UC-Berkeley-IIAC-Report-3-20-2014.pdf http://murray.seattle.gov/wp-content/uploads/2014/03/UC-Berk...
- whimsy 12y ago
  This isn't the first time we've seen an artificial increase in the minimum wage in the US - it's just the highest artificially increased minimum wage. There are nine other localities where this has been done where there's empirical evidence available. See a link somewhere in the child tree of your comment.
- honksillet 12y ago
  Um, "at worst", this deals a death blow to many small businesses in Seattle and drives other business to greener pastures.
digitalengineer 12y ago
A minimum wage would stop companies indirectly sucking the 'welfare-tit', where their employees are forced to have welfare/food stamps in order to just survive. http://www.theguardian.com/commentisfree/2013/oct/30/mcdonalds-helpline-food-stamps-minimum-wage http://www.theguardian.com/commentisfree/2013/oct/30/mcdonal...
- zo1 12y ago
  Probably would, but it's really just shifting the costs elsewhere. With the "welfare-tit" as you call it, the taxpayers are paying the cost of the poorish via welfare paid for by taxes. But when you increase the minimum wage, it'd end up just shifting the costs to higher overall prices, which everyone will bear... including the poor it's meant to help. I suppose you could argue that this might cut into business owners' profits, but that's a stretch. As they'd most likely just raise prices to cover the new operating costs.
  - rahimnathwani 12y ago
    "As they'd most likely just raise prices to cover the new operating costs." If they could raise prices to completely offset an increase in costs, they would have done that already, and have higher profits as a result. They may raise prices, but it will not be revenue-neutral of profit-neutral for them.
    - benmmurphy 12y ago
      if you face strong competition then it may not be possible to raise prices even if consumers would pay higher prices.
      - isleyaardvark 12y ago
        The competition would also have to deal with an increased minimum wage.
  - bakhy 12y ago
    "it'd end up just shifting the costs to higher overall prices, which everyone will bear" -- not true. fact is, everyone bears those costs now, through the tax money going out for those social security programs. minimum wage will make it a burden just of those businesses, and not obligate society as a whole to subsidize their workers pay. as for the supposed price hike, rahimnathwani already covered that ;)
twelvechairs 12y ago
In Australia our minimum wage is $16.37 and $20.30 for casual work (no fixed hours). I think the gap to the usa minimum wages has generally narrowed over the last decade or so. The other side is that tipping in most forms is rare. Maybe a little less so now though
- deleted 12y ago
  [deleted]
vixin 12y ago
Evidently Seattle businesses are very productive and able to readily achieve profits over and above the $600+ a week (8h/d) cost of employing someone ( "+" means that I don't know what the overhead costs are). Rather tough on those whose energy and skills do not warrant employing them at that rate. The alternative for borderline businesses is to find ways of not employing anyone at all.
- whimsy 12y ago
  Ohoho, you think all minimum wage positions are full-time? This is simply false.
- zo1 12y ago
  > "Rather tough on those whose energy and skills do not warrant employing them at that rate. The alternative for borderline businesses is to find ways of not employing anyone at all." That's the dirty little secret that no one wants to talk about when it comes to the minimum wage. Especially in discussions where everyone is compelled to make feel-good arguments in support of stuff, without thinking of the long-term consequences. Sure, we'd all like it if all people could live comfortably, and it is a noble goal. But the minimum wage is not the way to do it.
  - whimsy 12y ago
    It would be an interesting and compelling secret if there was evidence for this occurring. Research indicates that it's simply untrue. "A larger body of economic research investigates the effects of state and federal minimum wage increases. These studies compare employment trends for states or counties that have different minimum wages. The best studies make comparisons to nearby states or counties to control for regional economic trends. These studies also find no statistically significant negative effects on employment or hours at an aggregate level or for low-wage industries such as restaurants and retail stores, or for specific groups of workers such as teens. These studies also do not find substitution effects (such as shifts in hiring away from black and Latino teens)." ... "In a prospective study of the San Francisco minimum wage, Reich and Laitinen (2003) carried out a representative survey of establishments. They estimated that a 25.9 percent increase in the minimum wage from $6.75 to $8.50 would result in a 1.1 percent increase in the overall wage bill. When viewed from the perspective of operating costs, a 26 percent increase would result in 82.0 percent of establishments experiencing an increase in operating costs of less than 1 percent or more, and 95.2 percent experiencing an increase in operating costs of less than 5 percent. Breaking down results by industry, they estimated that 17.9 percent of restaurants would experience an increase in operating costs of 5 percent or more, as would 8.6 percent of retail establishments. For manufacturing, entertainment, hotel, and personal service firms, the estimated increase in operating costs was close to zero. Pollin (2004) similarly estimated that the average increase in firms’ costs relative to sales under Santa Fe’s 2003 minimum wage ordinance would be 1 percent; the average cost increase for hotels relative to sales would be 3 percent. Benner and Jayaraman (2012) analyzed the impact of a proposed increase in the federal minimum wage from $7.25 to $10.10 (a 39 percent increase, not accounting for inflation during the phase-in) on the food industry. They estimated a maximum increase in operating costs for the food service and drinking establishment industry of 2.25 percent over three years, and 1 percent in the retail food industry. " from "University of California, Berkeley study: Who Would be Affected by an Increase in Seattle’s Minimum Wage?"[1], one of the pieces of research commissioned during the development of the Seattle ordinance. "This research was based on nine localities in the United States currently have enacted minimum wage laws: Albuquerque, NM; Bernalillo County, NM; Montgomery County, MD; Prince George's County, MD; San Francisco, CA; San Jose, CA; Santa Fe, NM; Santa Fe County, NM; and Washington DC." http://murray.seattle.gov/minimumwage/#sthash.u0fx1kth.dpuf http://murray.seattle.gov/minimumwage/#sthash.u0fx1kth.dpuf
