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Thread: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

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    Re: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

    Quote Originally Posted by cpwill View Post
    The idea that you can simply increase minimum wages without effecting demand for low-wage labor is a free lunch argument. We can give poor people a raise with no trade offs. Hooray!
    I don't know if it's an accurate of thinking of this situation, but I see it as forced acceleration of the velocity of money(as long as the increase is relatively small). In this case, yes there will be small job losses, and slight inflation(poor people still would have more relative purchasing power than before), yet as a result of the increase in the velocity of money, some of those lost jobs, would end up coming back.
    Men do what they have to when they want to, Great men do what they have to, even when they don't want to.

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    Re: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

    Quote Originally Posted by cpwill View Post

    Did you miss all those studies I posted for you earlier? When you look only at the lowest income, you find strong disemployment effects. It's when you look at entire sectors or the broad workforce that you can lose them in the larger mash.



    competition at that level is much about social capital. Sadly, a middle class teenager with two parents who is en route to college has more of it than a 21 year old lower class high school drop out who was raised by a grandmother and who gets high on occasion.
    I have seen the studies showing that the minimum wage hurts jobs for low skilled workers. The problem is as I stated earlier the studies on that issue are all over the place. Many economists believe that most the job market for minimum wage jobs in the United States is elastic.

    Raising the Minimum Wage Does not

    Does Raising The Minimum Wage Kill Jobs? : Planet Money : NPR

    Economists disagree on whether the minimum wage kills jobs. Why? - The Washington Post

    Why Raising the Minimum Wage Doesn’t Hurt Jobs - US News

    From the last article:


    So why is conventional economic wisdom wrong? Why doesnít raising the minimum wages kill jobs? Itís hard to say for sure, but several factors appear to explain the difference:

    [See a collection of political cartoons on the budget and deficit.]

    1. Employers donít have much flexibility to reduce staff without cutting their revenues: In the conventional Economics 101 narrative, people switch their buying habits when prices change. If apples become more expensive, you donít eat less; you simply buy more oranges or grapes and fewer apples. But if youíre running a fast food restaurant, you donít have that option. You canít offshore the fry cookís job to China. You canít replace the cashier with a robot. Youíre not going to diversify into a new line of work like tax preparation, with staff who are unaffected by the minimum wage law. No, the typical fast food owner will retain most of his or her minimum wage employees and compensate by investing in better equipment and work processes that make them more productive. The owner will pass through a small price hike to cover the remaining cost.

    2. Higher minimum wages stimulate the local economy and bring in more business: When low-wage workers get a raise they usually spent it rather than sock it away in a mutual fund. In many cases, they will spend the money in the same places that hire a lot of low-wage workers: They spend it in fast food restaurants and low-end retail chain stores which account for many of Americaís minimum wage jobs. So these stores get more business, which offsets much of what they lose by paying higher wages.

    [See a collection of political cartoons on Congress.]

    3. Better-paid employees are more productive and loyal: When employees are paid more, they value their jobs more. They work harder and more productively. They have a better attitude, which means they provide better, friendlier customer service. They are less likely to quit. All of this helps the employer by reducing turnover and training costs, and making customers happier and more likely to return.

    4. The minimum wage in the U.S. is quite low to begin with: The risk that a minimum wage hike would reduce jobs depends on the starting point. In France, for example, unemployment among youth is terribly high, in the range of 26 percent. This has been blamed on its minimum wage. But Franceís minimum wage is more than 60 percent of the French median wage, so the portion of jobs affected is vastly higher. And France has other structural constraints in its economy that the U.S. does not have; for example, itĎs much harder to lay off workers in a downturn, which makes employers reluctant to add to payroll. In contrast, the U.S. federal minimum wage is 38 percent of median income, which is among the lowest levels in the developed world.

    The minimum wage debate reminds us that what sounds good in economic theory does not necessarily turn out to be true in the real world. Raising the federal minimum wage from its current low level would have little if any effect on jobs and employment, while dramatically helping those who labor in these jobs. Itís easy to see why the oversimplified ideas of freshman economics fail to explain the opportunity.
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    Re: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

    Quote Originally Posted by SouthernDemocrat View Post
    I have seen the studies showing that the minimum wage hurts jobs for low skilled workers. The problem is as I stated earlier the studies on that issue are all over the place. Many economists believe that most the job market for minimum wage jobs in the United States is elastic.

    Raising the Minimum Wage Does not

    Does Raising The Minimum Wage Kill Jobs? : Planet Money : NPR

    Economists disagree on whether the minimum wage kills jobs. Why? - The Washington Post

    Why Raising the Minimum Wage Doesn’t Hurt Jobs - US News

    From the last article:

    Good post. What it supports is how marginally beneficial economists are in the grand scheme of things, and equally, how marginally helpful the study of economics is.

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    Re: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

    Quote Originally Posted by KevinKohler View Post
    Minimum wage went up to 9.15 in CT. From 8.25, or something. My company employees a lot of minimum wage workers. None of them got laid off. Not in any of the stores.


