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UW Researchers Report Price Data After Seattle’s Minimum Wage Increase

joG said:
I know the applicable economic theories, what variables might be affected and what indices you would have to measure. I also know that it takes a whole lot more time for shocks of this kind to push through the economy and work their magic.
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Funny, if you actually read the preliminary report, they explicitly state that it takes time for these effects to be seen. That's why it is a "preliminary report."

That said, it's not clear what "applicable economic theories" you refer to. After all, we've seen well over 10 years of employers slashing labor rolls; the idea that they will hire fewer employees presumes they can afford to further cut hours and wages, which may not be the case at all. There is very little fat left to cut; if they cut back further on staff, they're cutting into muscle.

The empirical data also does not suggest a strong impact of minimum wages. This should not be surprising, given that minimum wages are not indexed to inflation, and aren't keeping up with inflation.

In the meantime, it looks like they have enough data from Seattle to say that raising the minimum wage to $11 had no statistically significant effect on inflation.

So. Did you read the study, before writing it off...?
 
KevinKohler said:
I agree. I don't believe the minimum wage will result in higher costs like some (maybe you?) predict, however, making this claim now is like throwing on a cod piece, and proclaiming mission accomplished.

Way too soon
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This is just meant to be funny.....right?
Economics 101 - Business costs rise.....prices rise to maintain profitability and margin
 
jet57 said:
Your answer makes no sense.
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Why? If a company needs an employee, they calculate and offer a job at a price. The participation rate isn't so high that no able bodies exist.
 
Visbek said:
Funny, if you actually read the preliminary report, they explicitly state that it takes time for these effects to be seen. That's why it is a "preliminary report."

That said, it's not clear what "applicable economic theories" you refer to. After all, we've seen well over 10 years of employers slashing labor rolls; the idea that they will hire fewer employees presumes they can afford to further cut hours and wages, which may not be the case at all. There is very little fat left to cut; if they cut back further on staff, they're cutting into muscle.

The empirical data also does not suggest a strong impact of minimum wages. This should not be surprising, given that minimum wages are not indexed to inflation, and aren't keeping up with inflation.

In the meantime, it looks like they have enough data from Seattle to say that raising the minimum wage to $11 had no statistically significant effect on inflation.

So. Did you read the study, before writing it off...?
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1) it is pointed out that it is a long term study and that results are provisional, as I remember. It then goes on to treat the results in a manor that implies political significance. This is a typical false use of research that is probably less due to ignorance than purpose, knowing as information managers do that most readers will remember the headline and not the caveat. That is what we punish registered representatives for, when they use the technique in selling pork bellies. In principal, that is all i wanted to point out.
2) at this level of discussion, the precise model used to structure one's thoughts is probably not very relevant. If we were to want to understand the exact meaning of the study's numbers, we would have to be more exact. But we seem to agree that it is silly to put that much time into understanding the numbers at this early stage in the game, unless as researchers we need to know now. I do not see why you mention the boiler plate stuff in the context. It sounds like a red herring.
3) Saying that the indexation is relevant to understanding the relevance of short period multipliers, when inflation is as low as presently, on the other hand, seems simply weird. ;)
4) No. I have not looked at the research design yet. The results are still too little useful. But yes. I have looked at a good number of studies of wage shocks and other instruments of social programs to stabilize low income levels.
 
we'll see. this type of thing takes time to have its effect felt. we should all re-visit this thread in 5 years to discuss the issue, simply not enough time has passed to reach any hard conclusions.
 
TheDemSocialist said:
[/COLOR][/FONT]

[FONT=Lato, Helvetica Neue, Helvetica, Helvetica, Arial, sans-serif]Read more @: [/FONT]UW Researchers Report Price Data After Seattle’s Minimum Wage Increase

[FONT=Lato, Helvetica Neue, Helvetica, Helvetica, Arial, sans-serif]Spoiler, they didnt much change. Seattle restaurant prices increased 7-8% (wohooo a burger now costs $8 instead of $7.50 [/FONT]:sarcasticclap[FONT=Lato, Helvetica Neue, Helvetica, Helvetica, Arial, sans-serif]), but there is question if that is associated with the minimum wage increase because restaurant prices also rose outside of Seattle and are thought to be a broader phenomenon that is tied to rising rent and ingredient prices. The draconian predictions of raising the wage still not coming true. Its time to raise the wage nationally [/FONT]:2razz:
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I thought the increase was to be phased in over a couple years. Is that right? If so, the minimum is not yet $15 but some lower figure and you are already seeing a 7-8% rise in prices. Not sure how that is a sign of success.
 
