Seattle raises minimum wage to $15/hour (1 Viewer)

[Doug B]

When did it change that minimum wage jobs were the domain of the high school/college student, housewife, second job for someone with a primary job or retiree? When did minimum wage jobs become the job of the primary bread winner of the home?

Someone else can flesh this out better than I can ... but I think what's happened over the last 25 years or so is that a lot of blue-collar and low-end white-collar jobs kind of dried up and blew away. Some of those folks have drifted into fast-food and other minimum-wage-type jobs.

Around here, it's been minority workers that have been displaced most of all. When I was in high school in the 80s, a lot of the kids working at the nearby fast-food places and the grocery store were kids I knew from school or from around the neighborhood. Most of those same extablishments are still open today, but typically have an older (average age of 25-40 or so) minority staff. The number of white teenagers working fast food locally is close to nil today. They've moved on to the mall, or stand-alone cell-phone stores, or strip-mall retailers -- plus I think a lot smaller percentage of white teenagers locally work for wages these days (no data, just personal impression).

This seems to be common in other areas, but the specific minority changes -- it's probably more Mexicans in Texas and the Southwest, whereas here the dominant minority is African-American. When I travel, and go to a fast-food place or a grocery that staffs white teenagers, it really stands out.

 

[Maurile Tremblay]

When did it change that minimum wage jobs were the domain of the high school/college student, housewife, second job for someone with a primary job or retiree? When did minimum wage jobs become the job of the primary bread winner of the home?

That change has been occurring since around 2002, apparently.

 

[Maurile Tremblay]

I guess I have two questions, when there is a raise in the min. wage, what happens to the guys that were making say $13.75 an hour? What I mean is, let's say you started out at $8.00 an hour and you work for a fast food company for a couple years and get a promotion and now are an assistant manager making $13.75. This increase goes in and they now promote you to $15.00 to come into compliance with the law, but now you are making the same amount of money as the guy they just hired yesterday who mops the floor because they hired him at $15.00.

Secondly, would this not lead to a dramatic increase in the costs for say rent in the areas that the min. wage goes up. I mean, isn't it just going to be supply and demand with landlords. People have more money, so I am going to charge more and people will pay it vs. having to spend even more of their new money on gas commuting from alternate locations. So in essence the people in these communities are going to make more, but in turn be forced to spend more to live there. So basically a net neutral gain for the actual people the law is supposed to help. Is that wrong or would you guys see something else happening?

1. The assistant manager would get a raise to preserve the wage hierarchy. He needs to make more than the entry-level floor-mopper.

2. In the short term, the quantity of apartments available for rent will stay the same. Rents will increase if more people move to Seattle looking for high-paying entry-level work; and rents will decrease if more people move away from Seattle as companies relocate and jobs dry up there. It's not clear which effect will predominate (if either does).

Tenants' income does not have an appreciable direct effect on supply and demand in the rental housing market. You, as a landlord, cannot charge your tenant more just because he has more money -- unless you also make it impossible for him to move down the block into a unit owned by one of the many other landlords who are competing with you for tenants.

 

[Cliff Clavin]

I guess I have two questions, when there is a raise in the min. wage, what happens to the guys that were making say $13.75 an hour? What I mean is, let's say you started out at $8.00 an hour and you work for a fast food company for a couple years and get a promotion and now are an assistant manager making $13.75. This increase goes in and they now promote you to $15.00 to come into compliance with the law, but now you are making the same amount of money as the guy they just hired yesterday who mops the floor because they hired him at $15.00.

Secondly, would this not lead to a dramatic increase in the costs for say rent in the areas that the min. wage goes up. I mean, isn't it just going to be supply and demand with landlords. People have more money, so I am going to charge more and people will pay it vs. having to spend even more of their new money on gas commuting from alternate locations. So in essence the people in these communities are going to make more, but in turn be forced to spend more to live there. So basically a net neutral gain for the actual people the law is supposed to help. Is that wrong or would you guys see something else happening?

1. The assistant manager would get a raise to preserve the wage hierarchy. He needs to make more than the entry-level floor-mopper.

Wouldn't most people still want to be the assistant manager instead of the floor-mopper / toiler cleaner regardless of salary?

 

[Maurile Tremblay]

I guess I have two questions, when there is a raise in the min. wage, what happens to the guys that were making say $13.75 an hour? What I mean is, let's say you started out at $8.00 an hour and you work for a fast food company for a couple years and get a promotion and now are an assistant manager making $13.75. This increase goes in and they now promote you to $15.00 to come into compliance with the law, but now you are making the same amount of money as the guy they just hired yesterday who mops the floor because they hired him at $15.00.

Secondly, would this not lead to a dramatic increase in the costs for say rent in the areas that the min. wage goes up. I mean, isn't it just going to be supply and demand with landlords. People have more money, so I am going to charge more and people will pay it vs. having to spend even more of their new money on gas commuting from alternate locations. So in essence the people in these communities are going to make more, but in turn be forced to spend more to live there. So basically a net neutral gain for the actual people the law is supposed to help. Is that wrong or would you guys see something else happening?

1. The assistant manager would get a raise to preserve the wage hierarchy. He needs to make more than the entry-level floor-mopper.

