City of Seattle to raise minimum wage to $15/hr

[The Berean]

one would think purex would be all over this thread like white on rice

Why does the rice have to be white?!

:chuckle:

 

[resurrected]

negro, i implore you






(my best sig line ever - although barbie's quote about blacks being inferior to whites got a lot more response )

 

[rexlunae]

It isn't difficult to answer. History shows yes, every single time.

That is a lie, as detailed above.

Let's keep it simple. A Subway franchise is making just margin to satisfy the operator.

Will lowering wages of the kids working there decrease his margin?

Will raising wages of the kids working there increase his margin?

You've contrived an example that doesn't match reality. Subway does not operate close to its minimum margins, and wages aren't directly related to the profitability of the business.

Speaking of links, it was very easy to find data.

http://www.aei-ideas.org/2013/12/ra...ck-male-teens-whose-jobless-rate-is-now-44-3/

Common Sense

That isn't data. It's two opinion pieces. I posted links to the data for unemployment, and for minimum wage hikes in my last main response to Angel. If there were a directly link between hikes in the minimum wage and spikes in unemployment, they're quite well hidden, as unemployment seems to drop or remain level at least as often as it rises.

 

[Lon]

Why does the rice have to be white?!

Spoiler

:chuckle:

Random response

 

[fool]

Inflation.
If a guy stocking loaves of bread on a shelf makes 7 loaves of bread an hour and you decide he has to make 15 loaves of bread an hour cause that sure would be nice if he made more bread for stocking bread what he'll find out after he punches in is that the price of bread has doubled cause he's making twice as much bread stocking bread and he's right back to making 7 loaves of bread an hour.

Why don't we just print more money so that everyone can have as much as they want?
Great idea huh?
Because the more you print the less it's worth.
Saying that one hour of unskilled labor in the US is worth x amount is setting value of the dollar.
Why not make minimum wage 100 dollars an hour? Then we could all get by just fine on minimum wage right? But it dosn't work like that because if you did that then a loaf of bread would cost 15 dollars and yer right back where you started.

 

[Nimrod]

Does mimimum wage increase unemployment?

Depends on which type of economist you are.

keynesian or any type of pro-state control over wages will say No. They hate the fact where the price of something drop. Everything must continue to go up.

Economists that are against state control (Austrian) over wages will say Yes.

 

[Nimrod]

Rothbard

Both workers and businessmen may become persuaded by the mistaken idea that artificial propping of wage rates is beneficial. This factor played a great role in the 1929 depression.

from http://mises.org/rothbard/agd/chapter2.asp

 

[rexlunae]

Spoiler

Ok, so I've graphed the unemployment data and the minimum wages together so that we can look at the history of minimum wage hikes a little more easily. See above.

There are two possible cases.

1. Unemployment goes up:
   1. 1956
   2. 1974
   3. 1979
   4. 1980
   5. 1981
   6. 1990
   7. 1991
   8. 2007
   9. 2008
   10. 2009
2. Unemployment goes down
   1. 1950
   2. 1961
   3. 1963
   4. 1967
   5. 1968
   6. 1975
   7. 1976
   8. 1978
   9. 1996
   10. 1997

By my count, that's ten each. And it isn't clear what, if any, causal relationship exists. That's just the correlations. If there is a causal relationship either way, it can't be as simple as a straight line from one to the other.

Edit:
And because I apparently feel like making charts today, here's another way to look at it:

Spoiler

This shows the change in minimum wage correlated to the change in the change (the double-delta, or the second derivative) of the unemployment rate. Essentially, it shows how much the unemployment curve is deflected year to year, which should minimize the impact of larger trends. Keeping in mind that the impact of the changes in unemployment happen in the following year, it appears that looking at it this way moved one of the years from "Unemployment goes down" barely into "Unemployment goes up", or for all practical purposes "Nothing much happens", but again, if there is a causal relationship, it has to be pretty weak.

 

[bybee]

Spoiler

Ok, so I've graphed the unemployment data and the minimum wages together so that we can look at the history of minimum wage hikes a little more easily. See above.

There are two possible cases.