    The bottom line is this...a company doesn't hire or fire based on the expense of doing so, their primary reason is need. We NEED those employees, so even though the cost to employ them just went up, we can't AFFORD to let any of them go.

    We have also not raised prices....well, except for beef. Beef is skyrocketing all over the place, though.
    Sounds to me that you're one of the few that actually DO pay their employees less than they're worth unless the government demands they give them a raise.
    You can't reason anyone out of a position they didn't reason themselves into in the first place.

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    Re: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

    Quote Originally Posted by ocean515 View Post
    Good post. What it supports is how marginally beneficial economists are in the grand scheme of things, and equally, how marginally helpful the study of economics is.
    Well try to tease any type of real correlation out of this stuff and you can see why they are all over the place. Take the late 90s, two minimum wage hikes, yet the poverty rate dropped to record low levels:

    Economist A Says - See the minimum wage increases did not kill job creation for low skilled workers as evidenced by the fact that poverty rates went down to record low levels and we had high job creation rates.

    Economist B Says - Yeah but that was because of welfare reform, not the minimum wage increases. Welfare reformed moved more people into the job market.

    Economist A Then Responds With - Wait a second, welfare reform put more low skilled workers into the job market and the minimum wage increases killed job creation for low wage workers but at the same time poverty rates dropped and the unemployment rate was near record lows??
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    Re: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

    Quote Originally Posted by Redress View Post
    Who is claiming a free lunch?
    The only one I know that claims there is a free lunch is Disney World during their free dining promotions.
    When it comes to matters of reproduce health, Politicians and the religious dogma of another faith should never interfere with religious liberty of an individual or her faith.

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    Re: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

    Quote Originally Posted by SouthernDemocrat View Post
    Well try to tease any type of real correlation out of this stuff and you can see why they are all over the place. Take the late 90s, two minimum wage hikes, yet the poverty rate dropped to record low levels:

    Economist A Says - See the minimum wage increases did not kill job creation for low skilled workers as evidenced by the fact that poverty rates went down to record low levels and we had high job creation rates.

    Economist B Says - Yeah but that was because of welfare reform, not the minimum wage increases. Welfare reformed moved more people into the job market.

    Economist A Then Responds With - Wait a second, welfare reform put more low skilled workers into the job market and the minimum wage increases killed job creation for low wage workers but at the same time poverty rates dropped and the unemployment rate was near record lows??
    You nailed it. In the end, these analysis rarely avoid a potential agenda bias. A crystal ball should be included with every diploma handed out related to the field.

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    Re: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

    Quote Originally Posted by Redress View Post
    Who says that?
    Um. See: previous 39 posts of this thread, and pretty much the vast majority of MW discussions on this forum?

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    Re: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

    Quote Originally Posted by cpwill View Post
    Um. See: previous 39 posts of this thread, and pretty much the vast majority of MW discussions on this forum?
    No, that is not what they said.
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    Re: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

    Quote Originally Posted by SouthernDemocrat View Post
    I have seen the studies showing that the minimum wage hurts jobs for low skilled workers. The problem is as I stated earlier the studies on that issue are all over the place.

    Yes, mostly due to their inputs, as I pointed out.

    From the last article:

    So why is conventional economic wisdom wrong? Why doesn’t raising the minimum wages kill jobs? It’s hard to say for sure, but several factors appear to explain the difference:

    [See a collection of political cartoons on the budget and deficit.]

    1. Employers don’t have much flexibility to reduce staff without cutting their revenues: In the conventional Economics 101 narrative, people switch their buying habits when prices change. If apples become more expensive, you don’t eat less; you simply buy more oranges or grapes and fewer apples.


    I sure eat fewer apples. When we moved to Okinawa the fruit bill shot through the roof and you know what we did? We reduced our fruit diet. To answer his point, though, if you can hire multiple low skill workers, or buy some machines and one or two medium-low skill workers, then which path you choose will depend upon your relative return for each.

    But if you’re running a fast food restaurant, you don’t have that option.
    You have lots of options, particularly over time.

    You can’t offshore the fry cook’s job to China.
    Ah yes. That is why none of (for example) Krispy Kreme's donut-making processes are automated. You have to have a person to stand there and flip those donuts, doncha know.

    You can’t replace the cashier with a robot.
    This is where I stopped reading. Of course you can replace a cashier with a machine. Has this man not been in a store that features a self-checkout machine? Do you know when they started incorporating that technology? Right after the last time we raised the minimum wage.




    The jobs that you can't replace with machines and that you can't offshore are typically ones whose value-added comes from both knowledge and physical access. So, for example, you can out-source analysis of X-Rays (it only requires knowledge), you can automate a cashier (you require only physical access) but you cannot outsource or automate an electrician (he requires both knowledge and physical access).


    Skimming through the rest, he also buys into the Spending>Saving fallacy (there is no such thing as time, apparently) as well as "Businesses make it back through increased business" fallacy (you cannot get back more of what you put out when you are guaranteed to lose portions of it). This man would be wrecked if he tried this argument on this site.

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