The Gaming Den

Snippet of that Article wrote:First of all, the current level of the minimum wage is very low by any reasonable standard. For about four decades, increases in the minimum wage have consistently fallen behind inflation, so that in real terms the minimum wage is substantially lower than it was in the 1960s. Meanwhile, worker productivity has doubled. Isn’t it time for a raise?

Now, you might argue that even if the current minimum wage seems low, raising it would cost jobs. But there’s evidence on that question — lots and lots of evidence, because the minimum wage is one of the most studied issues in all of economics. U.S. experience, it turns out, offers many “natural experiments” here, in which one state raises its minimum wage while others do not. And while there are dissenters, as there always are, the great preponderance of the evidence from these natural experiments points to little if any negative effect of minimum wage increases on employment.

Why is this true? That’s a subject of continuing research, but one theme in all the explanations is that workers aren’t bushels of wheat or even Manhattan apartments; they’re human beings, and the human relationships involved in hiring and firing are inevitably more complex than markets for mere commodities. And one byproduct of this human complexity seems to be that modest increases in wages for the least-paid don’t necessarily reduce the number of jobs.

What this means, in turn, is that the main effect of a rise in minimum wages is a rise in the incomes of hard-working but low-paid Americans — which is, of course, what we’re trying to accomplish.

hyzmarca wrote:The most valid complain abut a massive nationwide minimum wage spike is the highly varied cost of living across the country. That is to say, if you live in New York, where a 1 bedroom apartment costs you over $3000, a $15 an hour minimum wage is still utter shit and you won't be able to pay your rent.

On the other hand, if you're paying $400 a month for rent and utilities, a week of work covers your basic needs at that price.

That is to say, a minimum wage increase will have different effects in different regions due to massive disparities in basic cost of living.

Snippet of Krugman talking about Puerto Rico wrote:Put it this way: if a region of the United States turns out to be a relatively bad location for production, we don’t expect the population to maintain itself by competing via ultra-low wages; we expect working-age residents to leave for more favorable places. That’s what you see in poor mainland states like West Virginia, which actually looks a fair bit like Puerto Rico in terms of low labor force participation, albeit not quite so much so. (Mississippi and Alabama also have low participation.)

And outmigration need not be such a terrible thing. There is much discussion of what’s wrong with Puerto Rico, but maybe we should, at least some of the time, just think of Puerto Rico as an ordinary region of the U.S.; at any given time, we expect some regions to be in relative and maybe even absolute decline, as the winds of technology and global trade shift.

Count Arioch the 28th wrote:Two things I wonder about in regards to the higher wage:

1. My dad works for a charitable organization. This organization cannot pay their bills as it is, let alone pay all of their minimum wage people $15. I'm not sure anyone except the CEO makes $15 or more an hour.

2. The classic stand-by of American business is when expenses go up hire fewer people and make them do more work, then put the extra money in their pockets and still don't hire anyone when expenses go down. Won't this raise unemployment?

Krugman article wrote:First, a few facts. Although the national minimum wage was raised a few years ago, it’s still very low by historical standards, having consistently lagged behind both inflation and average wage levels. Who gets paid this low minimum? By and large, it’s the man or woman behind the cash register: almost 60 percent of U.S. minimum-wage workers are in either food service or sales. This means, by the way, that one argument often invoked against any attempt to raise wages — the threat of foreign competition — won’t wash here: Americans won’t drive to China to pick up their burgers and fries.

Still, even if international competition isn’t an issue, can we really help workers simply by legislating a higher wage? Doesn’t that violate the law of supply and demand? Won’t the market gods smite us with their invisible hand? The answer is that we have a lot of evidence on what happens when you raise the minimum wage. And the evidence is overwhelmingly positive: hiking the minimum wage has little or no adverse effect on employment, while significantly increasing workers’ earnings.

It’s important to understand how good this evidence is. Normally, economic analysis is handicapped by the absence of controlled experiments. For example, we can look at what happened to the U.S. economy after the Obama stimulus went into effect, but we can’t observe an alternative universe in which there was no stimulus, and compare the results.

