Stories
Slash Boxes
Comments

SoylentNews is people

posted by cmn32480 on Wednesday May 20 2015, @02:20PM   Printer-friendly

Jennifer Medina reports at the NYT that the the city council of nation’s second-largest city voted by a 14-1 margin to increase its minimum wage to $15 an hour by 2020, in what is perhaps the most significant victory so far in the national push to raise the minimum wage. Several other cities, including San Francisco, Seattle and Oakland, Calif., have already approved increases, and dozens more are considering doing the same.

In 2014, a number of Republican-leaning states like Alaska and South Dakota also raised their state-level minimum wage by referendum. The impact is likely to be particularly strong in Los Angeles, where, according to some estimates, more than 40 percent of the city’s work force earns less than $15 an hour. “The proposal will bring wages up in a way we haven’t seen since the 1960s," says Michael Reich. "There’s a sense spreading that this is the new norm, especially in areas that have high costs of housing.”

It's important to remember that the minimum wage hike comes at a significant direct cost to business — well over a $1 billion a year, according to the mayor's analysis — and it would be foolish to pretend that it won't lead to some job losses and business closures. Critics say the increase will turn the city into a “wage island,” pushing businesses away into nearby places where they can pay employees less. “They are asking businesses to foot the bill on a social experiment that they would never do on their own employees,” says Stuart Waldman, president of the Valley Industry and Commerce Association, a trade group that represents companies and other organizations in Southern California. “A lot of businesses aren’t going to make it. It’s great that this is an increase for some employees, but the sad truth is that a lot of employees are going to lose their jobs.”

 
This discussion has been archived. No new comments can be posted.
Display Options Threshold/Breakthrough Mark All as Read Mark All as Unread
The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
  • (Score: 5, Insightful) by Thexalon on Wednesday May 20 2015, @02:53PM

    by Thexalon (636) on Wednesday May 20 2015, @02:53PM (#185496)

    There are 2 other factors for why the Econ 101 answer of "higher wages means less employment" is wrong:
    - If the business could manage with fewer workers, they would already have done so.
    - Increased worker wages means increased worker purchasing power means (potentially) increased sales, which gives the business the money it needs to pay the workers more.

    There was no unemployment spike in Seattle when they did the exact same thing that LA is doing.

    --
    The only thing that stops a bad guy with a compiler is a good guy with a compiler.
    Starting Score:    1  point
    Moderation   +3  
       Insightful=2, Informative=1, Total=3
    Extra 'Insightful' Modifier   0  
    Karma-Bonus Modifier   +1  

    Total Score:   5  
  • (Score: 1, Insightful) by Anonymous Coward on Wednesday May 20 2015, @04:00PM

    by Anonymous Coward on Wednesday May 20 2015, @04:00PM (#185554)

    - If the business could manage with fewer workers, they would already have done so.
    And they will do so because MR=MC has changed. Their supply curve HAS changed. To pretend it didnt is silly. This is a fairly standard econ 150 problem. The supply curve WILL move to the left. That means MR=MC changes. Less goods are made and prices go up. It is called a floor in economic terms. It is usually taught mid term. It is a fairly standard test problem.

    - Increased worker wages means increased worker purchasing power means (potentially) increased sales, which gives the business the money it needs to pay the workers more.
    The business will short term adjust to higher recurring costs. They will do that by giving less hours or eliminating people.

    There was little to slightly up.
    http://www.seattletimes.com/business/state-unemployment-rate-edges-up-while-seattlersquos-holds-at-48-percent/ [seattletimes.com]

    Min wage jobs are not the majority of jobs.

    The min wage in 1980 was 3.10. The inflation on that is anywhere from 7.50 to 18.50 depending on where you look and what you buy. For example buying a computer it would be MUCH lower. But for buying a car it would be about 12-15. For buying a gallon of gas it would be lower. Inflation depends on what you buy.

    The proper way to increase wages is to drive more demand. Demand means more jobs. Constricting supply is a way to raise prices. But at the cost of inefficiencies on both the supply curve AND demand curve. You could not pick a worse way to help someone than by constricting the supply curve.

