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Raising Floor for Minimum Wage Pushes Economy into the Unknown

nytimes.com

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Re: Raising Floor for Minimum Wage Pushes Economy into the Unknown

#71

Post by bko »

erikpukinskis wrote: post #69
bko wrote: post #36

> Their evidence rests largely on comparisons between neighboring areas with different minimum wages. The seminal study in this vein examined fast-food restaurants on both sides of the Pennsylvania-New Jersey border before and after New Jersey raised its minimum wage in the early 1990s. It found no evidence that employment there fell as a result. This is often cited in publications that generally support a higher min…

Your assertion may or may not be true, but there's no way I am willing to accept that as "logic". Your assumption is that the profit margin on labor is 0% which logic would suggest is pretty universally false. Here's my logic, maybe you can help me find the flaws in it: businesses are trying to maximize sales and minimize costs, which means they have the smallest possible workforce required to support their current s…

In traditional economics you want to look at marginal cost versus marginal revenue. If it costs you $10 to produce another widget you can sell at $10.01, you will in order to maximize profits.

You will hire people up until the point where the marginal revenue that employee provides is equal to that of the marginal cost of that employee.

Of course companies make profit, but that's because the marginal cost curve is upward past a certain point. So on average, the average cost is less than the marginal cost

A visual representation explains it well. When you talk about profits, you're talking about average cost. When you're talking about whether you should hire an extra worker, you're talking about marginal cost versus marginal revenue.

https://apecon3.wikispaces.com/Marginal+Revenue

Re: Raising Floor for Minimum Wage Pushes Economy into the Unknown

#72

Post by littletimmy »

BurningFrog wrote: post #31
civilframe wrote: post #2

I don't believe that raising the minimum wage will trigger businesses to cut jobs significantly. They will probably pass the higher cost onto the consumer. Ultimately, it's a method of wealth redistribution, which is sorely needed in our economy.

Then why not raise it to $100/h, so everyone can live a comfortable life?

Reasonable person: 8 glasses of water keep you healthy.

You: WHY DON'T YOU DRINK 100 LITERS A DAY IF YOU LIKE IT SO MUCH!!

Re: Raising Floor for Minimum Wage Pushes Economy into the Unknown

#73

Post by dragonwriter »

w1ntermute wrote: post #5
thomasfoster96 wrote: post #4

Earlier quoted context omitted.

I'd agree, but raising the minimum wage is a relatively good alternative to doing nothin given unconditional basic income is merely a political dream in most jurisdictions. The US has such a low minimum wage given the wealth within the economy it's hard to see a rise having much of an impact.

An EITC would more effectively incentivize the poor to work than unconditional basic income.

> An EITC would more effectively incentivize the poor to work than unconditional basic income.

Maybe, but:

(1) This is an assertion provided without evidence, and (2) The purpose of the basic income isn't to incentivize poor people to work, anyway, and (3) Poor people, even before considering EITC or Basic Income, have more than sufficient incentive to work, what they generally lack is opportunity to work with their current skill set, and opportunity to gain the skills needed to work where it is in demand without trading off present necessities.

Re: Raising Floor for Minimum Wage Pushes Economy into the Unknown

#74

Post by crazy_geek »

I find it interesting that when the government distorts a market via pricing controls, taxes, or other means, the law of unintended consequences almost inevitably kicks in and it's result is either "bad luck" or calls to "fill in the loopholes!" Distort the market and people are rational-enough agents and will change their behavior, just not necessarily entirely in the way you hope/want. There is no free lunch.

Either the economic distortion makes it cost-effective to pay people to find ways to dodge the distortion and come up with strange, but legal, means to avoid it, or there are shortages, or the price of things go up.

It's like trying to squish one part of a water balloon -- the other part of the balloon will deform in some way.

Some examples: "The Double Irish arrangement" for tax avoidance, ObamaCare effectively limiting part timers to 30 (or 35, I forget which) hours/week, or strict zoning laws causing property values to skyrocket due to lack of supply of housing in SF.

Re: Raising Floor for Minimum Wage Pushes Economy into the Unknown

#75

Post by BurningFrog »

littletimmy wrote: post #72
BurningFrog wrote: post #31

Earlier quoted context omitted.

Then why not raise it to $100/h, so everyone can live a comfortable life?

Reasonable person: 8 glasses of water keep you healthy. You: WHY DON'T YOU DRINK 100 LITERS A DAY IF YOU LIKE IT SO MUCH!!

Well, yeah, I'm interested in what mechanism people think will make going to $100/h or $30/h fail, and what makes it not apply for $15/h.

Re: Raising Floor for Minimum Wage Pushes Economy into the Unknown

#76

Post by TheGrimDerp1 »

toomuchtodo wrote: post #22
rhino369 wrote: post #15

Earlier quoted context omitted.

Passing costs on the client isn't something you can just do. Many products and services have elastic demand. Fast food, for example, has been has found it very hard to raise away from their dollar menu pricing. Businesses don't have to cut jobs either. They just have to move them. Edit2: Costumers can also shift to lower cost alternatives. Online retailers have less overhead and lower labor costs. If you make Walmart…

>15 dollars will put people in most of the country out of work. So be it. Can't find a job that offers a living wage? We provide a social safety net and increase taxes on the wealthy to pay for it. Make more than a million dollars a year? 95% marginal tax rate. Tax rates are the lowest they've been in the history of the US, and all we've seen is a disgusting level of income equality.

