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Study: The 2007 minimum wage hike cost more than 1 million jobs during the recession

Re: Study: The 2007 minimum wage hike cost more than 1 million jobs during the recess

KevinKohler said:
Sometimes that's nearly impossible. PROVE how an increase in minimum wage killed those jobs, and not the already shrinking economy causing less consumption.


You can't, you can only THEORIZE.


And if you bothered to read the ACTUAL study, and not the op ed piece linked in the OP, you would see that even more clearly, as the authors offered up not ONE, TINY, LITTLE piece of evidence to support their claim...a claim they had stated BEFORE they did the study. In other words, this study was done with the PURPOSE of proving MW killed jobs, not with the purpose of seeing IF it did or not.

That's called bad science.
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Where you are right is that the math is not really simple. But it is pretty bread and butter for professionals to do this type of work. The results are very reliable.
 
Re: Study: The 2007 minimum wage hike cost more than 1 million jobs during the recess

joG said:
Where you are right is that the math is not really simple. But it is pretty bread and butter for professionals to do this type of work. The results are very reliable.
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And yet...you can't actually prove it. Nor can you DISPROVE that these jobs which had an increase in minimal pay were killed by a simple lack of demand for the product in which they were involved with producing. Sans proof, one must turn to the only thing left...logic.


And logic dictates that if there is work that needs to be done, truly needs to be done, then employers will hire workers to do it. Regardless of what they have to pay them. Either they can afford to have the work done, or they can't afford to be in business, yes? Disprove this logic, I guess?
 
Re: Study: The 2007 minimum wage hike cost more than 1 million jobs during the recess

KevinKohler said:
And yet...you can't actually prove it. Nor can you DISPROVE that these jobs which had an increase in minimal pay were killed by a simple lack of demand for the product in which they were involved with producing. Sans proof, one must turn to the only thing left...logic.


And logic dictates that if there is work that needs to be done, truly needs to be done, then employers will hire workers to do it. Regardless of what they have to pay them. Either they can afford to have the work done, or they can't afford to be in business, yes? Disprove this logic, I guess?
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If you would spend some time with the theory and practice of such things instead of dreaming of the importance of your questions, you would ask quite different questions.
 
Re: Study: The 2007 minimum wage hike cost more than 1 million jobs during the recess

joG said:
If you would spend some time with the theory and practice of such things instead of dreaming of the importance of your questions, you would ask quite different questions.
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So, in other words, you can't, you're only going to vaguely insinuate that I don't know what I'm talking about.


It might surprise you to know that I used to be a small business owner, with 3, sometimes 4 employees, and am STILL am employer, with HUNDREDS of employees, though not for my own business. Just what, exactly, do I need, in terms of experience with the theory and practice, before I start asking different questions?
 
Re: Study: The 2007 minimum wage hike cost more than 1 million jobs during the recess

KevinKohler said:
And yet...you can't actually prove it. Nor can you DISPROVE that these jobs which had an increase in minimal pay were killed by a simple lack of demand for the product in which they were involved with producing. Sans proof, one must turn to the only thing left...logic.


And logic dictates that if there is work that needs to be done, truly needs to be done, then employers will hire workers to do it. Regardless of what they have to pay them. Either they can afford to have the work done, or they can't afford to be in business, yes? Disprove this logic, I guess?
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If the employer can afford $X in total payroll (and remain competitive in the market) then the easiest means to cope with a mandate to pay all entry level workers more is to use fewer of them. The losers in that game are the least skilled skilled and lower stamina workers. If an employer must choose which workers to keep and which to terminate then they are likely to keep the best (most experienced) and fastest making it ever more difficult for others to get a start (gain that needed experience) in the workforce.
 
Re: Study: The 2007 minimum wage hike cost more than 1 million jobs during the recess

ttwtt78640 said:
If the employer can afford $X in total payroll (and remain competitive in the market) then the easiest means to cope with a mandate to pay all entry level workers more is to use fewer of them. The losers in that game are the least skilled skilled and lower stamina workers. If an employer must choose which workers to keep and which to terminate then they are likely to keep the best (most experienced) and fastest making it ever more difficult for others to get a start (gain that needed experience) in the workforce.
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An employer isn't going to fire someone they truly NEED.


However, your FIRST line is the most damning for my argument, as it implies an aspect that I simply have no defense against. SMALL businesses can afford less in total payroll and still remain competitive due to their inability to take losses year after year and still retain liquidity. Larger businesses can shoulder those losses by spreading them around to the various facets of their business, facets that a small business, by definition, don't have.

But then, typically, small businesses don't pay minimum wage...to any of their employees. It would seem, then, that the REAL solution is to kill big business.
 