    Long term those jobs may come back. But only potentially as you point out. So you gain a maybe instead at the cost of a reality. This is due to the way our gov prints money. Eventually inflation will make 15 look like the real min wage anyway (about 4-10 years). Min wage earners will find it hard to get into the game for the short term as long term employees will stay longer in that position as there is no drive to move up.

    Try giving this a read it really breaks down bad ways to 'help' people. Yet look like you are helping them.
    http://steshaw.org/economics-in-one-lesson/ [steshaw.org]

    • (Score: 2) by Thexalon on Wednesday May 20 2015, @04:55PM

      by Thexalon (636) on Wednesday May 20 2015, @04:55PM (#185588)

      - If the business could manage with fewer workers, they would already have done so.
      And they will do so because MR=MC has changed. Their supply curve HAS changed. To pretend it didnt is silly. This is a fairly standard econ 150 problem. The supply curve WILL move to the left. That means MR=MC changes. Less goods are made and prices go up. It is called a floor in economic terms. It is usually taught mid term. It is a fairly standard test problem.

      You appear to be misunderstanding that part of my argument: The demand for low-cost labor is highly inelastic, so shifting the supply curve has minimal effects on the quantity of labor purchased.

      If I need 3 people on a shift to keep my business open, then I need 3 people on a shift regardless of whether those 3 people cost me $175 or $350. The only way I can forego that cost is to shut down the business for half the shift, but that's going to cost me more in lost sales during that period, so it is not worth it for me to make that change, and instead I'm going to accept the lower profit margin.

      --
      The only thing that stops a bad guy with a compiler is a good guy with a compiler.
      • (Score: 0, Informative) by Anonymous Coward on Wednesday May 20 2015, @08:02PM

        by Anonymous Coward on Wednesday May 20 2015, @08:02PM (#185685)

        If I need 3 people on a shift to keep my business open, then I need 3 people on a shift regardless of whether those 3 people cost me $175 or $350.
        In some cases yes. But you can just make your customers wait say an extra 5 mins? Shift the cost to time and onto your customer.

        You have a misunderstanding of MR=MC then. You are saying the supply of labor is totally flat. Which it may be. However, you can wiggle it around a bit. You even said so yourself. By turning off part of the business. You start with the 'slow days'.

        For example 'Oh my prices went up'. I cut my workers back from 3 to 2 on slow days. Instead of 3 that I could swing before. Maybe instead of being open on Sunday I close earlier at 6 instead of 9 that I did before. I loose a bit of rev but gain back the extra cost I had for an employee.

        Dont think so? I talk to the managers in these restaurants all the time. They all say the same thing. They adjust the schedules to match what they need (that includes the workers AND the time the restaurants are open). In some cases less workers and they just come in themselves and fill the gap.

        and instead I'm going to accept the lower profit margin.
        This is the more likely outcome. This is not the only one. I bet there are hundreds of cases like this one.
        http://q13fox.com/2015/04/28/owner-of-pizza-shop-says-new-minimum-wage-law-is-forcing-her-to-close/ [q13fox.com]

        They try to make it work and see if they can handle it. But not so much (as you pointed out). Now instead of 1-2 people getting cut (which is what they sold us on) ALL go. Remember MR=MC has changed. Meaning I can only afford to keep 9 workers not 11. But I need 11. So what is the likely outcome of that? If I run a restaurant and have 2 guys doing everything. I have 4 customers per hour. What does my margin have to be to keep those 2 guys employees at 10 an hour. Do not forget the rent/electric/gas/taxes/fica/insurance. Now you have raised my cost per hour 8 dollars. That means my meals need to go up a minimum of 2-3 dollars per meal just to cover it. Also remember I am basically competing with mcds and its ilk who can keep costs low and prices fairly fixed. What if I had 10 employees? That means an extra 80 per hour must be taken in. Oh and remember my vendors have the same problem so the costs of my input materials went up too.

