here's a decent piece that discusses both the benefits but also the potential negative impacts on the young that minimum wage standards can have. https://www.economist.com/leaders/2013/12/14/the-logical-floor The logical floor Moderate minimum wages do more good than harm. They should be set by technocrats not politicians Dec 14th 2013 ON BOTH sides of the Atlantic politicians are warming to the idea that the lowest-paid can be helped by mandating higher wages. Barack Obama wants to raise America’s federal minimum wage by 40% from $7.25 to $10.10 an hour, and more than three-quarters of Americans support the idea (see article). In Germany, one of the few big rich-world countries still without a national wage floor, the incoming coalition government has just agreed on an across-the-board hourly minimum of €8.50 ($11.50) from 2015. In Britain, which has had a minimum wage since 1999, the opposition Labour Party is keen to cajole firms into “voluntarily” paying higher “living wages”. For free-market types, including The Economist, fiddling with wages by fiat sets off alarm bells. In a competitive market anything that artificially raises the price of labour will curb demand for it, and the first to lose their jobs will be the least skilled—the people intervention is supposed to help. That is why Milton Friedman called minimum wages a form of discrimination against the low-skilled; and it is why he saw topping up the incomes of the working poor with public subsidies as a far more sensible means of alleviating poverty. Scepticism about the merits of minimum wages remains this newspaper’s starting-point. But as income inequality widens and workers’ share of national income shrinks, the case for action to help the low-paid grows. Addressing the problem through subsidies for the working poor is harder in an era of austerity, when there are many other pressing claims on national coffers. Other policy options, such as confiscatory taxes, are unattractive. Nor is a moderate minimum wage as undesirable as neoclassical purists suggest. Unlike those in textbooks, real labour markets are not perfectly competitive. Since workers who want to change jobs face costs and risks, employers may be able to set pay below its market-clearing rate. A minimum wage, providing it is not set too high, could thus boost pay with no ill effects on jobs. French lessons Empirical evidence supports that argument. In flexible economies a low minimum wage seems to have little, if any, depressing effect on employment. America’s federal minimum wage, at 38% of median income, is one of the rich world’s lowest. Some studies find no harm to employment from federal or state minimum wages, others see a small one, but none finds any serious damage. Britain’s minimum wage, at around 47% of median income, with a lower rate for young people, also does not seem to have pushed many people out of work. High minimum wages, however, particularly in rigid labour markets, do appear to hit employment. France has the rich world’s highest wage floor, at more than 60% of the median for adults and a far bigger fraction of the typical wage for the young. This helps explain why France also has shockingly high rates of youth unemployment: 26% for 15- to 24-year-olds. Theory and practice suggest two lessons for governments contemplating setting or changing minimum wages. The first is to ensure that the level is pretty low—say, less than 50% of the median, with lower levels for less productive people such as the young and long-term unemployed. Germany risks breaking this rule. Its proposed level is, by one calculation, 62% of the median wage. One in six German workers is paid less than that, suggesting that jobs will be lost, especially in the less productive east of the country. Similarly the “living wage” which campaigners are calling for in Britain is 20% higher than the minimum wage. That could hit employment. Though America’s proposed increase is huge, the minimum wage would still be only about 50% of the median. A second lesson is that politicians should give the power to set minimum wages to technocrats. In Britain, the floor is adjusted annually on the advice of economists and statisticians in the Low Pay Commission; it has generally advanced gradually. In America, the federal floor is set by politicians and adjusted irregularly in huge increments. That does no favours to American workers or their employers. Finally, governments should remember that minimum wages are a palliative. They should not distract attention from more fundamental causes of low wages—such as a lack of education and skills—and the efforts to address them. This article appeared in the Leaders section of the print edition under the headline "The logical floor"
related story "Millions of jobs probably aren’t coming back, even after the pandemic ends: The United States needs to invest more in retraining workers, economists warn" https://www.washingtonpost.com/road-to-recovery/2021/02/17/unemployed-workers-retraining/ excerpt: Automation of jobs often speeds up during recessions, as companies look to cut costs and use periods of layoffs to experiment with new technologies. Some economists predict that there could be more automation now, because the pandemic forced companies to look for ways to minimize the number of employees in a workspace and the vast scale of the layoffs in the economy gives executives a unique opportunity to bring in robots. Chewy, an online pet food and supply company, opened its first fully automated fulfillment center in Archbald, Pa., in October. Wall Street analysts who monitor the company closely say the facility — a warehouse where orders are processed and packaged for delivery — needs only about a third of the workers who are at Chewy’s other warehouses. “When you can take labor out and replace it with automation, you are taking out a significant cost,” said Stephanie Wissink, a managing director at Jefferies who researches Chewy. “You won’t eliminate all labor. Chewy will still have engineers and warehouse directors, but there won’t be nearly as many individual laborers walking those floors.” Chewy chief executive Sumit Singh told investors that the Archbald facility is already more productive than any of the nine other warehouses, and that there are plans to build more. more at the link
OK Let's say a differentiated $4 or 5 min wage for 14-17, let's say a differentiated min wage for adult beginning/training workers as well that knocks out a couple of bucks for a certain period of time. Would you then be in favor a federal tier min wage system that say puts the min wage between 11-17 dollars by designated areas or counties? I'm trying to figure out if you have a legitimate thing that you would want to see worked out for a federal increase of the min wage, or if you're just using those and overexaggerating particular reasons for an objection - while truly just being against any type of federal min wage increase what so ever, or perhaps a federal min wage in general? Are you willing to engage me in the marketplace of ideas BIG Os?