Re: Study: The 2007 minimum wage hike cost more than 1 million jobs during the recess

KevinKohler said:
An employer isn't going to fire someone they truly NEED.


However, your FIRST line is the most damning for my argument, as it implies an aspect that I simply have no defense against. SMALL businesses can afford less in total payroll and still remain competitive due to their inability to take losses year after year and still retain liquidity. Larger businesses can shoulder those losses by spreading them around to the various facets of their business, facets that a small business, by definition, don't have.

But then, typically, small businesses don't pay minimum wage...to any of their employees. It would seem, then, that the REAL solution is to kill big business.
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That (bolded above) is true. If Joe's Rib Joint truly needs 10 employees then they must either raise prices or close the business. However the owner of Joe's may decide to reduce their staff to 9 employees if they could convince those nine employees to agree to cover the current duties of the 10th worker and, in exchange, get a commensurate increase in their own pay (say $0.80/hour) rather than have to seek work elsewhere.

Not many businesses operate at the bare minimum staff because of staff turnover, illness, personal emergency and vacation periods, yet most can (and do) adjust for these temporary staff reductions without having to pay that current staff any more. Many employers have found that paying their better workers more not only keeps them apt to show up more often but to work a bit harder to get that next raise.

Since only about 3% now work at the federal MW, I find it hard to believe that those particular (entry level) workers are all that indispensable and that the other 97% of the workforce would not be willing and able to work a bit harder in order to keep their jobs (and enjoy the resulting increased pay).
 
Re: Study: The 2007 minimum wage hike cost more than 1 million jobs during the recess

ttwtt78640 said:
That (bolded above) is true. If Joe's Rib Joint truly needs 10 employees then they must either raise prices or close the business. However the owner of Joe's may decide to reduce their staff to 9 employees if they could convince those nine employees to agree to cover the current duties of the 10th worker and, in exchange, get a commensurate increase in their own pay (say $0.80/hour) rather than have to seek work elsewhere.

Not many businesses operate at the bare minimum staff because of staff turnover, illness, personal emergency and vacation periods, yet most can (and do) adjust for these temporary staff reductions without having to pay that current staff any more. Many employers have found that paying their better workers more not only keeps them apt to show up more often but to work a bit harder to get that next raise.

Since only about 3% now work at the federal MW, I find it hard to believe that those particular (entry level) workers are all that indispensable and that the other 97% of the workforce would not be willing and able to work a bit harder in order to keep their jobs (and enjoy the resulting increased pay).
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I have honestly never experienced that. And I've worked a lot of places, and more than a few different fields. Understand that I am not an economist, I have not gone to school for it, etc. I simply apply logic and personal experience to it, and then try to convince all of you that I know what I'm talking about, and that you should listen to me because I'm right.


What you say sounds like it could happen, but logic deters my agreement to your assessment. From my exp, and I have exp TWO increases in minimum wage while being in a position of power, to date, is that an employer is going to TRY to do as you described, but will, ultimately, retain the orig number of employees, and move their prices up a little, where ever possible.

The ONLY thing in my work history that has affected total staffing like you suggest thus far in my history has been the AHCA.
 
Re: Study: The 2007 minimum wage hike cost more than 1 million jobs during the recess

joG said:
Where you are right is that the math is not really simple. But it is pretty bread and butter for professionals to do this type of work. The results are very reliable.
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Not really. Studies on previous increases in minimum wage pretty much 100% concluded that increasing min wage did not cause unemployment, mostly because there was no uptick in the unemployment rate during those time periods. So someone decides to "prove" that increases in min wage cause unemployment, and they then only study the one increase in minimum wage that happened to be the same year that the Great Recession starts.

You don't think that may show intellectual dishonesty? There is absolutely no way to conclude that X jobs were lost due to the increase in minimum wage, when we were losing jobs like crazy due to a deep recession. If they wanted to be honest about it, they would have studied the entire history of minimum wage increases instead of looking at the single outlier.
 
Re: Study: The 2007 minimum wage hike cost more than 1 million jobs during the recess

ttwtt78640 said:
That (bolded above) is true. If Joe's Rib Joint truly needs 10 employees then they must either raise prices or close the business. However the owner of Joe's may decide to reduce their staff to 9 employees if they could convince those nine employees to agree to cover the current duties of the 10th worker and, in exchange, get a commensurate increase in their own pay (say $0.80/hour) rather than have to seek work elsewhere.

Not many businesses operate at the bare minimum staff because of staff turnover, illness, personal emergency and vacation periods, yet most can (and do) adjust for these temporary staff reductions without having to pay that current staff any more. Many employers have found that paying their better workers more not only keeps them apt to show up more often but to work a bit harder to get that next raise.