When it comes to the minimum wage, however, we have a number of cases in which a state raised its own minimum wage while a neighboring state did not. If there were anything to the notion that minimum wage increases have big negative effects on employment, that result should show up in state-to-state comparisons. It doesn’t.

So a minimum-wage increase would help low-paid workers, with few adverse side effects. And we’re talking about a lot of people. Early this year the Economic Policy Institute estimated that an increase in the national minimum wage to $10.10 from its current $7.25 would benefit 30 million workers. Most would benefit directly, because they are currently earning less than $10.10 an hour, but others would benefit indirectly, because their pay is in effect pegged to the minimum — for example, fast-food store managers who are paid slightly (but only slightly) more than the workers they manage.

Grek wrote:Basically, imagine what you would do if your annual wage went from 15k per year to 30k per year. Then multiply that by the roughly 30 million people making minimum wage in the US. From a macroeconomics perspective, doing this would put an extra 0.45 trillion dollars a year into the economy, most of which would be spent because minimum wager earners are unlikely to save money (they don't have the money to spare to be saving).

Maj wrote: But it made both of us stop and think about those business owners who essentially would rather pocket the money and buy a car than do the ethical thing and pay their employees.

hyzmarca wrote:A good chunk of the opposition I've seen comes from middle class workers, and boils down to "I went to school and have specialized skills, burger flippers don't deserve to make as much as I do."


That is, they feel that the effort they spent on education and training would be rendered worthless if the minimum wage was increased.

Hiram McDaniels wrote:Minimum wage earners have a backlog of things they need/want but don't have money for. Any extra money they get goes to that stuff.

I don't exactly live paycheck to paycheck, but every spare amount of cash I had over the past couple of years just went to pay for my wedding and honeymoon. The next bonus I get pays for a new couch we've been needing. After that it's saving up for a down payment on a condo. And so on and so forth.

Grek wrote:

Hiram McDaniels wrote:Minimum wage earners have a backlog of things they need/want but don't have money for. Any extra money they get goes to that stuff.

I don't exactly live paycheck to paycheck, but every spare amount of cash I had over the past couple of years just went to pay for my wedding and honeymoon. The next bonus I get pays for a new couch we've been needing. After that it's saving up for a down payment on a condo. And so on and so forth.

That sort of saving doesn't count as far as macroeconomics are concerned. People spend money either on consumption or on investment. Saving up to buy something is consumption, since on the aggregate you're still spending the same amount of money. It's just happening in larger, more discrete chunks when you make big ticket purchases. In cases like yours, doubling your wage would translate into you making the down payment on your condo sooner and then moving to the next item on your things to buy list. Maybe eventually you get through the whole backlog and then start saving for retirement some day, but in the short term all of that increase goes straight to your consumption budget which directly increases demand.

Maj wrote:Well, Seattle just raised their minimum wage - the first step in the wage increase went into effect in June. And in preparation for this, restaurants fired hundreds of people. And then the new wage hit, and restaurants have been hiring new employees in record-breaking numbers. So... Businesses might be the ones taking the first hit when it comes to expenses, but they're making it up once people can spend it.

RobbyPants wrote:What about the complaints of places that primarily hire people making less than that having their prices go up? It seems reasonable that if McDonalds hires people mostly making $7 an hour that prices would have to go up to compensate. Do we know how much they'd go up? Obviously, there's more to the cost of a burger than the wage of the person making it. Do we have any idea what fraction of the operation overhead is wages?

Count Arioch wrote:Two things I wonder about in regards to the higher wage:

1. My dad works for a charitable organization. This organization cannot pay their bills as it is, let alone pay all of their minimum wage people $15. I'm not sure anyone except the CEO makes $15 or more an hour.

2. The classic stand-by of American business is when expenses go up hire fewer people and make them do more work, then put the extra money in their pockets and still don't hire anyone when expenses go down. Won't this raise unemployment?

Shatner wrote:However, the amount Americans on-average are getting paid has, when you adjust for inflation, gone down since the '60s, so raising the wage to back up to historical levels is more of a correction than an unheard of imposition.