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New UW Study: Raising the Minimum Wage Doesn’t Raise the Price of Groceries

The last time this really became controversial was when Jacob Vigdor, et al. did a city-commissioned study on raising the minimum wage. This study included one of the "synthetic" models that is vaguely criticized in your link. The study concluded mixed results. One one hand it found numerous workers earning more. On the other it suggested a decrease in hours among some jobs and a decrease in supply of some jobs on the lowest end of wages. So then the City (then-mayor's office, likely taking orders from Kshama Sawant) scrambled to hire an outsider from Berkeley known for being biased in favor of the minimum wage to come in and shoot down Vigdor's study.

This study didn't say the sky would fall, predict prices would rise, and businesses would close. It also didn't hypothesize that grocery stores would hike their prices within a year. It primarily found concern that some workers would struggle to maintain adequate hours and that the supply of low wage jobs would shrink. Nonetheless, the city felt any downsides was not flattering enough for their agenda, so they weaponized out-of-state researchers to attack the study they commissioned.

Maybe the writer in your link mainly wants to refute the global sky-is-falling arguments that are auto-deployed by people who have made up their minds that they're against the minimum wage no matter what. I get that. The evidence clearly doesn't support economic devastation in every instance of raising the minimum wage. Raising the MW seems to typically do pretty well in booming, rich markets with high costs of living. That's especially where it tends to get passed. Seattle is one of those places.
 
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In most middle class communities almost no one is paid minimum wage, not even teenagers. Usually it's paid in poor areas with a huge surplus of low skilled labor. And even then, those who stick on the job for six months make more; simply because they have proven to be dependable and learned how to do the job more efficiently. There are pockets in very poor states where minimum wage is common, but those surrounding areas are also very poor. The whole state might be poor. Not much profit margin in what they do.
 
In most middle class communities almost no one is paid minimum wage, not even teenagers. Usually it's paid in poor areas with a huge surplus of low skilled labor. And even then, those who stick on the job for six months make more; simply because they have proven to be dependable and learned how to do the job more efficiently. There are pockets in very poor states where minimum wage is common, but those surrounding areas are also very poor. The whole state might be poor. Not much profit margin in what they do.

This is why I've said what the real motivation for the $15 minimum wage is--and this should be admitted/acknowledged--is disproportionately negatively affecting poor rural red areas relative to high-cost thriving cities. The effects of this across-the-board policy would be wildly different to an economically depressed rural red area than a thriving metropolis. Find me a pro-$15 minimum wage Democrat that is willing to discuss these differences. A $15 FMW would cause a 0% change to San Francisco's minimum, whereas a town in rural Alabama would see a 107% increase to theirs. Do Democrats really care what the effect of this would be to a place like rural Alabama? Of course not. They stand to lose nothing by pissing those people off, because their prospects of ever winning over rural Alabama voters is essentially zero regardless.

Prominent party insiders in both parties love to promote policies that have a sinister underlying disproportionate negative effect on the states dominated by the other party. For example, Trump's tax reform disproportionately hurt blue states by limiting the state and local tax deduction. Similarly, big boosts to the national minimum wage would be most difficult and disruptive to the lowest cost, poorest states, which are typically Republican-voting.

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The last time this really became controversial was when Jacob Vigdor, et al. did a city-commissioned study on raising the minimum wage. This study included one of the "synthetic" models that is vaguely criticized in your link. The study concluded mixed results. One one hand it found numerous workers earning more. On the other it suggested a decrease in hours among some jobs and a decrease in supply of some jobs on the lowest end of wages. So then the City (then-mayor's office, likely taking orders from Kshama Sawant) scrambled to hire an outsider from Berkeley known for being biased in favor of the minimum wage to come in and shoot down Vigdor's study.

This study didn't say the sky would fall, predict prices would rise, and businesses would close. It also didn't hypothesize that grocery stores would hike their prices within a year. It primarily found concern that some workers would struggle to maintain adequate hours and that the supply of low wage jobs would shrink. Nonetheless, the city felt any downsides was not flattering enough for their agenda, so they weaponized out-of-state researchers to attack the study they commissioned.

Maybe the writer in your link mainly wants to refute the global sky-is-falling arguments that are auto-deployed by people who have made up their minds that they're against the minimum wage no matter what. I get that. The evidence clearly doesn't support economic devastation in every instance of raising the minimum wage. Raising the MW seems to typically do pretty well in booming, rich markets with high costs of living. That's especially where it tends to get passed. Seattle is one of those places.