        There is no increase in demand so therefore there must be less productivity. It does not magically work that way because someone says so. But you are saying the need to make due with less. But they cant do less. So they close. Without an increase in demand you can not create work.

        McDs or Wally world can swing it. The mom and pop pizza place? Not so much. In fact if you noticed the big companies pushed for it. Why would they do that? They saw it as a competitive advantage.

        Try asking the people who work these jobs if they like having to have 2 shifts at different businesses on the other ends of town just to get 40 hours.

        This helping the poor will do exactly the opposite. It will punish them even more in the long term. Short term they gain a little. But long term they find they can not make up the new 'normal'.

        The only proven way to raise wages is to make job seekers more scarce. You do that by creating more demand. Demand is what drives growth. You can not legislate your way into growth.

        Case in point (low unemployment example)
        http://www.cnbc.com/id/101767406 [cnbc.com]
        They could not find people to work these crap jobs. They had to raise the hourly wage to attract them. It also shows how businesses react when labor costs go up.

        • (Score: 0) by Anonymous Coward on Thursday May 21 2015, @12:37AM

          by Anonymous Coward on Thursday May 21 2015, @12:37AM (#185817)

          Frankly, these kinds of stories always strike me as blatant fear mongering. Do you honestly think that people are going to suddenly stop eating pizza if this lady closes up shop? Seriously?!? Can you honestly not see that the most likely outcome is that some other pizza shop is going to open up to replace this one that decided that they were going to petulantly close down, take their ball, and go home? Seriously?!? I guess supply and demand just doesn't work in Fox Noise Land.

        • (Score: 0) by Anonymous Coward on Thursday May 21 2015, @05:16AM

          by Anonymous Coward on Thursday May 21 2015, @05:16AM (#185896)

          This is the more likely outcome. This is not the only one. I bet there are hundreds of cases like this one.
          http://q13fox.com/2015/04/28/owner-of-pizza-shop-says-new-minimum-wage-law-is-forcing-her-to-close/ [q13fox.com]

          Any business making so little in profit that they can't afford to pay a living wage is already an unsustainable business, ready to crash at any moment. The Invisible Hand has already dictated its going out of business, so its no real surprise when they do exactly that. You don't have abysmal profit margins because you're paying too much in wages; if anything, your lack of profit is specifically because nobody is paying their employees enough, and thus nobody has anything to spend; no disposable income means no demand, which means supply is forced to reduce to match (layoffs and bankruptcies). Its already a proven fact that increasing the minimum wage improves the economy [forwardprogressives.com] and creates jobs, because disposable income (which requires making at least a living wage) means demand, which means more jobs as supply must increase to match the demand.

  • (Score: 3, Informative) by rts008 on Wednesday May 20 2015, @04:08PM

    by rts008 (3001) on Wednesday May 20 2015, @04:08PM (#185561)

    Yeah, you are right.

    We have been hearing this same FUD since 1980, and it has been proven wrong time and time again.

    Corporate earnings and worker productivity and executive's wages all have increased astronomically, yet wages for over 70% of the workers has been almost static in comparison.(it is readily apparent when plotted on a graph)

    Minimum wage won't house you or feed you without subsidies, and forget healthcare on top of those two. And a savings account? For what, the bills?

  • (Score: 2) by tangomargarine on Wednesday May 20 2015, @04:50PM

    by tangomargarine (667) on Wednesday May 20 2015, @04:50PM (#185582)

    There are 2 other factors for why the Econ 101 answer of "higher wages means less employment" is wrong:
    - Increased worker wages means increased worker purchasing power means (potentially) increased sales, which gives the business the money it needs to pay the workers more.

    Um...how does this make it wrong?