Since only about 3% now work at the federal MW, I find it hard to believe that those particular (entry level) workers are all that indispensable and that the other 97% of the workforce would not be willing and able to work a bit harder in order to keep their jobs (and enjoy the resulting increased pay).
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I would think that if the employer could afford to pay the other ten workers 80 cents an hour more, that they could have afforded to keep the minimum wage worker, if they had chosen to. Anyhow, not all min wage employers operate on the margin, some make a great deal of profit. A typical McDonald's can rake in a million a year in net profit, and that's plenty enough for the owner/operator to have a nice standard of living and to not close the business, even if they find that they have to pay a little more in wages.

The only time that an employer would absolutely HAVE to increase prices or to cut staff would be if that employer is only marginally profitable. There is certainly no law that says that business X has to make Y profit. Lot's of businesses eventually loose some profitability for one reason or another, and they do so without closing, or raising prices, or cutting employees.

In theory, businesses always try to maximize profits, regardless of how much that profit is, so they are already operating with the optimal profit making number of employees, who are already being paid the optimal amount of wages, and prices are already set to the profit maximizing amount. If they have more employees than they need to maximize profits, or if they pay wages that are not profit maximizing, or if they are pricing above or below the profit maximizing amount, they weren't being managed very well to begin with.
 
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Re: Study: The 2007 minimum wage hike cost more than 1 million jobs during the recess

imagep said:
I would think that if the employer could afford to pay the other ten workers 80 cents an hour more, that they could have afforded to keep the minimum wage worker, if they had chosen to. Anyhow, not all min wage employers operate on the margin, some make a great deal of profit. A typical McDonald's can rake in a million a year in net profit, and that's plenty enough for the owner/operator to have a nice standard of living and to not close the business, even if they find that they have to pay a little more in wages.

The only time that an employer would absolutely HAVE to increase prices or to cut staff would be if that employer is only marginally profitable. There is certainly no law that says that business X has to make Y profit. Lot's of businesses eventually loose some profitability for one reason or another, and they do so without closing, or raising prices, or cutting employees.

In theory, businesses always try to maximize profits, regardless of how much that profit is, so they are already operating with the optimal profit making number of employees, who are already being paid the optimal amount of wages, and prices are already set to the profit maximizing amount. If they have more employees than they need to maximize profits, or if they pay wages that are not profit maximizing, or if they are pricing above or below the profit maximizing amount, they weren't being managed very well to begin with.
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I used the $0.80/hour to represent current cost of MW Fred ($7.25/hour divided by the remaining 9 workers). I was assuming a scenario with a MW increase that cost significantly more, say raising by the MW to $15/hour - the equivalent of then having to pay MW Fred $7.75/hour more or $1.66/hour more if spread among the remaining 9 workers. In my example the total payroll remained completely unchanged but that does not mean that is the only alternative - the employer could then increase the "get rid of MW Fred" bonus offer up to $1.50/hour and still save money over keeping MW Fred on at $15/hour. ;)
 
Re: Study: The 2007 minimum wage hike cost more than 1 million jobs during the recess

KevinKohler said:
So, in other words, you can't, you're only going to vaguely insinuate that I don't know what I'm talking about.


It might surprise you to know that I used to be a small business owner, with 3, sometimes 4 employees, and am STILL am employer, with HUNDREDS of employees, though not for my own business. Just what, exactly, do I need, in terms of experience with the theory and practice, before I start asking different questions?
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I am glad you are doing so well. That is good to hear.

But even in good positions in companies most employees will usually not do the math. But it works its way through the system anyway, by reducing the P/L of the supervisor or branch manager or managing director.

This does not mean that every minimum wage will cause visible reductions of jobs. There have been a good number of studies with opposite findings. What you will always find, though, is that the impact is due to a number of contributing and limiting factors that reshuffle the costs, so that the effect is become invisible, but are felt elsewhere. Cost increases affect general competitiveness negatively, when the cost of a product is increased without increasing its qualities.
 
Re: Study: The 2007 minimum wage hike cost more than 1 million jobs during the recess

ttwtt78640 said:
I used the $0.80/hour to represent current cost of MW Fred ($7.25/hour divided by the remaining 9 workers). I was assuming a scenario with a MW increase that cost significantly more, say raising by the MW to $15/hour - the equivalent of then having to pay MW Fred $7.75/hour more or $1.66/hour more if spread among the remaining 9 workers. In my example the total payroll remained completely unchanged but that does not mean that is the only alternative - the employer could then increase the "get rid of MW Fred" bonus offer up to $1.50/hour and still save money over keeping MW Fred on at $15/hour. ;)
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And then pray fervently that two things happen...that the reduced staff can handle the work load, which implies they were over staffed in the first place, and that their business doesn't increase at all. If business increases while they are already operating bellow minimal staffing needs, they are SCREWED.
 