In area's which export price sensitive goods to other area's the min wage could be an issue. In place like Seattle, which the economy is based on tech related higher cost items, the min wage jobs would be service sector jobs related to services provided to the local community. These jobs are not likely to be exportable to other areas as the service industry is mostly local. However if a high min wage came into effect in the South East US, which does do low value manufacturing at lower pay rates, a high min wage could cause a loss of jobs as the manufacturers seek a lower cost area
 
From the article:

[Professor Jennifer] Otten and colleagues collected data from six supermarket chains affected by the policy in Seattle and from six others outside the city but within King County and unaffected by the policy. They looked at prices for 106 food items per store starting one month before enactment of the ordinance, one month after, and a year later.

How do they know that the minimum wage increase didn't cause stores to raise prices and then the stores outside the affected areas saw an opportunity to also raise prices to make more money?

Or maybe it's that those stores were also forced to raise wages to keep workers who would otherwise switch to the new minimum wage jobs?
 
This may not be the best time to mention that here in Toronto, in the past 6 months, virtually all the major supermarkets have wiped out two thirds of their checkout lanes and replaced them with self-checkout. :shrug:
 
This may not be the best time to mention that here in Toronto, in the past 6 months, virtually all the major supermarkets have wiped out two thirds of their checkout lanes and replaced them with self-checkout. :shrug:

That's no surprise. Minimum wage laws tend to give a little extra money to some workers, while others see their hours cut or never get hired.

How do you measure "employees not hired"? This is like the Obama administration's ludicrous and fictitious "jobs created or saved" statistics.
 
When I became a lifeguard in 1988, I made $7.50 hr. If you were an EMT, Virginia Beach paid $8.50.

As a beach lifeguard supervisor in 2001, I made $14.90. Starting guards made $9.50.

YMCA's are still paying $7.50 to $8.50 and are hurting for money. City budgets on the east coast are paying guards $10.50 to $13 hour and are struggling. The impact of $15 an hour will be interesting. Taxes will have to go up. YMCA's will be in crisis. Many PA state parks are swim at your own risk now.
 
How do you measure "employees not hired"?
Count the number of self-checkout kiosks and divide by 3? :shrug:

US minimum wage could stand a bit of hiking, but $15/hr. nationwide is ridiculous.
 
What is amazing to me is the conservative posture on this. When it comes to workplace issues they have tended to oppose things that benefit workers: unemployment insurance, workers comp, safety enforcement, pesticide regulation, union protection, civil rights and equal pay laws, etc. But their compassion and thirst for justice for the working person emerges when an increase in the minimum wage is debated. Strange.
 
This may not be the best time to mention that here in Toronto, in the past 6 months, virtually all the major supermarkets have wiped out two thirds of their checkout lanes and replaced them with self-checkout. :shrug:

That has happened everywhere. I have been an IT professional for over 20 years, how much someone was paid has never factored into whether we automated a job or or not. If you can automate a job, it doesnt matter what they are paid, they could be paid slave wages and its still more efficient to automate the job.
 
What is amazing to me is the conservative posture on this. When it comes to workplace issues they have tended to oppose things that benefit workers: unemployment insurance, workers comp, safety enforcement, pesticide regulation, union protection, civil rights and equal pay laws, etc. But their compassion and thirst for justice for the working person emerges when an increase in the minimum wage is debated. Strange.

Exactly, Hellen Keller could see through them on this.
 
That has happened everywhere. I have been an IT professional for over 20 years, how much someone was paid has never factored into whether we automated a job or or not. If you can automate a job, it doesnt matter what they are paid, they could be paid slave wages and its still more efficient to automate the job.
While that may be true, I have a hard time believing the employer who can save $70M a year automating isn't considerably more motivated to dealing with the risks and headaches of automating than the employer who can save $25M a year.

Plus there's the moral factor to consider, especially with small businesses. That retailer wondering if they should keep that contractor on staff, offer those perks to customers, fill needs with flesh and blood human beings for the social good, in spite of modest or even negative returns on investment, is going to be far less morally conflicted about "fixing" the problem if it turns into an additional $25-60 per employee per day cash burn.
 
While that may be true, I have a hard time believing the employer who can save $70M a year automating isn't considerably more motivated to dealing with the risks and headaches of automating than the employer who can save $25M a year.

Plus there's the moral factor to consider, especially with small businesses. That retailer wondering if they should keep that contractor on staff, offer those perks to customers, fill needs with flesh and blood human beings for the social good, in spite of modest or even negative returns on investment, is going to be far less morally conflicted about "fixing" the problem if it turns into an additional $25-60 per employee per day cash burn.