trhway 12y ago
why Bay Area cities wouldn't do that? How much pricier our coffee/burritos would get here so that we stop buying them thus making the minimum wage increase a "job killer"? I think even making it $30/hour people here would hardly notice it.
- whimsy 12y ago
  Actually, San Francisco and San Jose both have laws increasing the minimum wage. Richmond also just passed an ordinance in March to raise it to $12.30 by 2017, which will be the highest minimum wage in CA.
omarforgotpwd 12y ago
"Seattle votes to fire everyone worth less than $15 / hour"
- dan_bk 12y ago
  That argument doesn't work, b/c: You can always "create jobs" by lowering the salary. As others have noted, it simply results in people becoming dependent on social benefits (and this bill ends up being footed by the tax payer). So: You are right if you think that the tax payer should subsidize business owners.
  - fdr234rd22 12y ago
    That is a trite and misleading argument. 89% of minimum wage workers don't live in poor households. To say that they are being subsidized because they are poor is simply dishonest. See my link above.
    - KJasper 12y ago
      Those 11% isn't worth helping? And should be subsidized by the government?
      - dfa333377777 12y ago
        Who said that? Why attack the minimum wage and not the EITC (which directly helps the poor)?
    - ubernostrum 12y ago
      In the United States, a family of four with a total household income of $23,851/yr. is "not poor". An individual with an income of $11,761/yr. is "not poor". If you believe an individual can survive on $11,761, or that a family of four can survive on $23,851, in a major city, I would identify that as a flaw in your positions.
    - bakhy 12y ago
      the word "households" being key. i just noticed that the text you linked clearly states that in those households there need to be 2-3 workers (or one doing 2-3 jobs) for them to rise above the poverty line. if one would try to put a price on the lost free time, family interaction,.. these people could in fact be in a very tough situation, even though their bank account might not reflect it.
literalusername 12y ago
SeaTac raised it to $15 at the beginning of 2014, and they're already seeing regrettable consequences. “Are you happy with the $15 wage?” I asked the full-time cleaning lady. “It sounds good, but it’s not good,” the woman said. “Why?” I asked. “I lost my 401k, health insurance, paid holiday, and vacation,” she responded. “No more free food,” she added. The hotel used to feed her. Now, she has to bring her own food. Also, no overtime, she said. She used to work extra hours and received overtime pay. What else? I asked. “I have to pay for parking,” she said. I then asked the part-time waitress, who was part of the catering staff. “Yes, I’ve got $15 an hour, but all my tips are now much less,” she said. Before the new wage law was implemented, her hourly wage was $7. But her tips added to more than $15 an hour. Yes, she used to receive free food and parking. Now, she has to bring her own food and pay for parking. http://www.unitedliberty.org/articles/17751-warning-to-seattle-seatac-businesses-slashing-benefits-overtime-in-wake-of-wage-hike http://www.unitedliberty.org/articles/17751-warning-to-seatt...
- georgemcbay 12y ago
  Well, with such an unbiased source as United Liberty quoting "full-time cleaning lady" as their economic analyst I guess the matter is settled.
  - fdr234rd22 12y ago
    Maybe you should read the article. They're quoting from "Assunta Ng, publisher of the Northwest Asian Weekly" http://www.nwasianweekly.com/2014/05/blog-seatac-tells-us-15-minimum-wage/ http://www.nwasianweekly.com/2014/05/blog-seatac-tells-us-15...
- pawelkomarnicki 12y ago
  Well that's another case of "careful what you wish for", assuming the money coming to the company is the same, but the output money is (any amount) higher, somewhere must be the cut to keep the profitability, and it's the easiest way to cut the perks...
- bakhy 12y ago
bakhy 12y ago
the most incredible libertarian assumption is that all companies operate in such a way that the smallest hike in pay absolutely must result in cutbacks elsewhere. apparently, no company is making any profit! :D
- georgemcbay 12y ago
  Agreed. Also there seems to be an implied assumption that these "no-profit" companies are only holding on to their current low-wage workers out of some kind of charity that will expire when they have to pay them a few bucks more an hour, which seems absurd when all of my experience as a retail consumer suggests that modern companies staffed primarily by minimum-wage workforces are generally incredibly under-staffed already in the name of increasing the profit the companies employing them supposedly aren't making, as evidenced by the generally poor customer service, long wait times for service, etc (I'm in SoCal, YMMV in other parts of the country).
  - bakhy 12y ago
