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California poised to raise minimum wage to $10

money.cnn.com

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Re: California poised to raise minimum wage to $10

#41

Post by mjn »

elnate wrote: post #28
ahallock wrote: post #17

Earlier quoted context omitted.

It sounds like all that's happened is a form of inflation.

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.

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.

Re: California poised to raise minimum wage to $10

#42

Post by panarky »

AaronFriel wrote: post #9

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-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 s…

That CEPR paper is really the gold standard of "evidence-based" economics.

There's a wealth of real-life evidence that shows what actually happens when the minimum wage is increased. So put away all the theories about what should happen, and look at the extensive data on what does happen.

It turns out this is a lot more complex than just "higher price of labor = lower supply of jobs". Offsetting the higher cost per hour are lower turnover, lower training costs, upgraded skill levels, higher worker productivity, and higher demand when workers spend their bigger paychecks.

Believe it or not, the data shows that modest increases in the minimum wage do not reduce employment in any significant way.

Re: California poised to raise minimum wage to $10

#43

Post by moocowduckquack »

yetanotherphd wrote: post #37
moocowduckquack wrote: post #36

Earlier quoted context omitted.

In particular, why do we want to benefit workers on the minimum wage? Maybe because they need the money?

Maybe you should have read past the sentence you quoted?

I did, perhaps I misunderstood where you were coming from though. I was just meaning that there is a definite and not particularly subtle reason for minimum wage laws, sure the economics is used to set a level and to argue on the theory, but the reason for them existing in the first place does not come from economic theory, but rather from political experience with hungry angry people.

Re: California poised to raise minimum wage to $10

#44

Post by ronaldx »

coldtea wrote: post #38
forgingahead wrote: post #3

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.

> 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.

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-empl...

Re: California poised to raise minimum wage to $10

#45

Post by wcfields »

elnate wrote: post #24
toomuchtodo wrote: post #16

Earlier quoted context omitted.

Teen unemployment is already running around 22-23 percent: http://www.bls.gov/web/empsit/cpseea10.htm The question is, how many people are working minimum wage jobs who aren't teenagers.

Article says 90% are over 20.

That's a really depressing number.

Re: California poised to raise minimum wage to $10

#46

Post by brownbat »

AaronFriel wrote: post #9

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-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 s…

How many economists prefer the minimum wage to other benefit programs, like the EITC, a negative income tax, or direct competition in the labor market (like the Works Progress Administration)?

Genuinely curious, I couldn't find any good metanalyses at first glance...

Re: California poised to raise minimum wage to $10

#47

Post by StevenRayOrr »

forgingahead wrote: post #3

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.

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.

Re: California poised to raise minimum wage to $10

#48

Post by dragonwriter »

pkaler wrote: post #40

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 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…

> 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

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.)

Re: California poised to raise minimum wage to $10

#49

Post by yetanotherphd »

moocowduckquack wrote: post #43
yetanotherphd wrote: post #37

Earlier quoted context omitted.

Maybe you should have read past the sentence you quoted?

I did, perhaps I misunderstood where you were coming from though. I was just meaning that there is a definite and not particularly subtle reason for minimum wage laws, sure the economics is used to set a level and to argue on the theory, but the reason for them existing in the first place does not come from economic theory, but rather from political experience with hungry angry people.

If there was no welfare, and no tax system, then introducing a minimum wage would probably be a net improvement.

However, taxes and welfare already address the issue of hungry people (I don't particularly care how angry a person is). My problem is not with the goal of redistributing wealth, but with the minimum wage as a way to do this. Since the tax authorities already know the figure that we are really interested in (how much money a person makes in total), it makes more sense to lower the tax rate on low income earners, or increase welfare, than to increase the minimum wage.

Re: California poised to raise minimum wage to $10

#50

Post by forgingahead »

AaronFriel wrote: post #9

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-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 s…

Rather than worry about what economists think, I'd highly suggest talking to real people who employ other real people in jobs that are at the current minimum wage, and see what their reaction will be. Understand their thinking of how and why they make salary decisions.
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