Its never even a question what someone is making as to whether we code them out of a job. For example, you could be paying a book keeper near slave wages to maintain a ledger, and it still will be more economically efficient for a business to have an accounting package like GP doing that for them. If we ever get fully autonomous cars, it won't matter what we pay Uber drivers, they will still be out of a job. A factory worker on an assembly line will never be as efficient as a robot doing that job. If you can automate the work that a legal secretary is doing, then you will regardless of what you are paying the legal secretary.

Point being, this notion that minimum wage increases lead to more automation is nonsense. The same jobs being automated out of existence in high wage countries are being automated out of existence in China as well, despite wages being only a fraction in China what they are here.
 
Its never even a question what someone is making as to whether we code them out of a job. For example, you could be paying a book keeper near slave wages to maintain a ledger, and it still will be more economically efficient for a business to have an accounting package like GP doing that for them. If we ever get fully autonomous cars, it won't matter what we pay Uber drivers, they will still be out of a job. A factory worker on an assembly line will never be as efficient as a robot doing that job. If you can automate the work that a legal secretary is doing, then you will regardless of what you are paying the legal secretary.

Point being, this notion that minimum wage increases lead to more automation is nonsense. The same jobs being automated out of existence in high wage countries are being automated out of existence in China as well, despite wages being only a fraction in China what they are here.
I disagree on a number of bases. The main one being that employers--especially small businesses--aren't purely interested in the bottom line. They're interested in reducing their own workload, their comfort and convenience, and in the social welfare of their communities. Employees can best automation in all three, but there's only so much financial pain employers can or will tolerate before bending to the realities of the almighty dollar.

Less important but also a factor: people are willing to pay more in order to get flesh and blood human experiences in retail, food, and even farming and manufacturing. But the premium they're willing to pay isn't limitless. Raise it above a certain threshold and once again people are sent running into the open arms of automated supply lines, whose attractiveness magnifies with each minimum wage hike.

You can't claim that wages aren't a factor simply because automation is a force to be reckoned with even in slave-wage labour countries. China isn't culturally the US. Even if they were, I maintain that their push towards automation would be vastly more forceful and systemic if their employers were contending with high wages.

Where you may have a point is that the price point automation ultimately provides is below any reasonable living wage, but this makes a modest minimum wage all the more important. Modest wages, combined with moral social consciousness of business owners and consumers, will be the only reason there are any low-wage jobs left.
 
I disagree on a number of bases. The main one being that employers--especially small businesses--aren't purely interested in the bottom line. They're interested in reducing their own workload, their comfort and convenience, and in the social welfare of their communities. Employees can best automation in all three, but there's only so much financial pain employers can or will tolerate before bending to the realities of the almighty dollar.

Less important but also a factor: people are willing to pay more in order to get flesh and blood human experiences in retail, food, and even farming and manufacturing. But the premium they're willing to pay isn't limitless. Raise it above a certain threshold and once again people are sent running into the open arms of automated supply lines, whose attractiveness magnifies with each minimum wage hike.

You can't claim that wages aren't a factor simply because automation is a force to be reckoned with even in slave-wage labour countries. China isn't culturally the US. Even if they were, I maintain that their push towards automation would be vastly more forceful and systemic if their employers were contending with high wages.

Where you may have a point is that the price point automation ultimately provides is below any reasonable living wage, but this makes a modest minimum wage all the more important. Modest wages, combined with moral social consciousness of business owners and consumers, will be the only reason there are any low-wage jobs left.

Bob's small business keeps a book keeper and a receptionist on staff. Bill's small business buys an accounting package and an automated attendant, thus doesn't need those positions anymore. Bill's small business then undercuts Bob's small business in prices. Bob's small business must do what Bill's small business did in order to remain competitive.

See how it works?

It's why the U.S. produces more than ever in manufacturing, but with a fraction of the manufacturing employment. It's also why you can't show a correlation between any increase in the minimum wage in the United States for the last 80 years, and a reduction in hiring.

Every minimum wage increase is met by claims of doom and gloom by cheap labor conservatives, yet their predictions have never came to fruition. Now sure, you could set some wage so high that no one would hire anyone, but no one is suggesting a wage anywhere near that high.
 