1. Unemployment goes up:
   1. 1956
   2. 1974
   3. 1979
   4. 1980
   5. 1981
   6. 1990
   7. 1991
   8. 2007
   9. 2008
   10. 2009
2. Unemployment goes down
   1. 1950
   2. 1961
   3. 1963
   4. 1967
   5. 1968
   6. 1975
   7. 1976
   8. 1978
   9. 1996
   10. 1997

By my count, that's ten each. And it isn't clear what, if any, causal relationship exists. That's just the correlations. If there is a causal relationship either way, it can't be as simple as a straight line from one to the other.

Edit:
And because I apparently feel like making charts today, here's another way to look at it:

Spoiler

This shows the change in minimum wage correlated to the change in the change (the double-delta, or the second derivative) of the unemployment rate. Essentially, it shows how much the unemployment curve is deflected year to year, which should minimize the impact of larger trends. Keeping in mind that the impact of the changes in unemployment happen in the following year, it appears that looking at it this way moved one of the years from "Unemployment goes down" barely into "Unemployment goes up", or for all practical purposes "Nothing much happens", but again, if there is a causal relationship, it has to be pretty weak.

A thought, if employees begin to cost too much, the small businessman will forgo hiring and expanding. He, along with the big businesses will seek to automate.

 

[rexlunae]

A thought, if employees begin to cost too much, the small businessman will forgo hiring and expanding.

That would actually be a very poor business decision. If you're being held back from expanding for the sake of a few dollars per hour for a few employees, the opportunity can't have been that great in the first place.

Businesses expand when there is an opportunity to make a buck. The minimum wage doesn't play a large role.

He, along with the big businesses will seek to automate.

Perhaps. Although, the businesses that pay minimum wage already try to hire as few people as possible, so the chances are that this isn't going to change much.

And in any case, as I meticulously pointed out above, there's no clear evidence that significant unemployment results from minimum wage hikes.

 

[Nimrod]

By my count, that's ten each. And it isn't clear what, if any, causal relationship exists. That's just the correlations. If there is a causal relationship either way, it can't be as simple as a straight line from one to the other.

Correct. There are many other factors in play. For example in 1997 and 1998, the Fed was lowering the interest rate, making it easier to get money. Then the dot com crash of 2000.

If raising the minimum wage by force was the answer to a problem. Why not raise it to $50 per hour? :kookoo: What is their logically answer to raise it to $15? Does anyone know? Did they pull it out of a hat?


Unemployment goes up:
1956
1974
1979 ->recession
1980 -> recession
1981 -> recession
1990 -> recession
1991 -> recession
2007 -> recession
2008 -> recession
2009 -> recession

I marked the ones I think where there was a recession going on at the time. Since we are in a really bad recession now, do you think it is wise to raise the minimum wage?

 

[WizardofOz]

rexlunae - Seattle raises their minimum wage to $15.00. What, if any, economic predictions can you make regarding what impact this will have on the Seattle economy, both positive and negative?

Or, do you think there will be no clear impact on the economy at all?

 

[rexlunae]

Correct. There are many other factors in play. For example in 1997 and 1998, the Fed was lowering the interest rate, making it easier to get money. Then the dot com crash of 2000.

I think the way to look at the relationships in more detail, the obvious way to do that is to use monthly data. That would give us an order of events. But I'm not that bored right now.

If raising the minimum wage by force was the answer to a problem. Why not raise it to $50 per hour? :kookoo:

Presumably, there is a point where you actually would price yourself out of the labor market. If you start flipping a lot of businesses from profitable to unprofitable, that would be a problem.

What is their logically answer to raise it to $15? Does anyone know? Did they pull it out of a hat?

I don't really know. But that's why I said it would be an interesting experiment.

Unemployment goes up:
1956
1974
1979 ->recession
1980 -> recession
1981 -> recession
1990 -> recession
1991 -> recession
2007 -> recession
2008 -> recession
2009 -> recession

I marked the ones I think where there was a recession going on at the time.

To be clear, are you arguing for a causal link between recessions and minimum wage?

Since we are in a really bad recession now, do you think it is wise to raise the minimum wage?

We're actually not in a recession, and haven't been for years. We're in a rather lopsided recovery. That makes a huge difference. For the wealthy, it has been a boom time. But for the middle class and the poor, it's been a lot rougher. Which is why I think it is time for policies that help these groups, like the minimum wage, to be ratcheted up.