guess I just don't understand where you see us disagreeing. I am not a labor economist nor do I play one on tv. As the piece in the Economist observes, federal minimum wage standards as have historically been administered in the U.S. are kind of a train wreck. That author suggests that a more fluid, flexible system be put in place ("A second lesson is that politicians should give the power to set minimum wages to technocrats. In Britain, the floor is adjusted annually on the advice of economists and statisticians in the Low Pay Commission; it has generally advanced gradually. In America, the federal floor is set by politicians and adjusted irregularly in huge increments. That does no favours to American workers or their employers"). I believe that there is a better chance of success at the state level than at the federal level; on that point and on that point alone I suppose your mileage may vary.
It does very, as we talked about earlier, Austin Tx, Travis County, one of the most expensive areas in the country has a 7.25 min wage. Upstate NY, many counties have much cheaper cost of living in comparison, 12.5 min wage. I might be more content with state setting floors if I were in NY too, but I'm in Texas, so what does leaving it to the state do for Texans? You note how the fed min wage is set by politicians, but where does that differentiate from the state? Clearly, there's a whole lot of politics, and not a lot of economists factoring in on Austin/Houston/Dallas metro area min wages. That is where I'm seeing us disagree, as I noted earlier by highlighting "federal" multiple times. I do think a federal system is necessary here. I do think any federal min wage increase NEEDS to have inflation tied to it, as well, as you noted adjusting in irregular and huge increments is really silly.
so if Austin TX has an effective minimum wage of $7.25 (where the effective minimum wage nationally is on the order of $11.50 or thereabouts, with about 90% of all minimum waged employees nationally making above the federal minimum), then I would say you are really talking about an Austin Texas problem and not a minimum wage problem at all. Why is local governance in Austin Texas so sucky?? and why would someone living in Austin Texas want the Federal Government to step in and tell Austin Texas what it should or should not do? is that not a job for the voters of Austin Texas???? back to the subject at hand. let's run the experiment a different way: you write, "I do think a federal system is necessary here." Let's imagine (for the sake of argument solely) that we had a global government. And that global governing body was trying to set a minimum wage standard that would apply to the richest of industrialized countries (such as the U.S.) and the poorest of the least developed countries (insert your favorite lesser developed country here). How would such a global governing body go about achieving such a wage standard across such disparate local/state/national contexts? And would we really want a global governing body making those decisions on behalf of all 7.8 billion humans on the planet today? Could we possibly trust such global bureaucracy to get it right?
Well rural NY counties having 12.5 min wage is because NY states min wage is 12.5, right? Are individual counties even allowed to raise the min wage without the state's approval (of some form)? Dallas county increased it's own local gov min wage to $15 https://www.dallasnews.com/news/201...minimum-wage-for-its-employees-to-15-an-hour/ But that is not a county increase, just for the employees of the local gov. Austin, Dallas, Houston, and Texas problems are America's problems so that's why I'm looking at federal law here. To expand this line of thinking in a juvenile way, when southern states wanted to keep slaves the federal gov didn't say "we don't want to intrude, y'all should really figure that out with the local gov y'know". You blow this line of thinking to the largest possible way though, by asking if I'd be for complete globalization with the wealthy countries subsidizing non-wealthy countries. My theoretical personal opinion is yes that's is the ethical thing to do, even if my quality of life decreases significantly. Children born in DRC are no less important or deserving of a quality life than my own. Whether it is possible for it to be done properly is a different question.
