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Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

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



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.



You have lots of options, particularly over time.



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.



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.

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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.

We are obviously not going to agree. However, I would point out that a low skilled worker will be replaced with a machine if a company can do so regardless of whether the minimum wage is raised or not. Menial jobs are always going to be automated when possible and it has nothing to do with having a minimum wage.
 
No, that is not what they said.

Please highlight for me all of the tradeoffs that they think will occur. Because what I see basically boils down to:

SouthernDemocrat said:
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.

Where do you find the discussion of the trade-offs and negative externalities there?

Heck. PoweRob thought demand for low-skill workers would go up.



It's free-lunchism. That's why we make fun of it by suggesting that we just increase the minimum wage to $100 an hour. Because outside of pointing out that it is a reductio absurdum, there isn't an answer for it within the logic presented. If demand for labor is unconnected to price (if it is perfectly inelastic), and if you can trust the increased spending to allow the companies to make back the increased costs, then why not?


If you want to argue that demand for labor is relatively inelastic under certain conditions, and argue that therefore the reduction in demand would be small, then we can talk about that. But I don't see anyone admitting that they are willing to screw over the most vulnerable in our society simply because there are relatively few of them among our low-income quintile.
 
We are obviously not going to agree. However, I would point out that a low skilled worker will be replaced with a machine if a company can do so regardless of whether the minimum wage is raised or not.

:shrug: maybe. I mean, it's not like there is some kind of large, un/semi-registered, low-skill, low-wage workforce out there with whom our low-skill citizens have to compete for jobs, but who don't come along with federal mandates or taxes... :thinking

Menial jobs are always going to be automated when possible and it has nothing to do with having a minimum wage.

That is incorrect. As costs for labor rise you create greater incentive for automation, expanding or accelerating it's space. MW increases therefore either accelerate or create demand for automation.

However, if you are willing to acknowledge that MW increases do indeed cost poor people their jobs, and are shifting now to a position of "but those jobs might have been lost in a few years anyway", I am more than happy to shift to that point of discussion.
 
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.

Inflation hasn't been held to lead inexorably to employment since the 70s. That's why we have New Keynesianism.

However, it's worth pointing out that in this scenario you haven't increased anyones wages in real terms, you've merely thrown some people out of work.
 
Where do you find the discussion of the trade-offs and negative externalities there?

Heck. PoweRob thought demand for low-skill workers would go up.



It's free-lunchism. That's why we make fun of it by suggesting that we just increase the minimum wage to $100 an hour. Because outside of pointing out that it is a reductio absurdum, there isn't an answer for it within the logic presented. If demand for labor is unconnected to price (if it is perfectly inelastic), and if you can trust the increased spending to allow the companies to make back the increased costs, then why not?


If you want to argue that demand for labor is relatively inelastic under certain conditions, and argue that therefore the reduction in demand would be small, then we can talk about that. But I don't see anyone admitting that they are willing to screw over the most vulnerable in our society simply because there are relatively few of them among our low-income quintile.

And once again, find a correlation between the small increases we have had in the minimum wage over the course of the last 70 years, and any reductions in job creation for low skilled workers. I mean for crying out loud, when in the last 3 decades has they ever been a point when a minimum wage job could not be easily obtained? During economic downturns, they are about the only jobs still available. During periods of solid economic growth, many minimum wage jobs go unfilled because better opportunities exist.

Some of your arguments you have presented thus far are contradictory. For example, when its pointed out that the minimum wage was increased in the 90s yet the poverty rate dropped to record low levels, you respond with "yea because of welfare reform". Well if that is the case, then welfare reform would have had to result in lots of unskilled people entering the workforce and then getting jobs that you argue the minimum wage would have reduced the creation of.

Moreover, just because an increase in the minimum wage from say 6 dollars to 7 dollars an hour would not be detrimental to job creation does not mean the same would be true if you increased the minimum wage to 30 dollars an hour. Such an comparison is absurd.