    of course. the day a company, when faced with larger profits, decides "hey, let's give it all to our workers through an increase in pay" is when i'll believe the libertarians ;) the determining factor for the amount someone is payed is not how much their company earns, and/or how much they contribute to that. for most workers it is simply - how easily can s/he be replaced? i.e. market price, mostly independent of how well an individual company is doing! no manager is going to pay workers more than s/he needs to, at least not without risking reduction in competitiveness, and for workers with low education, you can find replacements easy, particularly during economic downturns.
    - zo1 12y ago
      "of course. the day a company, when faced with larger profits, decides "hey, let's give it all to our workers through an increase in pay" is when i'll believe the libertarians ;)" This has nothing to do with Libertarianism, nor any of it's main tenets. It's called charity, and you'd do well to disassociate it with petty political ideology.
homakov 12y ago
How exactly will it help? Employers are not stupid, they will pay the same money eventually, destroying the perks.
conroe64 12y ago
Now, if only the workers did $15 per hour worth of work, everything would be set...
bmm6o 12y ago
For anyone who thinks that $15 minimum wage is a bad idea, what do you think is the "correct" value for a legislated minimum wage? Is the current value also too high? Should there be such a thing as a minimum wage?
- glenra 12y ago
  The current value is also too high. There should be no such thing as a minimum wage.
  - bmm6o 12y ago
    How do you see this work in practice? Would you still have government assistance programs to subsidize workers at the low end? I mean, you would expect wages for a lot of people to drop drastically, right?
    - glenra 12y ago
      > Would you still have government assistance programs to subsidize workers at the low end? Those are separable concerns; I see no strong reason to immediately change the status quo in that regard. > I mean, you would expect wages for a lot of people to drop drastically, right? No, I would actually expect wages for a lot of people to increase and the overall need for assistance to decline. But there's an important trick here that renders things a bit counterintuitive, which is that average wages would indeed decline - even though nearly everybody in the economy is being paid as much or more than they were before. This happens because you're adding new workers into the pool of people with jobs, and you're adding them at the low end. If you just look at people at the low end who are currently unemployed, underemployed or illegally employed: without a minimum wage law they would find it much easier to get a legal first job, some transitional employment which gives them experience and references and training that makes it easier for them to get higher-paying later jobs. So THEIR reported income goes UP, both in the short run and in the longer run. But since they weren't employed before, their wage of $0/hour wasn't part of the "average wage" computation BEFORE, and their new wage of, say, $5/hour is part of the "average wage" computation after the change, so their improved salary drags the computed "average" down. Now consider the rest of the economy: The existence of more people in the labor force who were previously unemployed makes the economy more productive, which enables even people earning far above the minimum to also get higher wages. When someone who is highly productive can hire other people to mow the lawn, empty the trash, do the filing or paperwork, that person can focus more of their own time and effort on what they're best at - more workers means more gains can be had from specialization of labor. Also, the fact that fewer people are entirely unemployed and more are rapidly entering the workforce means we need less government assistance which means tax rates could decline, again making the economy more productive and increasing standard of living. (The case for getting rid of the minimum wage is actually quite similar to the case for open borders. Fully opening the borders to let people work wherever they want would by some estimates DOUBLE world GDP. Getting rid of minimum wage laws everywhere wouldn't have nearly THAT large an effect, but it would be quite positive.)
holograham 12y ago
I think most people on HN agree that employees should be paid proportional to the value they create. In fact that is an underlying reason many folks choose to work for (or start) a startup for equity rather than a big company for a salary. With equity, the more value you produce the more you make. For the rest of America, you typically work for an agreed upon sum (salary or hourly wage) with your employer. We call this a mutually agreeable contract since no one is forced to work for an employer in our modern society (we have valid laws to prevent this scenario). If an employee does not like a given wage, they can shop their skills around for another employer (or start their own company) in order to gain a higher wage. We call this the free market. I am a libertarian all about math. But even putting math aside, with the logic above why is there a need for a minimum wage?
- bakhy 12y ago
  supply and demand have an important quality called elasticity, which is not taken into account in libertarian discourse. unlike a simple commodity market, like coffee for example, where a buyer can say "these prices are too high, i'm not going to buy any", a worker cannot simply say, "these wages are too low, i'm not going to work". (unless the government plans to give them all sufficient social security so that they can live comfortably without any work, which is unlikely and probably undesirable.) likewise, when a coffee producer sells a lot due to good prices, he will increase his production, and thus the supply. in the labor market, a company that seeks workers and offers them a great wage will easily find workers, but i find it incredible that it's managers will then think "hey, we had such a great demand for work, let's hire more people just because of that!" it will not increase demand, limiting the effect a single positive agent can have. not every market is exactly the same, and considering the dynamics of various markets will enable you to understand why so many countries have minimum wage, why they subsidize food production and are very interested in influencing the prices of basic commodities, and why they often meddle in real estate. these are things people simply cannot do without, and the stability of governments and regimes depends on somehow ensuring them for as many people as possible.