Re: Study: The 2007 minimum wage hike cost more than 1 million jobs during the recess

joG said:
I am glad you are doing so well. That is good to hear.

But even in good positions in companies most employees will usually not do the math. But it works its way through the system anyway, by reducing the P/L of the supervisor or branch manager or managing director.

This does not mean that every minimum wage will cause visible reductions of jobs. There have been a good number of studies with opposite findings. What you will always find, though, is that the impact is due to a number of contributing and limiting factors that reshuffle the costs, so that the effect is become invisible, but are felt elsewhere. Cost increases affect general competitiveness negatively, when the cost of a product is increased without increasing its qualities.
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The larger the business, the more areas there are to absorb the cost in an increase. This is where I say that the achilles heel of minimum wage is that it can be very harmful to small businesses, but then, most small businesses pay above minimum wage anyway...exactly for that reason.

BJ's, the company I work for, already has a contingency plan in place for WHEN the minimum wage goes up. For starters, the lowest paid position, bakery clerks and deli clerks, start out .70 cents above minimum wage. This is to help absorb it when it does happen. There is policy in place to prevent employees from asking for a raise the moment it happens, as well. I mean, they can ask...but it's against company policy to give more than one raise per year. From there, the rest of the costs are going to be passed on to consumers, in the form of slightly increased membership costs, (5 dollars more per year) and an up tick on markup of some groups of items, already selected, by about 6%. In other words, it'll increase certain items by pennies on the dollar, such that out members won't notice. Since we don't pay minimum wage at any of our locations, these measures are predicted to easily absorb any costs associated with an increase to minimum wage.

Honestly, I've seen the minimum wage go up several times in my life. It used to be 5.15, when I first started working. Since I've been in management, across various fields, in several businesses, I have weathered two increases. And saw little to no change...in anything.

The ONLY thing that has had such an affect as you guys are describing in my lifetime was when they passed AHCA.
 
Re: Study: The 2007 minimum wage hike cost more than 1 million jobs during the recess

joG said:
...Cost increases affect general competitiveness negatively...
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Not when all competitors have the same cost increases. Relative to each other, their competiveness exactly the same.

The only way that we would lose competitiveness is against foreign labor, but that foreign labor doesn't compete for min wage jobs in the US. Someone in China can't flip burgers in the US.
 
Re: Study: The 2007 minimum wage hike cost more than 1 million jobs during the recess

ocean515 said:
Yes. Do you?
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I said explain. Then I'll tell you if I have the same as you.
 
Re: Study: The 2007 minimum wage hike cost more than 1 million jobs during the recess

imagep said:
Not when all competitors have the same cost increases. Relative to each other, their competiveness exactly the same.

The only way that we would lose competitiveness is against foreign labor, but that foreign labor doesn't compete for min wage jobs in the US. Someone in China can't flip burgers in the US.
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True. Only the floor cleaners at the t-shirt factory, unless one hamburger flipper is fired, while the other employer has a heart.
 
Re: Study: The 2007 minimum wage hike cost more than 1 million jobs during the recess

imagep said:
Not really. Studies on previous increases in minimum wage pretty much 100% concluded that increasing min wage did not cause unemployment, mostly because there was no uptick in the unemployment rate during those time periods. So someone decides to "prove" that increases in min wage cause unemployment, and they then only study the one increase in minimum wage that happened to be the same year that the Great Recession starts.

You don't think that may show intellectual dishonesty? There is absolutely no way to conclude that X jobs were lost due to the increase in minimum wage, when we were losing jobs like crazy due to a deep recession. If they wanted to be honest about it, they would have studied the entire history of minimum wage increases instead of looking at the single outlier.
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Sorrily my longish response has disappeared and is therefore lost to posterity and the living. But I would like to include a meta study that seemed to shine some light on the reasons for the variance between the results from the many studies we find in the literature. I found it good at showing some methods also: http://ftp.iza.org/dp4983.pdf
 
Re: Study: The 2007 minimum wage hike cost more than 1 million jobs during the recess

ocean515 said:
You first. I've danced to this tune before.
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I asked first. And if you've danced, you know an honest answer is the quickest way to do this.
 
Re: Study: The 2007 minimum wage hike cost more than 1 million jobs during the recess

Boo Radley said:
I asked first. And if you've danced, you know an honest answer is the quickest way to do this.
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LOL. As usual, a radical lib who demands things from others they won't do for themselves. You asked a question about experience in a national economy. What lame and loaded question. Something a child might ask.

I've managed to start a company that ended up doing billions in sales over 25 years, and had manufacturing facilities in multiple states. I sold my final interest a few years back, and now I own a company that manufactures products sold in every state, and in other parts of the world. My experience is not only national, but global.

What is your experience?
 
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