Finally, earlier you mention the price of apples and how when they are expensive you don't buy them. Yes, because apples are a luxury. However, lets say gas is $2.00 a gallon and it then goes up to $5.00 a gallon. Most likely you will drive less and combine trips to save money right? However, that does not mean that you will change anything about your driving habits if gas is $2.00 a gallon and then goes up to $2.10 a gallon. Similarly, if it is $2.00 a gallon and goes down to 20 cents a gallon you might go out and get a big gas guzzler, but that doesn't mean that if gas is $2.00 a gallon and drops to $1.95 a gallon, you will all of a sudden trade your CRV in for a Tahoe. See how that works? The minimum wage works much the same and that is why economists are all over the place with it. An economists opinion on the minimum wage has much more to do with their personal ideology than it does with empirical evidence.

We could have what amounts to slave labor wages for pennies an hour and all sorts of low wage jobs would be created. We could bump up the minimum wage to 30 dollars an hour and all sorts of low skilled jobs would be eliminated, but neither of those propositions represent any real world scenario in an advanced economy.
 
But remember, there is ZERO increase in productivity...so these products/services are no better...just more expensive. But since foreign countries that import those goods into America had no such increase in pay, then that instantly makes American-made products even less competitive with imports then they already were. That hurts sales. And that causes layoffs at those American manufacturers. And probably causes increased hiring at foreign manufacturers that import to America.

I like this.
 
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.

Training new employees is a very large expense too tho. So for now, it probably came out even. But long term? Your company may have to increase prices. Just a thought.
 
Please highlight for me all of the tradeoffs that they think will occur. Because what I see basically boils down to:



Where do you find the discussion of the trade-offs and negative externalities there?

Heck. PoweRob thought demand for low-skill workers would go up.



It's free-lunchism. That's why we make fun of it by suggesting that we just increase the minimum wage to $100 an hour. Because outside of pointing out that it is a reductio absurdum, there isn't an answer for it within the logic presented. If demand for labor is unconnected to price (if it is perfectly inelastic), and if you can trust the increased spending to allow the companies to make back the increased costs, then why not?


If you want to argue that demand for labor is relatively inelastic under certain conditions, and argue that therefore the reduction in demand would be small, then we can talk about that. But I don't see anyone admitting that they are willing to screw over the most vulnerable in our society simply because there are relatively few of them among our low-income quintile.

OK, here, let me highlight a small bit of what SD said in your quote of him: "little if any effect on jobs and employment". He is acknowledging that there could be an effect. That is not saying there is no tradeoff.

Acording to the CBO, it is possible that a minimum wage job could increase employment. The report is linked in this thread. It is not sure, but is within the range of most likely outcomes for a raise to 9 an hour.

Note that focusing on the positive is not denying the negative. Just as, if pressed, I am sure you would have to admit that many people would see a standard of living increase with a minimum wage hike, that is not what you focus on, those who support a minimum wage hike focus on the positive and not the negative.
 
You do not hire people just on need. If that was the case, then pay would be irrelevant.

I dont understand that statement. Can you please explain it further?
 
However, it's worth pointing out that in this scenario you haven't increased anyones wages in real terms, you've merely thrown some people out of work.

How so?
 
OK, here, let me highlight a small bit of what SD said in your quote of him: "little if any effect on jobs and employment". He is acknowledging that there could be an effect. That is not saying there is no tradeoff.

Acording to the CBO, it is possible that a minimum wage job could increase employment. The report is linked in this thread. It is not sure, but is within the range of most likely outcomes for a raise to 9 an hour.

No, I think you are referencing when the CBO said that a MW raise would increase income, though it would lower employment.

CBO: Once fully implemented raising the Minimum Wage to $10.10 would reduce total employment by about 500,000 workers, or 0.3 percent, but raise total family income by $2 Bn

Note that focusing on the positive is not denying the negative.

No. Actually denying the negative (see: above) is denying the negative. When Person A says "oh, raising the minimum wage will increase workers pay", Person B says "yeah, but it will cost some of those workers their jobs" and Person A responds "No it won't", Person A is denying the negative.

Just as, if pressed, I am sure you would have to admit that many people would see a standard of living increase with a minimum wage hike, that is not what you focus on, those who support a minimum wage hike focus on the positive and not the negative.