  - glenra 12y ago
    If workers are so desperate that they can't not work, then putting them out of a job by making it illegal to work for low wages is especially cruel. If you doubt that the minimum wage causes unemployment, how do you explain that the countries in Europe with a national minimum wage law have such consistently higher unemployment rates than the countries in Europe without one?
todd8 12y ago
For years, I've been frustrated by the debate over the minimum wage. Like many economic arguments, lots of ideas are mixed together and argued without very clear analysis. Seattle will offer us an opportunity to see what really happens when we establish minimum wages at levels comparable to some other developed countries. I happen to be a libertarian, and I note that there are often philosophical and economic arguments to be made for policy decisions. I'd like to see policies that are both just and economically efficient. So, for example, an argument (clearly specious) that women staying out of the workplace would produce overall economic gains doesn't matter to me. I don't care if it would or it wouldn't be more economically efficient for women (or minorities or red-heads) to be restricted from certain jobs. It's wrong to have laws restricting the freedom of women or minorities or red-heads and that trumps economic arguments. In Seattle, they have decided that restrictions on their citizens fundamental freedoms, will on balance be worth instituting, but the freedom to work, entering into an agreement to sell one's labor, is an important freedom that is being abrogated. What if Seattle decided that it wanted to encourage more high tech workers to move to Seattle, because it would increase the tax base, and they instituted a minimum wage for programmers, say $160 per hour. What would happen? Would you like being told that you were not allowed to program in Seattle unless you could find a job that paid $320,000 per year? It would ruin things. Like $160 per hour programmers, many $16 per hour low-skilled teenage kids will be priced right out of the job market. I got my start working in my first full-time job working for under $3 per hour. I lived at home with my parents, and my income made only a modest dent on the family's overall income, but it gave me a start. I learned to get up every morning, get to work, and do my job. Low wage jobs are a way to get into the job market, even if they don't immediately provide wealth and comfort. Ignoring the restrictions on our freedom of contract, some argue that this development is a good thing nevertheless, that the $16 per hour will help those living in poverty. Well, if $16 per hour is a good thing why wouldn't $25 per hour be even better? Clearly there is a level that will have negative impacts. Those supporting $16 per hour seem to recognize that there will be negative impacts, but the argument goes that these negative impacts are not so bad because they affect a group that the minimum wage supporters don't like or don't care about (for example, business owners). Perhaps supporters of the new minimum wage really do care about everyone and my last paragraph is too harsh. In that case what I see is a kind of first-order effect rationale being given that ignores the indirect, but possibly quite significant, consequences of the new minimum wage policy. Each side in this debate has studies that they can cite, but money doesn't grow on trees. It has to come from somewhere. Businesses will have to cover the costs by doing either (1) lowering the dividends to the owners/shareholders, (2) decreasing the salaries of higher paid employees or employing fewer people, or (3) increasing the costs imposed on the business's consumers. All of these actions have negative consequences. (1), lowering the benefits of owning the business means that over time, there will be less of them in Seattle; (2), lowers employment, often of the people this policy is purported to help; and (3), increases costs to everyone (or lowers the quality of the goods provided). If my simple breakdown in the previous paragraph is correct, why are politicians in Seattle supporting this new minimum wage? Politicians want to stay in office and they can use the minimum wage to appeal to large groups. One group is those that want to help others but don't understand economics or freedom well enough to understand what this policy means. The other group is comprised of those whose jobs might be threatened by workers willing to do the same job for less than $16 per hour. (This is the reason that unions are big supporters of raising the minimum wage even though their workers have wages far above minimum wage. It protects their high wages from low cost competition.)
DanBC 12y ago
Things to watch for: 1) businesses making employees clock in when it's busy, and clock out but stay on the premises when it's not busy. Thus, the business has workers available but only has to pay them for some of the time those workers are there. 2) "zero hour contracts". http://acas.org.uk/index.aspx?articleid=4468 http://acas.org.uk/index.aspx?articleid=4468 Other things the UK has done is increase the amount someone needs to earn before they start paying income tax; reduce the lower rates of income tax; provide "working tax credit" to some people, etc. I have no idea how the US tax system works so I don't know if that could be done or would work with voters. ("Supporting business to employ people on fair wages" maybe?)