joG said:
I know the applicable economic theories, what variables might be affected and what indices you would have to measure. I also know that it takes a whole lot more time for shocks of this kind to push through the economy and work their magic.
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Yeah, it's a "shock" and it takes a long, long time to have any effect :lamo

Are you sure you know what the word "shock" means?
 
sangha said:
Yeah, it's a "shock" and it takes a long, long time to have any effect :lamo

Are you sure you know what the word "shock" means?
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For simplicity may I use a quote: "An economic shock is an event that produces a significant change within an economy, despite occurring outside of it. Economic shocks are unpredictable and typically impact supply or demand throughout the markets." ("Outside" in this case indicates the change of a factor price to a value not determined by supply and demand.)
 
joG said:
For simplicity may I use a quote: "An economic shock is an event that produces a significant change within an economy, despite occurring outside of it. Economic shocks are unpredictable and typically impact supply or demand throughout the markets." ("Outside" in this case indicates the change of a factor price to a value not determined by supply and demand.)
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So a change in the cost of labor is a change that occurred "outside of it" (ie the economy)???
 
sangha said:
So a change in the cost of labor is a change that occurred "outside of it" (ie the economy)???
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You have probably heard the word to reference a foreign collapse of demand or increase of oil prices. Here it is a similar phenomenon.
In economic lingo the price would have been determined exogenously ie by something (politics) outside of the economic process. You could easily use other terms describing a fixed price, but in this case the term "shock" is perfectly acceptable.
 
joG said:
You have probably heard the word to reference a foreign collapse of demand or increase of oil prices. Here it is a similar phenomenon.
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And yet, there's been no collapse of demand or increase in prices due to this...so yeah, it's exactly the same thing :roll:

In economic lingo the price would have been determined exogenously ie by something (politics) outside of the economic process. You could easily use other terms describing a fixed price, but in this case the term "shock" is perfectly acceptable.
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Yes, because an event that happened inside the economy is exactly like an event that happens outside the economy!! :lamo

Time to face the facts - this increase in the MW has had no discernible impact on the economy
 
sangha said:
And yet, there's been no collapse of demand or increase in prices due to this...so yeah, it's exactly the same thing :roll:



Yes, because an event that happened inside the economy is exactly like an event that happens outside the economy!! :lamo

Time to face the facts - this increase in the MW has had no discernible impact on the economy
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If you just want to be funny, be my guest. If you do not like even that level of lingual precision, I do not really see how you will ever sort your ideas, however.

And BTW. As far as I know, there has been "discernible impact on the economy". It is only relatively unimportant at this time, as the change is still much too new. This type of field experiment is interesting no doubt, but one needs to hold one's horses and be patient. Economic process is not instantaneous and here the lag times could be quite long in areas of the economy, where palning periods for buildings or machinery are involved. You do not close a call-center till you have a replacement, after all.
 
Fletch said:
I thought the increase was to be phased in over a couple years. Is that right?
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Thats true. Its currently at $13 a hour.

If so, the minimum is not yet $15 but some lower figure and you are already seeing a 7-8% rise in prices. Not sure how that is a sign of success.
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"“Overall, we found that prices in Seattle are fairly stable and they haven’t gone up very much, if at all, since the minimum wage went up starting in April of last year," said Jacob Vigdor, the Daniel J. Evans professor of public policy at UW. "The exception would be in the restaurant sector, where we found price increases on the order of 7 or 8 percent."

But restaurant prices also rose outside of Seattle. Vigdor said his team didn’t collect that much restaurant data outside the city, making it a bit hard to draw conclusions.

"So we don’t have quite as much confidence in saying that 7 or 8 percent is purely a Seattle thing or whether it’s a broader economic phenomenon that could be reflecting rising rents or bigger ingredient prices that could be affecting the entire metro area," Vigdor said. "
 
joG said:
1) it is pointed out that it is a long term study and that results are provisional, as I remember. It then goes on to treat the results in a manor that implies political significance.
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The OP might be guilty of that. The authors of the study are not. They were very clear that these were preliminary results of a long-term study, and (for example) don't have employment data yet.

