- Joined
- Sep 28, 2011
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- Location
- SF Bay Area
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- Conservative
"Well-positioned" means that the industry structure (knowledge-oriented economy reliant to a larger extent on skilled workers than many other local economies), educated populace (57% with a bachelors degree or higher), prevailing wages (some three quarters of workers already earn above the $15 per hour figure), etc., will result in a smaller economic shock than what one will likely see in a city such as Los Angeles where more than a quarter of the population lacks a high school diploma.
But the 'economic shock' is just a euphemism for the harmful economic effect on businesses and labor. As such it has nothing to do with how educated the work force is - all other things being equal assuming that 25 percent of the workforce in LA or Seattle is getting a raise, then some will retain their jobs and some won't. The only difference is that in Seattle the average education of the unhired/laid off will be higher.
The only variables that mitigate impact on a work force is the gap between the minimum and market wage, and the percent of folks in the workforce that earn below the new minimum wage. I don't know what the 'gap' will be in LA, nor the percentage of the LA workforce who earns below that wage, but if they are statistically similar, then the impact on LA will be similar.
In any event, 25 percent of the workforce is a huge number to be affected by a new minimum wage. In 2013 the number of workers affected by the new federal minimum wage was about 2 million. Among those paid by the hour, 1.6 million earned exactly the prevailing federal minimum wage of $7.25 per hour. About 2.0 million had wages below the federal minimum. Together, these 3.6 million workers with wages at or below the federal minimum made up 4.7 percent of all hourly paid workers. THAT is modest.
But it is implausible that a major 50 percent wage increase (from 9.50 to 15 an hour, for example) could be characterized as having "modest impact", especially on the businesses and employees of that "25 percent". One would expect it to have an impact significantly greater than that historically experienced.
Of course, there will be some labor market dislocations, but those could be relatively modest based on the characteristics of Seattle's economy and workforce. Of course, we'll have to wait for the data to become available to better assess the impact. By the beginning of 2017, large firms (500 or more employees) will have been required to have raised their wage to $15 per hour, so a body of data will be available.
We don't need to wait for 'data'; economic factor theory, minimum wage experience, and common sense already tells us what will happen - disemployment, redistribution of jobs shutting out the unskilled, young, etc., reduced schooling-training, and lower job creation for this group. And we know that wage costs tend to redefine the kind of businesses that survive (or thrive). For example, fast food outlets may tend to gain business as less labor efficient diners and small resteraunts tend to be more severely impacted.
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