53 points by dan_bk 12y ago

> A councillor who supported the push said the vote "sends a message heard around the world". Probably the most important aspect here. Don't get ripped off.

arm55 12y ago

At worst, this is a great experiment. This will likely cause a substantial enough gap in pay between Seattle and another similar city that we can analyze the benefits and consequences of artificially increasing min wage.

corin_ 12y ago
Is there such a thing as a non-"artificial" minimum wage increase?
- rcthompson 12y ago
  Yes, there is. If market forces drive wages up, that's a non-artificial wage increase. Just like any other commodity, when labor is in high demand (or in low supply), the price goes up.
  - zo1 12y ago
    The OP asked for a non-artificial minimum wage increase. Not a simple "wage" increase. There is nothing non-artificial about a minimum wage, nor it's increase counterpart.
jeffdavis 12y ago
I thought the same thing at first. But to analyze it as an experiment, you really need to determine some objective criteria for success and failure. Each individual may have different criteria, but it's important to come up with the criteria first and then compare them to the results later. Even then, it's unlikely to change many minds. With the economy, it's too easy to find some exceptional event that you can blame for the results not matching your prediction. I think we just have to accept that science can't answer everything, and the economy is probably one of those things that can't be answered.
- whimsy 12y ago
  Well, the primary goal is, of course, to raise the income of minimum-wage earners. Failure criteria probably include things like a) a marked increase in businesses that rely on minimum-wage earners going out of business relative to other and/or b) a marked increase in unemployment among minimum-wage earners. I don't know what thresholds are reasonable. (Possibly confounding: as minimum wage increases, the available labor pool will also increase.) In the case of Seattle, they commissioned two pieces of research for this ordinance: UW Evans School of Public Affairs study: Local Minimum Wage Laws: Impacts on Workers, Families and Businesses [1] University of California, Berkeley study: Who Would be Affected by an Increase in Seattle’s Minimum Wage? [2] The second paper addresses a lot of the questions I suspect you're interested, and it addresses them with empirical evidence based on previous such experiments in other cities. [1] http://murray.seattle.gov/wp-content/uploads/2014/03/Evans-report-3_21_14-+-appdx.pdf http://murray.seattle.gov/wp-content/uploads/2014/03/Evans-r... [2] http://murray.seattle.gov/wp-content/uploads/2014/03/UC-Berkeley-IIAC-Report-3-20-2014.pdf http://murray.seattle.gov/wp-content/uploads/2014/03/UC-Berk...
whimsy 12y ago
This isn't the first time we've seen an artificial increase in the minimum wage in the US - it's just the highest artificially increased minimum wage. There are nine other localities where this has been done where there's empirical evidence available. See a link somewhere in the child tree of your comment.
honksillet 12y ago
Um, "at worst", this deals a death blow to many small businesses in Seattle and drives other business to greener pastures.

digitalengineer 12y ago

A minimum wage would stop companies indirectly sucking the 'welfare-tit', where their employees are forced to have welfare/food stamps in order to just survive. http://www.theguardian.com/commentisfree/2013/oct/30/mcdonalds-helpline-food-stamps-minimum-wage http://www.theguardian.com/commentisfree/2013/oct/30/mcdonal...

zo1 12y ago
Probably would, but it's really just shifting the costs elsewhere. With the "welfare-tit" as you call it, the taxpayers are paying the cost of the poorish via welfare paid for by taxes. But when you increase the minimum wage, it'd end up just shifting the costs to higher overall prices, which everyone will bear... including the poor it's meant to help. I suppose you could argue that this might cut into business owners' profits, but that's a stretch. As they'd most likely just raise prices to cover the new operating costs.
- rahimnathwani 12y ago
  "As they'd most likely just raise prices to cover the new operating costs." If they could raise prices to completely offset an increase in costs, they would have done that already, and have higher profits as a result. They may raise prices, but it will not be revenue-neutral of profit-neutral for them.
  - benmmurphy 12y ago
    if you face strong competition then it may not be possible to raise prices even if consumers would pay higher prices.
    - isleyaardvark 12y ago
      The competition would also have to deal with an increased minimum wage.
- bakhy 12y ago
  "it'd end up just shifting the costs to higher overall prices, which everyone will bear" -- not true. fact is, everyone bears those costs now, through the tax money going out for those social security programs. minimum wage will make it a burden just of those businesses, and not obligate society as a whole to subsidize their workers pay. as for the supposed price hike, rahimnathwani already covered that ;)

twelvechairs 12y ago

In Australia our minimum wage is $16.37 and $20.30 for casual work (no fixed hours). I think the gap to the usa minimum wages has generally narrowed over the last decade or so. The other side is that tipping in most forms is rare. Maybe a little less so now though

deleted 12y ago
[deleted]

vixin 12y ago

Evidently Seattle businesses are very productive and able to readily achieve profits over and above the $600+ a week (8h/d) cost of employing someone ( "+" means that I don't know what the overhead costs are). Rather tough on those whose energy and skills do not warrant employing them at that rate. The alternative for borderline businesses is to find ways of not employing anyone at all.