Or maybe just a fair flat tax on all new goods and all services at ~8%. Everybody always pays the same percentage: tourists, bajillionaires, hobos, you name it.

Re: Raising Floor for Minimum Wage Pushes Economy into the Unknown

#77

Post by toomuchtodo »

TheGrimDerp1 wrote: post #76
toomuchtodo wrote: post #22

Earlier quoted context omitted.

>15 dollars will put people in most of the country out of work. So be it. Can't find a job that offers a living wage? We provide a social safety net and increase taxes on the wealthy to pay for it. Make more than a million dollars a year? 95% marginal tax rate. Tax rates are the lowest they've been in the history of the US, and all we've seen is a disgusting level of income equality.

Or maybe just a fair flat tax on all new goods and all services at ~8%. Everybody always pays the same percentage: tourists, bajillionaires, hobos, you name it.

Flat taxes are regressive. They're simple, but they don't work.

You consider it "fair" because everyone pays the same. Not everyone should pay the same tax. Some people should pay more, some less.

Re: Raising Floor for Minimum Wage Pushes Economy into the Unknown

#78

Post by toomuchtodo »

bko wrote: post #50
toomuchtodo wrote: post #22

Earlier quoted context omitted.

>15 dollars will put people in most of the country out of work. So be it. Can't find a job that offers a living wage? We provide a social safety net and increase taxes on the wealthy to pay for it. Make more than a million dollars a year? 95% marginal tax rate. Tax rates are the lowest they've been in the history of the US, and all we've seen is a disgusting level of income equality.

A job is not just a job to most people. It's their livelihood and purpose in life. It's very cruel to deny someone their an opportunity to be independent of the state

Therapy can be provided through universal healthcare if you'd like.

What work would you like to make up for people when technology has replaced everyone's work? Salespeople? Digging ditches and filling them back in?

Re: Raising Floor for Minimum Wage Pushes Economy into the Unknown

#79

Post by dragonwriter »

rhino369 wrote: post #15
civilframe wrote: post #2

I don't believe that raising the minimum wage will trigger businesses to cut jobs significantly. They will probably pass the higher cost onto the consumer. Ultimately, it's a method of wealth redistribution, which is sorely needed in our economy.

Passing costs on the client isn't something you can just do. Many products and services have elastic demand. Fast food, for example, has been has found it very hard to raise away from their dollar menu pricing. Businesses don't have to cut jobs either. They just have to move them. Edit2: Costumers can also shift to lower cost alternatives. Online retailers have less overhead and lower labor costs. If you make Walmart…

> Costumers can also shift to lower cost alternatives. Online retailers have less overhead and lower labor costs. If you make Walmart more expensive than Amazon, Walmart will shutter stores laying massive numbers of people off.

Yes, that's a good reason why we shouldn't subsidize capital intensive businesses over labor intensive business by taxing capital income less than "normal" income and then adopting additional taxes on labor income on top of normal income taxes, but should instead treat all income alike for tax purposes without regard to source (and also, therefore, for benefit-eligibility purposes for past-income-qualified benefits for which dedicated taxes on income are taken to fund benefits.)

> But this is way outsides of a normal rise in minimum wage.

Not really. The article claims that $12 in 2020 would bring it above its 1968 peak level in inflation adjusted terms (the 1968 peak level, $1.60, is about $10.97 now, so $12 now would be a little bit ahead of it, with 2% annual inflation from now to 2020, $12 would be almost exactly the 1968 peak level.) So, a $15/hr. federal minimum wage in 2020 would be a higher-than-historical minimum wage, but not by a large margin.

And a little-over-doubling from 2009 to 2020 wouldn't be an unprecedented jump over an 11 year period, either (from 1945 to 1956 it got a 2.5 multiple from $0.40 to $1.00 -- and over 12 years, from 1938 to 1950 -- it tripled from $0.25 to $0.75.)

Re: Raising Floor for Minimum Wage Pushes Economy into the Unknown

#80

Post by bko »

toomuchtodo wrote: post #78
bko wrote: post #50

Earlier quoted context omitted.

A job is not just a job to most people. It's their livelihood and purpose in life. It's very cruel to deny someone their an opportunity to be independent of the state

Therapy can be provided through universal healthcare if you'd like. What work would you like to make up for people when technology has replaced everyone's work? Salespeople? Digging ditches and filling them back in?

I don't know what work people will be doing when technology replaces everyone's work.

It's also true that were I around in 1880 I would not know what roughly half of the US population who were then farmers would be doing after automation.

For those new-age luddites who are generally afraid of technology destroying jobs, why stop at tomorrow's technologies? Why not outlaw washing machines? Surely elimination of washing machines would bring back a lot of jobs. Or let's outlaw productivity tools like spreadsheets. If people were forced to do everything by hand, surely this would create a lot of jobs.

Would you propose we eliminate any of today's technology? Why is it always that today's technologies are OK but not tomorrow's? Those will surely be our downfall.

Ironically, increasing the cost of human capital through a minimum wage will surely hasten the replacement of human capital by machines.

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