I agree that increasing the MW would increase the standard of living for many - certainly at least in the short term. I'm just not sure we want to subsidize the less-worse-off poor at the expense of the more-worse-off poor, and I am sure as all get out that we shouldn't do it unless we've openly acknowledged what we are doing, and have good reasons why. That is my second biggest problem with advocates of MW increases - it seems that they are unwilling to acknowledge the trade offs, and honestly defend them. They prefer to insist it will be a free lunch. Anytime someone promises you that, be skeptical.
 
I dont understand that statement. Can you please explain it further?

He is pointing out that if demand for labor were perfectly inelastic, labor could demand any wage it pleased.
 
He is pointing out that if demand for labor were perfectly inelastic, labor could demand any wage it pleased.

Thanks. I will look again with that context.
 
Because you've increased the wages of some at the cost of jobs of others, but increased inflation to absorb the wage increases.

It is illogical to think that inflation will completely or even meaningfully cover the cost of the increase in wage.
 

No. Read the report, all of it. To quote the report, for an increase to 9 an hour:

There is about a two-thirds chance that the effect would be in the range between a very slight increase in employment and a reduction in employment of 200,000 workers, in CBO’s assessment.

No. Actually denying the negative (see: above) is denying the negative. When Person A says "oh, raising the minimum wage will increase workers pay", Person B says "yeah, but it will cost some of those workers their jobs" and Person A responds "No it won't", Person A is denying the negative.

Not what he said though.

I agree that increasing the MW would increase the standard of living for many - certainly at least in the short term. I'm just not sure we want to subsidize the less-worse-off poor at the expense of the more-worse-off poor, and I am sure as all get out that we shouldn't do it unless we've openly acknowledged what we are doing, and have good reasons why. That is my second biggest problem with advocates of MW increases - it seems that they are unwilling to acknowledge the trade offs, and honestly defend them. They prefer to insist it will be a free lunch. Anytime someone promises you that, be skeptical.

Now we are getting to real arguments. Here is my counterpoint: again using the CBO report, the largest job loss likely to happen is about 1 million short term, assuming an increase to 10.10(the 2/3 probability range for that increase is actually a "very slight decrease" to a decrease of 1 million). Note that this is in the short term and jobs levels will return to the norm over time. In contrast, 16.5 million people are working for less than 10.10, so they would see a raise of some amount. Or to put it another way, for every job lost, over 15 people see their standard of living increase. This does not include those who see a raise from the ripple effect, which would increase, probably dramatically, those who see at least a modest pay raise. Everything is about tradeoffs. To me, that sounds like a worthwhile tradeoff. Slightly harder to find a job for awhile, but when you get it, it pays more, and importantly, more relative to the cost of living.
 
No. Read the report, all of it. To quote the report, for an increase to 9 an hour:

I did read the report. Citing the section where they stated that a lower increase would simply cost fewer jobs than a greater increase sort of only reinforces my point.

Not what he said though.

Alright. Show me where he admitted that increasing the MW would reduce the demand for labor at the lowest income.

Now we are getting to real arguments. Here is my counterpoint: again using the CBO report, the largest job loss likely to happen is about 1 million short term, assuming an increase to 10.10(the 2/3 probability range for that increase is actually a "very slight decrease" to a decrease of 1 million). Note that this is in the short term and jobs levels will return to the norm over time.

That is not what the report states:

...The change in employment of low-wage workers also differs over time. At first, when the minimum wage rises, some firms employ fewer low-wage workers, while other firms do not; the reduced employment is concentrated in businesses and industries where higher prices result in larger reductions in demand. Over a longer time frame, however, more firms replace low-wage workers with inputs that are relatively less expensive, such as more productive higher-wage workers. Thus, the percentage reduction in employment of low-wage workers is generally greater in the long term than in the short term...

Which matches what I said above - by accelerating the process of automation and increasing the incentive to innovate in that space, you create a worse situation than the "well they may have lost those jobs in a few years anyway" scenario that was given in response.

In contrast, 16.5 million people are working for less than 10.10, so they would see a raise of some amount. Or to put it another way, for every job lost, over 15 people see their standard of living increase. This does not include those who see a raise from the ripple effect, which would increase, probably dramatically, those who see at least a modest pay raise. Everything is about tradeoffs. To me, that sounds like a worthwhile tradeoff. Slightly harder to find a job for awhile, but when you get it, it pays more, and importantly, more relative to the cost of living.