whimsy 12y ago
Ohoho, you think all minimum wage positions are full-time? This is simply false.
zo1 12y ago
> "Rather tough on those whose energy and skills do not warrant employing them at that rate. The alternative for borderline businesses is to find ways of not employing anyone at all." That's the dirty little secret that no one wants to talk about when it comes to the minimum wage. Especially in discussions where everyone is compelled to make feel-good arguments in support of stuff, without thinking of the long-term consequences. Sure, we'd all like it if all people could live comfortably, and it is a noble goal. But the minimum wage is not the way to do it.
- whimsy 12y ago
  It would be an interesting and compelling secret if there was evidence for this occurring. Research indicates that it's simply untrue. "A larger body of economic research investigates the effects of state and federal minimum wage increases. These studies compare employment trends for states or counties that have different minimum wages. The best studies make comparisons to nearby states or counties to control for regional economic trends. These studies also find no statistically significant negative effects on employment or hours at an aggregate level or for low-wage industries such as restaurants and retail stores, or for specific groups of workers such as teens. These studies also do not find substitution effects (such as shifts in hiring away from black and Latino teens)." ... "In a prospective study of the San Francisco minimum wage, Reich and Laitinen (2003) carried out a representative survey of establishments. They estimated that a 25.9 percent increase in the minimum wage from $6.75 to $8.50 would result in a 1.1 percent increase in the overall wage bill. When viewed from the perspective of operating costs, a 26 percent increase would result in 82.0 percent of establishments experiencing an increase in operating costs of less than 1 percent or more, and 95.2 percent experiencing an increase in operating costs of less than 5 percent. Breaking down results by industry, they estimated that 17.9 percent of restaurants would experience an increase in operating costs of 5 percent or more, as would 8.6 percent of retail establishments. For manufacturing, entertainment, hotel, and personal service firms, the estimated increase in operating costs was close to zero. Pollin (2004) similarly estimated that the average increase in firms’ costs relative to sales under Santa Fe’s 2003 minimum wage ordinance would be 1 percent; the average cost increase for hotels relative to sales would be 3 percent. Benner and Jayaraman (2012) analyzed the impact of a proposed increase in the federal minimum wage from $7.25 to $10.10 (a 39 percent increase, not accounting for inflation during the phase-in) on the food industry. They estimated a maximum increase in operating costs for the food service and drinking establishment industry of 2.25 percent over three years, and 1 percent in the retail food industry. " from "University of California, Berkeley study: Who Would be Affected by an Increase in Seattle’s Minimum Wage?"[1], one of the pieces of research commissioned during the development of the Seattle ordinance. "This research was based on nine localities in the United States currently have enacted minimum wage laws: Albuquerque, NM; Bernalillo County, NM; Montgomery County, MD; Prince George's County, MD; San Francisco, CA; San Jose, CA; Santa Fe, NM; Santa Fe County, NM; and Washington DC." http://murray.seattle.gov/minimumwage/#sthash.u0fx1kth.dpuf http://murray.seattle.gov/minimumwage/#sthash.u0fx1kth.dpuf

trhway 12y ago

why Bay Area cities wouldn't do that? How much pricier our coffee/burritos would get here so that we stop buying them thus making the minimum wage increase a "job killer"? I think even making it $30/hour people here would hardly notice it.

whimsy 12y ago
Actually, San Francisco and San Jose both have laws increasing the minimum wage. Richmond also just passed an ordinance in March to raise it to $12.30 by 2017, which will be the highest minimum wage in CA.

omarforgotpwd 12y ago

"Seattle votes to fire everyone worth less than $15 / hour"

dan_bk 12y ago
That argument doesn't work, b/c: You can always "create jobs" by lowering the salary. As others have noted, it simply results in people becoming dependent on social benefits (and this bill ends up being footed by the tax payer). So: You are right if you think that the tax payer should subsidize business owners.
- fdr234rd22 12y ago
  That is a trite and misleading argument. 89% of minimum wage workers don't live in poor households. To say that they are being subsidized because they are poor is simply dishonest. See my link above.
  - KJasper 12y ago
    Those 11% isn't worth helping? And should be subsidized by the government?
    - dfa333377777 12y ago
      Who said that? Why attack the minimum wage and not the EITC (which directly helps the poor)?
  - ubernostrum 12y ago
    In the United States, a family of four with a total household income of $23,851/yr. is "not poor". An individual with an income of $11,761/yr. is "not poor". If you believe an individual can survive on $11,761, or that a family of four can survive on $23,851, in a major city, I would identify that as a flaw in your positions.
  - bakhy 12y ago
    the word "households" being key. i just noticed that the text you linked clearly states that in those households there need to be 2-3 workers (or one doing 2-3 jobs) for them to rise above the poverty line. if one would try to put a price on the lost free time, family interaction,.. these people could in fact be in a very tough situation, even though their bank account might not reflect it.

literalusername 12y ago

SeaTac raised it to $15 at the beginning of 2014, and they're already seeing regrettable consequences. “Are you happy with the $15 wage?” I asked the full-time cleaning lady. “It sounds good, but it’s not good,” the woman said. “Why?” I asked. “I lost my 401k, health insurance, paid holiday, and vacation,” she responded. “No more free food,” she added. The hotel used to feed her. Now, she has to bring her own food. Also, no overtime, she said. She used to work extra hours and received overtime pay. What else? I asked. “I have to pay for parking,” she said. I then asked the part-time waitress, who was part of the catering staff. “Yes, I’ve got $15 an hour, but all my tips are now much less,” she said. Before the new wage law was implemented, her hourly wage was $7. But her tips added to more than $15 an hour. Yes, she used to receive free food and parking. Now, she has to bring her own food and pay for parking. http://www.unitedliberty.org/articles/17751-warning-to-seattle-seatac-businesses-slashing-benefits-overtime-in-wake-of-wage-hike http://www.unitedliberty.org/articles/17751-warning-to-seatt...