This is why I've said what the real motivation for the $15 minimum wage is--and this should be admitted/acknowledged--is disproportionately negatively affecting poor rural red areas relative to high-cost thriving cities. The effects of this across-the-board policy would be wildly different to an economically depressed rural red area than a thriving metropolis. Find me a pro-$15 minimum wage Democrat that is willing to discuss these differences. A $15 FMW would cause a 0% change to San Francisco's minimum, whereas a town in rural Alabama would see a 107% increase to theirs. Do Democrats really care what the effect of this would be to a place like rural Alabama? Of course not. They stand to lose nothing by pissing those people off, because their prospects of ever winning over rural Alabama voters is essentially zero regardless.

Prominent party insiders in both parties love to promote policies that have a sinister underlying disproportionate negative effect on the states dominated by the other party. For example, Trump's tax reform disproportionately hurt blue states by limiting the state and local tax deduction. Similarly, big boosts to the national minimum wage would be most difficult and disruptive to the lowest cost, poorest states, which are typically Republican-voting.

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I've always thought that full time minimum wage should be three times what a one bedroom apartment costs. As this number tends to reflect cost of living in the area.

This would pit employers against landlords, which IMO would be a good thing. Maybe get businesses to turn against real estate "speculation".

I said before that places where housing was cheap just hadn't been gotten to by the "speculators". (In quotes because much real estate speculation is actually just buying enough of the available real estate to create an apparent "shortage", driving prices up. I saw this practice triple the price of a home in the corridor around Joshua Tree CA when they thought it was going to be the next telluride or Santa Fe.)

Texas is now seeing this phenomenon.
 
This may not be the best time to mention that here in Toronto, in the past 6 months, virtually all the major supermarkets have wiped out two thirds of their checkout lanes and replaced them with self-checkout. :shrug:

Businesses adopt labor cost saving technologies as soon as they become viable. Shipping jobs overseas when container ship technology really came on line, for instance. Outsourcing call centers.

The idea that paying a living wage (I know, that's a dirty word) encourages businesses to do so is really just propaganda. A machine will always he cheaper than a human being.

I just wonder how many burgers those burger place machines are gonna buy.
 
Bob's small business keeps a book keeper and a receptionist on staff. Bill's small business buys an accounting package and an automated attendant, thus doesn't need those positions anymore. Bill's small business then undercuts Bob's small business in prices. Bob's small business must do what Bill's small business did in order to remain competitive.
Jill is willing to pay a bit more to patronize Bob's small business because she knows he hires locally and keeps Jeff and Mary, an accountant and receptionist respectively, on staff.

Besides this, Bob is willing to keep Mary on staff because she adds enough to the experience of shopping at his store to justify her modest wage--something a kiosk could never accomplish.

Every minimum wage increase is met by claims of doom and gloom by cheap labor conservatives, yet their predictions have never came to fruition.
There's a first time for everything, and the past few years have been a very busy time for unprecedented firsts.

We're also not talking about the nickel and dime minimum wage increases of the 20th Century. A $15 federal minimum wage is anywhere from a 25-90% hike in a very short period of time. The move would be unprecedented even if we weren't on the cusp of an era of disposable labour.

Now sure, you could set some wage so high that no one would hire anyone, but no one is suggesting a wage anywhere near that high.
How do you know? How are you so confident a massive wage hike at this cosmic moment in time won't cross the threshold to obsoleting tens of millions of jobs? Does nothing else about the time we're living in scream "unprecedented and unpredictable" to you?

If it happens, do you think a nation can recover easily? Lower the minimum wage again to try and put the genie back in the bottle once businesses have invested billions into automation-related capital, and the COL has gone up to what it currently is in $15 min wage cities?

There's a good case to be made for raising federal minimum wage in the US. I'm not saying otherwise. But if you're advocating e.g. the Bernie Sanders $15 minimum wage pipe dream, or even $12 minimum wage, I don't care who you are, you can't tell me with any confidence that the hike won't irreversibly destroy the lives of tens of millions of people. If you break the economy in this way, you can't fix it in an entire generation. And where will you be then? Running around, demanding government do this and do that, dictate hiring here, cap salaries there, impose quotas over there, in futile attempts to legislate your way back into prosperity.

The far wiser thing to do is to start with a modest hike: a $9.75 + inflation target over the next five years (which will wind up around $11.00), then a +$1.00 + inflation (roughly +$1.15) target every five years after that. Nominally. (i.e. assuming everything doesn't start falling apart midway through the process)
 
I've always thought that full time minimum wage should be three times what a one bedroom apartment costs. As this number tends to reflect cost of living in the area.

This would pit employers against landlords, which IMO would be a good thing. Maybe get businesses to turn against real estate "speculation".