You cannot blame the authors of the study, or discredit the study altogether (as you obvious have done), because someone else exaggerated its results.


2) at this level of discussion, the precise model used to structure one's thoughts is probably not very relevant.
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It is, when you are referring to "applicable economic theories" that refute empirical evidence, without saying what they are, or taking into account a variety of relevant factors (such as whether employers are able to cut back on staff, without harming productivity).


3) Saying that the indexation is relevant to understanding the relevance of short period multipliers, when inflation is as low as presently, on the other hand, seems simply weird. ;)
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When the claim is that "raising the minimum wage will cause inflation," and it fails to happen, or when the inflation in a specific industry can't be traced convincingly to wages, then there is nothing weird at all about it.


4) No. I have not looked at the research design yet. The results are still too little useful. But yes. I have looked at a good number of studies of wage shocks and other instruments of social programs to stabilize low income levels.
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I call shenanigans.

You explicitly stated that the study cited "false statistics," when you didn't even bother to read the study.

Plus, if you had actually looked into the field, you'd know there is no solid consensus on the effects of minimum wage hikes. In fact, many studies show little to no effect from the so-called "wage shocks" of raising MW.
 
Fletch said:
I thought the increase was to be phased in over a couple years. Is that right?
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It is. Minimum wages increased by about $1.50 last April, and prices at restaurants increased in the areas around Seattle as well.

We should also note that while the results are preliminary, "Hedgehogism" is not particularly convincing. E.g. "it's going to happen sooner or later, you'll see!" is not an effective prediction method. The better method is to wait and see how things turn out.
 
joG said:
If you just want to be funny, be my guest. If you do not like even that level of lingual precision, I do not really see how you will ever sort your ideas, however.
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My point is that you have been extremely imprecise by using the term "economic shock" (defined as a non-economic event that has an effect on the economy) to describe an economic event that has had no discernible effect on the economy

And BTW. As far as I know, there has been "discernible impact on the economy". It is only relatively unimportant at this time, as the change is still much too new. This type of field experiment is interesting no doubt, but one needs to hold one's horses and be patient. Economic process is not instantaneous and here the lag times could be quite long in areas of the economy, where palning periods for buildings or machinery are involved. You do not close a call-center till you have a replacement, after all.
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Yes, you "know" there's been an effect, but you can't actually show that there's been an effect.
 
Visbek said:
The OP might be guilty of that. The authors of the study are not. They were very clear that these were preliminary results of a long-term study, and (for example) don't have employment data yet.

You cannot blame the authors of the study, or discredit the study altogether (as you obvious have done), because someone else exaggerated its results.



It is, when you are referring to "applicable economic theories" that refute empirical evidence, without saying what they are, or taking into account a variety of relevant factors (such as whether employers are able to cut back on staff, without harming productivity).



When the claim is that "raising the minimum wage will cause inflation," and it fails to happen, or when the inflation in a specific industry can't be traced convincingly to wages, then there is nothing weird at all about it.



I call shenanigans.

You explicitly stated that the study cited "false statistics," when you didn't even bother to read the study.

Plus, if you had actually looked into the field, you'd know there is no solid consensus on the effects of minimum wage hikes. In fact, many studies show little to no effect from the so-called "wage shocks" of raising MW.
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1) I do not believe I did "discredit the study". In fact, I think highly of such studies, having worked on such quantitative socioeconomic impact studies myself at one time. I think I was quite clear that it was the use of the preliminary data I was criticizing. This I still do.
2) As for saying that the " "applicable economic theories" that refute empirical evidence", I believe you are misrepresenting me. You see, as a quantitative economist I do not really think that a theory can "refute" reality. It might make you revisit your data. But the rest of your point to is non applicable at this level of discussion, as I had pointed out. Why do you keep harping on an irrelevancy?
3) I do not understand you third input.
4) What I think I said was that the use in the article was an example of a false use of statistics. This is independent of the correctness of the data.
And yes, there are studies that show negative as well as positive correlations. That is well known and at the same time very interesting, as it means that it in not trivial how the experiment is designed and under which conditions it is performed. But again, this is not very new.
 
sangha said:
My point is that you have been extremely imprecise by using the term "economic shock" (defined as a non-economic event that has an effect on the economy) to describe an economic event that has had no discernible effect on the economy



Yes, you "know" there's been an effect, but you can't actually show that there's been an effect.
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1) I am afraid, I do not follow. The shock in not "a non-economic event" in this case. It is an event not determined economically that fixes the price of labor.