 

[rexlunae]

rexlunae - Seattle raises their minimum wage to $15.00. What, if any, economic predictions can you make regarding what impact this will have on the Seattle economy, both positive and negative?

Or, do you think there will be no clear impact on the economy at all?

The prediction I would have is that there would be no spike in unemployment in Seattle related to raising their minimum wage, with the caveat that I don't really know if $15/hr is too high. That could spoil that prediction, but we should remember that they're implementing the policy over seven years.

 

[Nimrod]

To be clear, are you arguing for a causal link between recessions and minimum wage?

No

We're actually not in a recession, and haven't been for years.

We read from Rothbard on redefining terms.

In the old days, we used to suffer nearly periodic economic crises, the sudden onset of which was called a "panic," and the lingering trough period after the panic was called "depression."

The most famous depression in modern times, of course, was the one that began in a typical financial panic in 1929 and lasted until the advent of World War II. After the disaster of 1929, economists and politicians resolved that this must never happen again. The easiest way of succeeding at this resolve was, simply to define "depressions" out of existence. From that point on, America was to suffer no further depressions. For when the next sharp depression came along, in 1937–38, the economists simply refused to use the dread name, and came up with a new, much softer-sounding word: "recession." From that point on, we have been through quite a few recessions, but not a single depression.

But pretty soon the word "recession" also became too harsh for the delicate sensibilities of the American public. It now seems that we had our last recession in 1957–58. For since then, we have only had "downturns," or, even better, "slowdowns," or "sidewise movements." So be of good cheer; from now on, depressions and even recessions have been outlawed by the semantic fiat of economists; from now on, the worst that can possibly happen to us are "slowdowns." Such are the wonders of the "New Economics."

http://mises.org/daily/3127

You crack me up when you say we are not in a recession. Rothbard agrees with you. lol

 

[WizardofOz]

The prediction I would have is that there would be no spike in unemployment in Seattle related to raising their minimum wage, with the caveat that I don't really know if $15/hr is too high. That could spoil that prediction, but we should remember that they're implementing the policy over seven years.

I am looking for a positive prediction; predict something that will happen due to the minimum wage hike....whether it be an advantage or a detriment.

 

[GuySmiley]

The only effect of minimum wage increases I would bet on is inflation.

 

[rocketman]

The cost of living in Seattle is already very high. That's why it is for the city, specifically. Can they afford it? Yes, for the most part. I doubt many businesses would leave that lucrative area where there is plenty of competition for building space.

Funny that is just what they said about California yet, business other than retail (ie good jobs) is leaving in droves.

Not New York or Chicago, certainly...

No, probably Texas, Arizona, Alabama, Florida anywhere where business and jobs are welcomed.

 

[rexlunae]

I am looking for a positive prediction; predict something that will happen due to the minimum wage hike....whether it be an advantage or a detriment.

I don't know that I have what you're looking for. Some people who are now underpaid will be paid a lot better. Most of the other impacts are contingent on what the business owners do. Profits may be down, or costs may be cut, or prices for certain things in certain stores may rise slightly, or there may be some combination of those, or profits might even be up as some number of people have more money to spend. But the minimum wage works at the edge of the economy, and it's really more about protecting vulnerable people from being exploited and saving government assistance programs from having to subsidize people who are working than it is about moving major economic indicators.

The negative predictions are important, given how so many others are insisting that there will be a necessary rise in inflation and/or unemployment that completely offsets the benefits to workers. I don't believe that either of those will happen in Seattle as compared to the surrounding areas that do not institute similar policies. And you can check which of us is right as the experiment plays out. My confidence in that prediction is fairly low, because of the unprecedented hike in the rate and the fact that the surrounding communities aren't doing the same so far, but that is the very experiment that is being run.

 

[rexlunae]

No




We read from Rothbard on redefining terms.


http://mises.org/daily/3127

You crack me up when you say we are not in a recession. Rothbard agrees with you. lol

Well, my point when I said we are not in a recession is that the economy is growing, jobs are growing, and unemployment is falling. And my argument isn't about what you might call a recession or a depression anyway, so I don't feel like wading into this right now.