Two items:

1. the people most likely to be laid off are the least-skilled, least-experienced, least-educated, who are also least-likely to be able to find a job at the new rate. In the ladder of life, you've taken the shortest people and told them to jump the most to reach the bottom rung.

2. The cost of living will increase as well. Not all, but some (relative portion will likely differ by business model and industry), of the increased costs will be reflected in increased prices.


and a final point: If we argue (and liberals make this argument convincingly) that society should be measured by how we treat The Least Of These, then I think it is worth arguing that we should not be completely screwing the poorest person in a group of 16 to hook up the other 15 with a couple of extra bucks an hour. I am not willing - and I think most folks would not be willing - to actively screw over the poorest of the poor to subsidize anyone, even slightly wealthier poor. It's worth noting in that context that 73.8% of the real wage increases will go to families who are already above the poverty line. However, I understand that some will not agree with that, placing greater emphasis on the net gain. I do appreciate the recognition, acceptance, and defense of the trade-off.
 
buck;1064200567]Here is an example of what occurs, from an article on CT:
In Connecticut, some minimum-wage workers say raise hasn't helped much - LA Times

You're source sites the opinion of ONE person, who is complaining that raising the minimum wage hasn't done ENOUGH to help. Hasn't really changed her life...why? Because she is a young single mom in CT...which means she gets about 10K per year in aid.

"Because you're raising the cost of hiring, you can get this unintended consequence where some of the people on the margin have their hours reduced," he said.

When Segui began working at Dunkin' Donuts, she was scheduled for 35 hours a week. A few months ago, she and other workers starting getting fewer hours. She now works from 20 to 27 hours a week.
THAT is the result of the AHCA enacting it's true goal...to redefine the full time work week as being 30 hours. And yeah, THAT is evident in almost every low skill job you see...just about no one, anywhere in retail, is allowed to consistently schedule their employees for more than 27.5 hours per week, UNLESS they are classified by the company as being full time. Minimum wage increases have done absolutely NOTHING to affect that, though. Barking up the wrong tree.
More important, though, I'm sure you'll agree, is what occurs in more than one individual or job location - i.e. at the state level. Here is how it effected workers in CT:
How Minimum Wage Increased Unemployment and Reduced Job Creation in 2013 | Research | American Action Forum


Min wage at the time of the study: $8.25
unemployment rate increase due to MW over federal level - total population: 1.48%
unemployment rate increase due to MW over federal level - Teenagers: 4.67%


This is called correlation = causation fallacy. Your opinion piece does not provide any insights OTHER than some states with higher minimum wage have higher unemployment. It goes into NO details whatsoever about which, specifically, those states are, it goes into no details about poverty levels, it goes into no details about specific states economic realities (like, SOME states have oil, some don't, SOME states got rocked MUCH harder by 2008 than others, etc)

In short, this was a half baked opinion article from the American Action Forum. The moment you want to pony up with some REAL data, feel free.
 
You do not hire people just on need. If that was the case, then pay would be irrelevant.

And your company has not raised prices for probably one of two reasons. a) they do not think they can because their customers will not bear it; or b) your comapnies profit margin was so great that they have no need to raise prices.

But one thing is 100% for certain - all other things being equal, your company is now making less money then iot used to assuming they are paying their people more money with zero increase in productivity. That is a fact.

Just because they have not yet raised prices does not mean they do not want to or will not soon be forced to. It just means they have not yet.

Nothing is free in business. If you raise costs then you have to raise prices or you will lower profit. Period.

This is 100% accurate. And I fail to see a problem with it. The bottom line is, companies are NOT going to do what is best for the overall economy, that's not their job. If my company could, it would get rid of ALL of it's workers entirely, even if we all only made .01 cents per hour. Why? Because it would be more profitable for them to do so. Assuming that most companies operate with this mindset, it becomes readily apparent that doing what is best for the company, is not really doing what is best for the company. Because companies need customers. Customers need jobs that pay enough for them to have money to burn. It would be nice if all companies were ran by people smart enough to realize this, but they are not. They are governed by rules set out by people who see said companies as nothing more than a payday, either now, or in the not so distant future. As such, action needs be taken to ensure the security and health of our economy, lest we all sink on the same boat.
 