2) Did you red the article?

3) What are you trying to get at?
 
NoLeftNoRight said:
This is just meant to be funny.....right?
Economics 101 - Business costs rise.....prices rise to maintain profitability and margin
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Correct. But because the minimum wage goes up 1 dollar and hour, does NOT mean gas goes up a dollar per gallon, burger go up by one dollar, pasta goes up by one dollar, etc etc etc. Inflation historically rides well behind increases in wages.
 
joG said:
1) I do not believe I did "discredit the study".
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Without having read the study, you explicitly referred to the study as "false statistics;" you did so on the basis that "I know the applicable economic theories, what variables might be affected and what indices you would have to measure." That was without even looking at the design of the study, or the explicit statements of the authors that this was a preliminary report, and part of an ongoing study.

What can I say, this certainly seems like you're trying to discredit a study you haven't read, as opposed to saying "ok, this is preliminary data, let's wait another 12 months and see what happens."

I.e. you were a bit too glib in your objection, and did not clear it up much in your replies.


3) I do not understand you third input.
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What's not to understand?

Many people claim that raising minimum wages has numerous negative effects on an economy, typically increases in unemployment and/or inflation. The study doesn't have employment figures yet, and the data they have shows no statistically significant effects on inflation. It might be a little surprising, but hardly outlandish.
 
TheDemSocialist said:
Thats true. Its currently at $13 a hour.



"“Overall, we found that prices in Seattle are fairly stable and they haven’t gone up very much, if at all, since the minimum wage went up starting in April of last year," said Jacob Vigdor, the Daniel J. Evans professor of public policy at UW. "The exception would be in the restaurant sector, where we found price increases on the order of 7 or 8 percent."

But restaurant prices also rose outside of Seattle. Vigdor said his team didn’t collect that much restaurant data outside the city, making it a bit hard to draw conclusions.

"So we don’t have quite as much confidence in saying that 7 or 8 percent is purely a Seattle thing or whether it’s a broader economic phenomenon that could be reflecting rising rents or bigger ingredient prices that could be affecting the entire metro area," Vigdor said. "
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So this study only reflects the initial $1.50 minimum wage increase not what the effects of a $15 minimum would be. Perhaps you should have said that at the start rather than giving the false impression that the data represented the full increase. Effects of this policy will not be know for a while so its a bit early to start waving the pom poms.
 
Fletch said:
So this study only reflects the initial $1.50 minimum wage increase not what the effects of a $15 minimum would be. Perhaps you should have said that at the start rather than giving the false impression that the data represented the full increase. Effects of this policy will not be know for a while so its a bit early to start waving the pom poms.
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So the fact that the simple rise in wages does not directly relate to increase in prices?
 
Will wait for more scientifically sound conclusions. They need to look at the surrounding areas and they would need to look at tips. I know that if I ate in Seattle I would drop my normal 20-22% tip to 15% or less so I would save money, not having to worry about my wait staff being adequately rewarded.
 
Fletch said:
It did. 7-8%. You said so yourself.
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"“Overall, we found that prices in Seattle are fairly stable and they haven’t gone up very much, if at all, since the minimum wage went up starting in April of last year," said Jacob Vigdor, the Daniel J. Evans professor of public policy at UW. "The exception would be in the restaurant sector, where we found price increases on the order of 7 or 8 percent."

But restaurant prices also rose outside of Seattle. Vigdor said his team didn’t collect that much restaurant data outside the city, making it a bit hard to draw conclusions.

"So we don’t have quite as much confidence in saying that 7 or 8 percent is purely a Seattle thing or whether it’s a broader economic phenomenon that could be reflecting rising rents or bigger ingredient prices that could be affecting the entire metro area," Vigdor said. "
 
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