    --
    "Is that really true?" "I just spent the last hour telling you to think for yourself! Didn't you hear anything I said?"
    • (Score: 2) by tangomargarine on Wednesday May 20 2015, @04:52PM

      by tangomargarine (667) on Wednesday May 20 2015, @04:52PM (#185583)

      Argh. Read "less UNemployment." Disregard :P

      --
      "Is that really true?" "I just spent the last hour telling you to think for yourself! Didn't you hear anything I said?"
  • (Score: 3, Informative) by purple_cobra on Wednesday May 20 2015, @05:10PM

    by purple_cobra (1435) on Wednesday May 20 2015, @05:10PM (#185597)

    Yeah, we had all the same old "a minimum wage will cost jobs!" bollocks before the minimum wage was introduced in the UK. Employment has gone up ever since - more money to buy things means we need more things to buy, perhaps? Damned if I know; I'm not an economist. But as previously stated, it was bollocks then and it's bollocks now.

  • (Score: 0) by Anonymous Coward on Wednesday May 20 2015, @08:37PM

    by Anonymous Coward on Wednesday May 20 2015, @08:37PM (#185697)

    There was no unemployment spike in Seattle when they did the exact same thing

    ...despite the swill that Wrong-Wing media keeps pushing. [googleusercontent.com] (orig) [thinkprogress.org]

    -- gewg_

  • (Score: 3, Insightful) by CirclesInSand on Wednesday May 20 2015, @10:10PM

    by CirclesInSand (2899) on Wednesday May 20 2015, @10:10PM (#185756)

    - If the business could manage with fewer workers, they would already have done so.

    Socialists always pretend that business is an endless well of money. Business can stop existing, or move overseas. How bad does the economy have to get before the econ books are fixed?

    - Increased worker wages means increased worker purchasing power means (potentially) increased sales, which gives the business the money it needs to pay the workers more.

    Again with the endless well of money model. Businesses don't pay employees out of some magic pot of never ending money. Paying employees more doesn't increase the total spending power of a population, it only moves it. The total amount of currency present doesn't change (although the increased regulation does decrease the buying power of units of currency).

    There are 2 other factors for why the Econ 101 answer of "higher wages means less employment" is wrong:

    Econ 101? That's college crap, which is the only place where "increased wages means increased employment" is true. Actual business is much less forgiving than university story telling.

  • (Score: 3, Insightful) by FatPhil on Thursday May 21 2015, @09:31AM

    by FatPhil (863) <pc-soylentNO@SPAMasdf.fi> on Thursday May 21 2015, @09:31AM (#185962) Homepage
    > There are 2 other factors for why the Econ 101 answer of "higher wages means less employment" is wrong:
    > - If the business could manage with fewer workers, they would already have done so.

    So we'll take the current MSNBC/bookstore case - guy employs 5. If he could get by with 4 he would. Therefore he can't get by with 4. And he can't afford 5 at the new minimum wage. So he folds. So 6 people are no longer in employment. Sure, you're right, the 1-fewer case doesn't happen, alas the 6-fewer case did instead.

    But even then, it's entirely possible that the 1-fewer case might happen, he might have to change his opening hours, to not stay open so late, or open so early. He might have to staff the shop himself on Sundays rather than employing a minimum-wager to do it.

    I'm guessing you don't run a business. Fortunately entrepreneurial spirit tends to enable people to ride the bumps, and the small entrepreneurs typically have longer to implement the changes, so it's less of a bump. An apparent expected change to X of deltaX rarely actually turns out to be so. Y and Z will change by deltaY and deltaZ in order to compensate, and X changes by less than deltaX.

    > There was no unemployment spike in Seattle

    This URL says otherwise: http://www.aei.org/publication/seattles-new-minimum-wage-law-takes-effect-april-1-but-is-already-leading-to-restaurant-closings-and-job-losses/
    Sure, they're biassed, you can tell from the first line, but so are you.
    --
    Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
    • (Score: 0) by Anonymous Coward on Thursday May 21 2015, @10:34AM

      by Anonymous Coward on Thursday May 21 2015, @10:34AM (#185982)

      Sure, they're biassed, you can tell from the first line, but so are you.

      Wow, all I can say is at least you are intellectually honest enough to admit that your source is worthless. So we should believe you and your obviously biased source because someone else was biased? If you want anyone to take you seriously then you should really find a real source and drop the whole "Yeah but you did it too!" routine.