Minimum wage has been too low for over a decade. It's about time it got raised to meet the cost of living. Businesses loved treating workers like animals working for peanuts. More profits for them. $15 an hour is nothing these days.
yes. and because New York state--all of it--is a pretty expensive place to live. That's why New Yorkers are moving to Texas. there are many locations that have raised local minimum wage levels above their state standard--Seattle is one such place I believe. there you have it: local problem, local solution back to the political problem. Vote the bums out I suppose this was inevitable. when in doubt, compare an issue to slavery. or Nazi Germany. or whatever. no, the real issue in that imagined thought experiment is WHERE WOULD THE POOR COUNTRIES GET THE MONEY TO PAY THOSE MINIMUM WAGES??? after all, it's not like the United Nations or the global governing body is going to be issuing the checks. The philosophical issue here is also the idea that the social minimum is related to local context: poverty in the United States is relative to the overall level of social well-being in the United States. Poverty in the Sudan, say, is related to the overall level of social well-being in Sudan. A relatively poor United States citizen would be fairly wealthy in the Sudan (or wherever, not picking on the Sudan necessarily). And this is a commonly understood point in welfare economics and political theory. yes, and yes. I have been focusing on the MECHANISM of achieving this kind of social justice. That is a very very different thing than debating the idea of social justice itself. I take the desire for social justice as a given, as do you I am sure.
I looked it up and no, counties are not permitted to raise the min wage in Texas. As I expected, no way multiple counties in the DFW/Austin/Houston/SA metros wouldn't have raised the min wage already if it weren't so. Really unfair cop-out to my point. Yeah, people bring up slavery a lot yada yada quit comparing everything to slavery got it. I might as well yell out "SURE JUST CALL FOR LESS FED GOV MORE STATE POWER HAHA OKAY GUY" I compared your logic, not the situations. If something is unethical for only one or even a particular number of states in America, it's not always as simple as saying "really this is only on the local gov". There are issues where federal regulations, laws are required. it's clear some (most) states are attempting to take care of increasing the min wage at varying levels, but not all states, to me it's clear something should be done about that federally at this point. It would all have to be subsidized, this is a quite large and different topic. Texas is not to the US as Sudan is to the developed world, obvioulsy. We have a big country but we are one and I expect social mins and poverty levels to be held to a certain standard. I like bof.
fair point, and I retract what I said. But there are literally THOUSANDS if not MILLIONS of legitimate state-federal jurisdictional issues left to the states to which you might have more accurately made a comparison in logic. In light of the 10th Amendment, if you could find words like "minimum wage," "hourly rate," or "salary" in the Constitution, you'd be on slightly firmer ground. and I might add that the Commerce Clause is still a somewhat thin reed upon which to justify the Federal Government riding in on its white horse to solve Austin Texas's problems.
GOP senators who oppose a very popular and evidentiarily strong case for a living wage have come down with a bad case of IN MY DAY.... In my day, Republicans could do arithmetic and bragged about it quite a bit, without self owns.
That's an interesting argument but I don't think it's one that is truly conservative. If fundamental argument of Conservatism is lower government and allow the market to decide then minimum lower wage is anathema as that is a prices control on the cost of labor. As a social argument it's not bad and it's the same argument that was made for the Earned Income Credit.
I don't think this is correct - in current inflation-adjusted dollars, the minimum wage has never been over $9. That's part of why $15 is so controversial - it's not a "keeping up with inflation" move. It's changing what minimum wage has been used for in the past (it was never designed to a living wage - it's a reasonable argument to make that it SHOULD be, but that's not what it was originally for).
crushing small businesses with lockdowns and then hitting them with a payroll increase soon there will be nothing left but megacorps that can absorb the costs
Some perspective https://en.wikipedia.org/wiki/Minimum_wage_in_the_United_States , the wage that the average minimum wage worker earns, is $11.80 as of May 2019. This is the highest it has been since at least 1994, the earliest year effective minimum wage data was available.[7]:1 The Federal minimum wage began in 1938 at $0.25 an hour ($4.54 in 2019 dollars[8]). The purchasing power of the federal minimum wage peaked in 1968 at $1.60 ($11.76 in 2019 dollars).[8][
I'm a reluctant supporter of a minimum wage increase because I do think just mandating a higher wage is going to be a big problem for small businesses at a time when they are hurting badly from COVID-19. As someone who knows a lot of people who work in the service industry and also who own small businesses they run on very tight margins and an increase in the cost of labor will be very hard to absorb. I also think with many fields automation is a large threat and robots don't need a minimum wage. My own view is that to address the very real problem of wages not keeping up with the cost of living is we should be looking at things like the EIC. Also that we still have shortages of trained labor we need more training and education to fill those jobs. Also the social safety net should be strengthened. Here I've come around some on the UBI and in some ways a UBI might be a better tool to address people being able to meet their basic needs than regulating the cost of labor. The problem is that I don't see enough movement addressing those other avenues and each of them have their own potential problems so a phased increase of the minimum wage is the tool most likely to get done than UBI.
The costs of lifting people out of poverty should be shared by EVERYONE, but proportionally more by higher incomes. It shouldn't be punted only to large companies that will find a way to offset all the costs off to the consumer and a lot of small businesses will cease to exist.
Its based on productivity Lie with John Thune and you come up with flees! https://www.nytimes.com/2021/02/25/opinion/john-thune-minimum-wage.html https://cepr.net/this-is-what-minimum-wage-would-be-if-it-kept-pace-with-productivity/