georgemcbay 12y ago
Well, with such an unbiased source as United Liberty quoting "full-time cleaning lady" as their economic analyst I guess the matter is settled.
- fdr234rd22 12y ago
  Maybe you should read the article. They're quoting from "Assunta Ng, publisher of the Northwest Asian Weekly" http://www.nwasianweekly.com/2014/05/blog-seatac-tells-us-15-minimum-wage/ http://www.nwasianweekly.com/2014/05/blog-seatac-tells-us-15...
pawelkomarnicki 12y ago
Well that's another case of "careful what you wish for", assuming the money coming to the company is the same, but the output money is (any amount) higher, somewhere must be the cut to keep the profitability, and it's the easiest way to cut the perks...
bakhy 12y ago

bakhy 12y ago

the most incredible libertarian assumption is that all companies operate in such a way that the smallest hike in pay absolutely must result in cutbacks elsewhere. apparently, no company is making any profit! :D

georgemcbay 12y ago
Agreed. Also there seems to be an implied assumption that these "no-profit" companies are only holding on to their current low-wage workers out of some kind of charity that will expire when they have to pay them a few bucks more an hour, which seems absurd when all of my experience as a retail consumer suggests that modern companies staffed primarily by minimum-wage workforces are generally incredibly under-staffed already in the name of increasing the profit the companies employing them supposedly aren't making, as evidenced by the generally poor customer service, long wait times for service, etc (I'm in SoCal, YMMV in other parts of the country).
- bakhy 12y ago
  of course. the day a company, when faced with larger profits, decides "hey, let's give it all to our workers through an increase in pay" is when i'll believe the libertarians ;) the determining factor for the amount someone is payed is not how much their company earns, and/or how much they contribute to that. for most workers it is simply - how easily can s/he be replaced? i.e. market price, mostly independent of how well an individual company is doing! no manager is going to pay workers more than s/he needs to, at least not without risking reduction in competitiveness, and for workers with low education, you can find replacements easy, particularly during economic downturns.
  - zo1 12y ago
    "of course. the day a company, when faced with larger profits, decides "hey, let's give it all to our workers through an increase in pay" is when i'll believe the libertarians ;)" This has nothing to do with Libertarianism, nor any of it's main tenets. It's called charity, and you'd do well to disassociate it with petty political ideology.

homakov 12y ago

How exactly will it help? Employers are not stupid, they will pay the same money eventually, destroying the perks.

conroe64 12y ago

Now, if only the workers did $15 per hour worth of work, everything would be set...

bmm6o 12y ago

For anyone who thinks that $15 minimum wage is a bad idea, what do you think is the "correct" value for a legislated minimum wage? Is the current value also too high? Should there be such a thing as a minimum wage?

glenra 12y ago
The current value is also too high. There should be no such thing as a minimum wage.
- bmm6o 12y ago
  How do you see this work in practice? Would you still have government assistance programs to subsidize workers at the low end? I mean, you would expect wages for a lot of people to drop drastically, right?
  - glenra 12y ago
    > Would you still have government assistance programs to subsidize workers at the low end? Those are separable concerns; I see no strong reason to immediately change the status quo in that regard. > I mean, you would expect wages for a lot of people to drop drastically, right? No, I would actually expect wages for a lot of people to increase and the overall need for assistance to decline. But there's an important trick here that renders things a bit counterintuitive, which is that average wages would indeed decline - even though nearly everybody in the economy is being paid as much or more than they were before. This happens because you're adding new workers into the pool of people with jobs, and you're adding them at the low end. If you just look at people at the low end who are currently unemployed, underemployed or illegally employed: without a minimum wage law they would find it much easier to get a legal first job, some transitional employment which gives them experience and references and training that makes it easier for them to get higher-paying later jobs. So THEIR reported income goes UP, both in the short run and in the longer run. But since they weren't employed before, their wage of $0/hour wasn't part of the "average wage" computation BEFORE, and their new wage of, say, $5/hour is part of the "average wage" computation after the change, so their improved salary drags the computed "average" down. Now consider the rest of the economy: The existence of more people in the labor force who were previously unemployed makes the economy more productive, which enables even people earning far above the minimum to also get higher wages. When someone who is highly productive can hire other people to mow the lawn, empty the trash, do the filing or paperwork, that person can focus more of their own time and effort on what they're best at - more workers means more gains can be had from specialization of labor. Also, the fact that fewer people are entirely unemployed and more are rapidly entering the workforce means we need less government assistance which means tax rates could decline, again making the economy more productive and increasing standard of living. (The case for getting rid of the minimum wage is actually quite similar to the case for open borders. Fully opening the borders to let people work wherever they want would by some estimates DOUBLE world GDP. Getting rid of minimum wage laws everywhere wouldn't have nearly THAT large an effect, but it would be quite positive.)

holograham 12y ago

I think most people on HN agree that employees should be paid proportional to the value they create. In fact that is an underlying reason many folks choose to work for (or start) a startup for equity rather than a big company for a salary. With equity, the more value you produce the more you make. For the rest of America, you typically work for an agreed upon sum (salary or hourly wage) with your employer. We call this a mutually agreeable contract since no one is forced to work for an employer in our modern society (we have valid laws to prevent this scenario). If an employee does not like a given wage, they can shop their skills around for another employer (or start their own company) in order to gain a higher wage. We call this the free market. I am a libertarian all about math. But even putting math aside, with the logic above why is there a need for a minimum wage?