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.

Most retail companies are the same, for all intents and purposes. ESPECIALLY ones that are owned by private equity firms.

Let's explore the idea of paying an employee less than they are worth. Define worth, so we can both operate on the same understanding? I think of worth as beings...the amount another person values something. As such, almost ALL companies who employ people pay said employees less than their worth, else they would not employ them. The best of companies will only ever pay people CLOSE to their worth. If they pay them exactly what they are worth, or more...profits suffer. In the end, a company is going to pay it's employees as little as they can, and still retain employees. With our current population to jobs ratio, that ends up being quite little for most people...minimum wage. Because there is a greater supply of labor, than there is demand for that labor. Based on that truth, should we just shrug our shoulders and say "That's capitalism, baby!" And offer a tip about making oneself more valuable to prospective employers? Or should we take action to ensure the current and future health of our overall economy? We're ALL linked...the wealthiest down to the poorest...all of our fates are wound up together...the poorest's actions affects the wealthiest, and vice versa.
 
Training new employees is a very large expense too tho. So for now, it probably came out even. But long term? Your company may have to increase prices. Just a thought.

Nah, it won't. Our most direct competitor, a VERY successful company called Costco, is ran by a man who understands that a company can only be as good, can only be as well off, as it's customers, and through them, it's employees. They pay their employees FAR above minimum wage, FAR above what BJ's pays, but keeps it's prices right at what BJ's has...how does it do this? Because it's run by a man who doesn't feel the need to make 10 million or more per year, with a bunch of other people beneath him who need 5 million per year, and so on.

THOSE are really the only casualties when a company becomes "less profitable"...the few who make 700 times more than the many within companies such as these. So when you engage in arguments like this, just remember who it is that you are arguing for, WHAT it is that you are arguing for them FOR.
 
Most retail companies are the same, for all intents and purposes. ESPECIALLY ones that are owned by private equity firms.

Let's explore the idea of paying an employee less than they are worth. Define worth, so we can both operate on the same understanding? I think of worth as beings...the amount another person values something. As such, almost ALL companies who employ people pay said employees less than their worth, else they would not employ them. The best of companies will only ever pay people CLOSE to their worth. If they pay them exactly what they are worth, or more...profits suffer. In the end, a company is going to pay it's employees as little as they can, and still retain employees. With our current population to jobs ratio, that ends up being quite little for most people...minimum wage. Because there is a greater supply of labor, than there is demand for that labor. Based on that truth, should we just shrug our shoulders and say "That's capitalism, baby!" And offer a tip about making oneself more valuable to prospective employers? Or should we take action to ensure the current and future health of our overall economy? We're ALL linked...the wealthiest down to the poorest...all of our fates are wound up together...the poorest's actions affects the wealthiest, and vice versa.

The price of a deck screw isn't dependent on the size and grandeur of the deck, Kevin. And the price of the hourly wage for a security guard doesn't change because it's the big mall instead of the strip mall. If you want to know what you're worth, go out and find out what's the most anyone will pay you for the skills you have. That's what your skills are worth. You don't have to like reality but you do have to live in it whether you like it or not or accept it or not.
 
Nah, it won't. Our most direct competitor, a VERY successful company called Costco, is ran by a man who understands that a company can only be as good, can only be as well off, as it's customers, and through them, it's employees. They pay their employees FAR above minimum wage, FAR above what BJ's pays, but keeps it's prices right at what BJ's has...how does it do this? Because it's run by a man who doesn't feel the need to make 10 million or more per year, with a bunch of other people beneath him who need 5 million per year, and so on.

THOSE are really the only casualties when a company becomes "less profitable"...the few who make 700 times more than the many within companies such as these. So when you engage in arguments like this, just remember who it is that you are arguing for, WHAT it is that you are arguing for them FOR.

Costco pays it's employees more and, therefore, they get the first choice of employees. That's where the best employees are going to go. That's their business model and if you want more, your best bet would be to raise your game enough to get hired by them instead of complaining that BJ's doesn't pay as much.
 
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