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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

#51

Post by jurassic »

StevenRayOrr wrote: post #47
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.

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.

Re: California poised to raise minimum wage to $10

#52

Post by moocowduckquack »

yetanotherphd wrote: post #49
moocowduckquack wrote: post #43

Earlier quoted context omitted.

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 i…

If we had good universal welfare that did not depend on income, then having no minimum wage is politically fairly neutral. However when you have a situation where welfare is divisive and intrusive on the individual, then being able to leave welfare through employment is socially important. And it really does matter how angry the hungry person is, at least if you want to stay in government.

Re: California poised to raise minimum wage to $10

#53

Post by cortesoft »

cynicalkane wrote: post #32
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…

I'm going to say the surveyed opinion is wrong and is furthermore asking the wrong question. 1) There is a welfare trap, and it is real. The more needy you are, the more your welfare programs are robbed with each wage increase. The marginal rate is very high and in some situations can exceed 100%. Here's what the welfare trap looks like for low-wage families, in one graph: https://lh3.ggpht.com/-_-6Fsycanmw/ULO_5kk3f…

Earned income tax credit is amazing. It is one of the few government initiatives that is an unquestionable success. It is such a good way to redistribute wealth without creating the negative incentives of welfare and the like.

Re: California poised to raise minimum wage to $10

#54

Post by dragonwriter »

cortesoft wrote: post #53
cynicalkane wrote: post #32

Earlier quoted context omitted.

I'm going to say the surveyed opinion is wrong and is furthermore asking the wrong question. 1) There is a welfare trap, and it is real. The more needy you are, the more your welfare programs are robbed with each wage increase. The marginal rate is very high and in some situations can exceed 100%. Here's what the welfare trap looks like for low-wage families, in one graph: https://lh3.ggpht.com/-_-6Fsycanmw/ULO_5kk3f…

Earned income tax credit is amazing. It is one of the few government initiatives that is an unquestionable success. It is such a good way to redistribute wealth without creating the negative incentives of welfare and the like.

> Earned income tax credit is amazing. It is one of the few government initiatives that is an unquestionable success. It is such a good way to redistribute wealth without creating the negative incentives of welfare and the like.

EITC, because of the phase out, has the same negative incentives as any other means-tested social benefit program which has a benefit reduction at less than a 1:1 level for additional income. (Its true that there are some other social benefit programs that have worse negative incentives at some or all points because either they are flat benefit with a sharp cutoff or because they have some range in which the benefit decline is greater per additional dollar of other income than EITC has, but its simply not the case that EITC doesn't have "the negative incentives of welfare and the like".)

Re: California poised to raise minimum wage to $10

#55

Post by [deleted] »

dragonwriter wrote: post #54
cortesoft wrote: post #53

Earlier quoted context omitted.

Earned income tax credit is amazing. It is one of the few government initiatives that is an unquestionable success. It is such a good way to redistribute wealth without creating the negative incentives of welfare and the like.

> Earned income tax credit is amazing. It is one of the few government initiatives that is an unquestionable success. It is such a good way to redistribute wealth without creating the negative incentives of welfare and the like. EITC, because of the phase out, has the same negative incentives as any other means-tested social benefit program which has a benefit reduction at less than a 1:1 level for additional income.…

[deleted]

Re: California poised to raise minimum wage to $10

#56

Post by sethammons »

johnsonman wrote: post #30
forgingahead wrote: post #25

Earlier quoted context omitted.

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 re…

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.

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....

Re: California poised to raise minimum wage to $10

#57

Post by coldtea »

ronaldx wrote: post #44
coldtea wrote: post #38

Earlier quoted context omitted.

> 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…

>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".

Re: California poised to raise minimum wage to $10

#58

Post by sethammons »

chc wrote: post #15
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.

Major corporations will, by and large, have far less trouble dealing with the extra $2 than workers would dealing with the lack thereof.

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.

Re: California poised to raise minimum wage to $10

#59

Post by toomuchtodo »

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.

So everyone who claims teenagers are the ones who are going to lose their jobs are very, very wrong. Good to know.
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