bakhy 12y ago
supply and demand have an important quality called elasticity, which is not taken into account in libertarian discourse. unlike a simple commodity market, like coffee for example, where a buyer can say "these prices are too high, i'm not going to buy any", a worker cannot simply say, "these wages are too low, i'm not going to work". (unless the government plans to give them all sufficient social security so that they can live comfortably without any work, which is unlikely and probably undesirable.) likewise, when a coffee producer sells a lot due to good prices, he will increase his production, and thus the supply. in the labor market, a company that seeks workers and offers them a great wage will easily find workers, but i find it incredible that it's managers will then think "hey, we had such a great demand for work, let's hire more people just because of that!" it will not increase demand, limiting the effect a single positive agent can have. not every market is exactly the same, and considering the dynamics of various markets will enable you to understand why so many countries have minimum wage, why they subsidize food production and are very interested in influencing the prices of basic commodities, and why they often meddle in real estate. these are things people simply cannot do without, and the stability of governments and regimes depends on somehow ensuring them for as many people as possible.
- glenra 12y ago
  If workers are so desperate that they can't not work, then putting them out of a job by making it illegal to work for low wages is especially cruel. If you doubt that the minimum wage causes unemployment, how do you explain that the countries in Europe with a national minimum wage law have such consistently higher unemployment rates than the countries in Europe without one?

todd8 12y ago

For years, I've been frustrated by the debate over the minimum wage. Like many economic arguments, lots of ideas are mixed together and argued without very clear analysis. Seattle will offer us an opportunity to see what really happens when we establish minimum wages at levels comparable to some other developed countries. I happen to be a libertarian, and I note that there are often philosophical and economic arguments to be made for policy decisions. I'd like to see policies that are both just and economically efficient. So, for example, an argument (clearly specious) that women staying out of the workplace would produce overall economic gains doesn't matter to me. I don't care if it would or it wouldn't be more economically efficient for women (or minorities or red-heads) to be restricted from certain jobs. It's wrong to have laws restricting the freedom of women or minorities or red-heads and that trumps economic arguments. In Seattle, they have decided that restrictions on their citizens fundamental freedoms, will on balance be worth instituting, but the freedom to work, entering into an agreement to sell one's labor, is an important freedom that is being abrogated. What if Seattle decided that it wanted to encourage more high tech workers to move to Seattle, because it would increase the tax base, and they instituted a minimum wage for programmers, say $160 per hour. What would happen? Would you like being told that you were not allowed to program in Seattle unless you could find a job that paid $320,000 per year? It would ruin things. Like $160 per hour programmers, many $16 per hour low-skilled teenage kids will be priced right out of the job market. I got my start working in my first full-time job working for under $3 per hour. I lived at home with my parents, and my income made only a modest dent on the family's overall income, but it gave me a start. I learned to get up every morning, get to work, and do my job. Low wage jobs are a way to get into the job market, even if they don't immediately provide wealth and comfort. Ignoring the restrictions on our freedom of contract, some argue that this development is a good thing nevertheless, that the $16 per hour will help those living in poverty. Well, if $16 per hour is a good thing why wouldn't $25 per hour be even better? Clearly there is a level that will have negative impacts. Those supporting $16 per hour seem to recognize that there will be negative impacts, but the argument goes that these negative impacts are not so bad because they affect a group that the minimum wage supporters don't like or don't care about (for example, business owners). Perhaps supporters of the new minimum wage really do care about everyone and my last paragraph is too harsh. In that case what I see is a kind of first-order effect rationale being given that ignores the indirect, but possibly quite significant, consequences of the new minimum wage policy. Each side in this debate has studies that they can cite, but money doesn't grow on trees. It has to come from somewhere. Businesses will have to cover the costs by doing either (1) lowering the dividends to the owners/shareholders, (2) decreasing the salaries of higher paid employees or employing fewer people, or (3) increasing the costs imposed on the business's consumers. All of these actions have negative consequences. (1), lowering the benefits of owning the business means that over time, there will be less of them in Seattle; (2), lowers employment, often of the people this policy is purported to help; and (3), increases costs to everyone (or lowers the quality of the goods provided). If my simple breakdown in the previous paragraph is correct, why are politicians in Seattle supporting this new minimum wage? Politicians want to stay in office and they can use the minimum wage to appeal to large groups. One group is those that want to help others but don't understand economics or freedom well enough to understand what this policy means. The other group is comprised of those whose jobs might be threatened by workers willing to do the same job for less than $16 per hour. (This is the reason that unions are big supporters of raising the minimum wage even though their workers have wages far above minimum wage. It protects their high wages from low cost competition.)

DanBC 12y ago

Things to watch for: 1) businesses making employees clock in when it's busy, and clock out but stay on the premises when it's not busy. Thus, the business has workers available but only has to pay them for some of the time those workers are there. 2) "zero hour contracts". http://acas.org.uk/index.aspx?articleid=4468 http://acas.org.uk/index.aspx?articleid=4468 Other things the UK has done is increase the amount someone needs to earn before they start paying income tax; reduce the lower rates of income tax; provide "working tax credit" to some people, etc. I have no idea how the US tax system works so I don't know if that could be done or would work with voters. ("Supporting business to employ people on fair wages" maybe?)