I said before that places where housing was cheap just hadn't been gotten to by the "speculators". (In quotes because much real estate speculation is actually just buying enough of the available real estate to create an apparent "shortage", driving prices up. I saw this practice triple the price of a home in the corridor around Joshua Tree CA when they thought it was going to be the next telluride or Santa Fe.)

Texas is now seeing this phenomenon.

Poor areas either have potential or they don't. High prices aren't always a result of speculation, they're often largely just ordinary supply and demand.

The market itself has a tendency to command certain wage rates. If a minimum wage can't afford housing anywhere nearby, people aren't going to be willing to do that job, at least not for long. We see this in California's most inflated real estate markets. Speaking of those, some people who tend to be more extremist on the liberal side like to blame tech companies and other large employers for creating the housing problem, as well as blame low minimum wages. But the single biggest contributor to housing problems is local zoning laws held hostage by the area's homeowners. Corporations have no reason to spend resources lobbying local planning and zoning commissions for luxury-only real estate.

Look at Atherton, CA. Median home price $8.1 million, and they've literally made it illegal for any house to cover more than 18% of a parcel's land. What's the (entirely intended) effect of that? Single family housing, mansions-only. Or look at the Bay Area. There isn't a single neighborhood where two adults both working full time at $15 an hour can afford a housing unit. A federal minimum wage hike does nothing for the people there, or for the homelessness problem. Even if SF hiked its own minimum wage to $30, and if we were to assume there were no disemployment effects from that, it still likely wouldn't put a dent in the homelessness problems, because all it would mean is more dollars chasing the same number of homes. The only solution is to build significant volumes of additional, affordable housing. The local homeowners oppose affordable housing as if they were fighting an invasion of zombies.

The single biggest thing that can be done to address homelessness problems is for local zoning laws to be overridden against the will of the people. How does a democracy accomplish that? The people who already own property in these areas would be livid and recall their city councils. What state or federal agency would be remotely equipped to take over local zoning decisions, even if they could? Even the most extremely liberal cities in the country, who proclaim to care deeply about the plight of the poor and homeless, nonetheless have some of the most aggressive anti-affordable-housing tactics you'll find anywhere among the homeowners. That's enormous hypocrisy, but it's the norm. Minimum wages don't fix it.
 
That has happened everywhere. I have been an IT professional for over 20 years, how much someone was paid has never factored into whether we automated a job or or not. If you can automate a job, it doesnt matter what they are paid, they could be paid slave wages and its still more efficient to automate the job.

Its like the "unions forced businesses overseas" canard. No American could pay their landlord at $5/day.

So it really was just cheap labor.

The Great Divergence in the mid seventies where wages stopped following GDP growth occurred as our status heads came into direct competition with foreign status heads with vast desperate populations.

It's really hard to become the richest, most powerful person when other competitors enjoyed those cheap labor pools. So something had to be done to "level the playing field".
 
Its like the "unions forced businesses overseas" canard. No American could pay their landlord at $5/day.

So it really was just cheap labor.

The Great Divergence in the mid seventies where wages stopped following GDP growth occurred as our status heads came into direct competition with foreign status heads with vast desperate populations.

It's really hard to become the richest, most powerful person when other competitors enjoyed those cheap labor pools. So something had to be done to "level the playing field".

Everyone wants to blame unions and regulations for outsourcing, but its actually made possible by container ships. Prior to container ships coming on the scene in the early 70s, it was much more expensive and slower to ship goods around the world, thus it was much harder to outsource production.
 

Goldstein was the recipient of a 2009 Fuse "Sizzle" Award. He was given the Spotlight on the Shadows Sizzle Award "for journalism that matters." According to the awarding organization, Goldstein's a"progressive muckraking and political analysis... keep legislators honest and provide the information and analysis we all need to recognize great leadership and hold legislators accountable." [9]
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So basically some hard edgy Progressive say Raising Min wage is a good thing. Someone stop the presses, progressives think more government is the answer, ****ing hell they have a "study too".


A long line of studies about the minimum wage has revealed that it can drive down employment at the low end of the wage scale, but those losses are made up for by increases in higher-paying jobs. The University of Washington findings, however, suggest that there’s some merit to the usual complaint that gets lodged against minimum-wage hikes -- that they’re not only expensive for employers, but threaten to cut the first rung on the career ladder out from under teenagers or others just getting their start in the labor market. “The evidence that we’re picking up is consistent,” says Jacob Vigdor, an economist at the University of Washington. “We’re pricing out low-skill workers.”
In Seattle, Minimum Wage Hike Comes at a Cost to Some Workers
 
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