Wouldn't most people still want to be the assistant manager instead of the floor-mopper / toiler cleaner regardless of salary?

Most people would want to be quarterback of the Pittsburgh Steelers instead of floor-mopper or toilet-cleaner regardless of salary.

You don't get a job just because you want it. You have to be qualified for it. Fewer people are qualified to be assistant manager than to be floor-mopper, so the first job is going to pay more than the second even if it also sucks less.

 

[Parrothead]

I guess I have two questions, when there is a raise in the min. wage, what happens to the guys that were making say $13.75 an hour? What I mean is, let's say you started out at $8.00 an hour and you work for a fast food company for a couple years and get a promotion and now are an assistant manager making $13.75. This increase goes in and they now promote you to $15.00 to come into compliance with the law, but now you are making the same amount of money as the guy they just hired yesterday who mops the floor because they hired him at $15.00.

Secondly, would this not lead to a dramatic increase in the costs for say rent in the areas that the min. wage goes up. I mean, isn't it just going to be supply and demand with landlords. People have more money, so I am going to charge more and people will pay it vs. having to spend even more of their new money on gas commuting from alternate locations. So in essence the people in these communities are going to make more, but in turn be forced to spend more to live there. So basically a net neutral gain for the actual people the law is supposed to help. Is that wrong or would you guys see something else happening?

1. The assistant manager would get a raise to preserve the wage hierarchy. He needs to make more than the entry-level floor-mopper.

Wouldn't most people still want to be the assistant manager instead of the floor-mopper / toiler cleaner regardless of salary?

Most people would want to be quarterback of the Pittsburgh Steelers instead of floor-mopper or toilet-cleaner regardless of salary.

You don't get a job just because you want it. You have to be qualified for it. Fewer people are qualified to be assistant manager than to be floor-mopper, so the first job is going to pay more than the second even if it also sucks less.

not with that offensive line.. get me a mop

 

[Jackstraw]

Do people making minimum wage realize this isn't going to increase their disposable income? It's only going to make everything else relatively more expensive.

If a person goes from making $10/hr to $15/hr, it will increase his disposable income.

There are a number of drawbacks to minimum wage laws. Causing inflation is not one of them. First, minimum wage laws appear to have very little effect on overall prices: it's been estimated, by analyzing empirical research, that a 10% increase in the minimum wage will cause prices, on the whole, to increase by 0.4%. (Not all prices are affected equally; food prices may increase by 4%, and fast-food prices by even more. And other things less.) And second, to the extent that minimum wage laws cause inflation, it seems to be the good kind of inflation rather than the bad kind. It is uncontroversial that MV = Py, where M is the money supply, V is the velocity of money, P is the price level, and y is the current amount of goods and services. The usual, and bad, way of causing inflation is to print more money. When M goes up, so does P. But minimum wage laws don't cause more money to be printed. If they cause inflation, it must either be by reducing y or by increasing V. It could reduce y through disemployment effects, which would be bad; but I think it's hard to construct a realistic model where that's a big effect. It's more likely to be by increasing V. Mimimum wage laws cause a redistribution of money from horders to spenders, to borrow a Keynsian framework. Minimum wage earners are likely to spend their money rather than saving it. This puts upward pressure on P, but in a socially useful (i.e., total-utility enhancing) way.

In any case, there are plenty of good arguments against minimum wage increases. I want the Seattle law to pass so that we can collect more data on the subject, but I expect the data to suggest that the increase to $15 will do more harm than good.

The idea, however, that a minimum wage increase will cause so much inflation that the purchasing power of minimum wage earners will be unaffected (i.e., that a 10% increase in the minimum wage will lead to a 10% increase in the price of goods and services rather than the observed ~0.4%) is theoretically and empirically untenable.

It seems that if this is the case, then we're going to see the same people calling for another minimum wage hike in a few years when $15 isn't enough because they're spending it all.

This could be a never-ending cycle.

Ooooh slippery slope fallacy. Nice.

 

[TheIronSheik]

This was extremely popular in Seattle, something like 75% approve of moving the min wage to $15/hr.

I just took a quick poll in my office and giving everyone a million dollars was very popular, too. 100% approve of getting a million dollars.

 

[Maurile Tremblay]

I just took a quick poll in my office and giving everyone a million dollars was very popular, too.

So the people in your office are going to give everyone a million dollars? Sweet.

 

[Freelove]

This was extremely popular in Seattle, something like 75% approve of moving the min wage to $15/hr.

I just took a quick poll in my office and giving everyone a million dollars was very popular, too. 100% approve of getting a million dollars.

Would that be a drastic pay reduction for 90% of the workers in your office, like it would be among people who voted to raise minimum wage in Seattle, if they wanted it for themselves?

 

[TheIronSheik]

I just took a quick poll in my office and giving everyone a million dollars was very popular, too.

So the people in your office are going to give everyone a million dollars? Sweet.

It was just a poll. I'm sure it would take some time to actually get that idea off the ground.

 

[parasaurolophus]

What do you think facial recognition systems are for?

To help catch the vandals. Similar to fingerprints and other video cameras. They still dont stop it.

 

[Loan Sharks]

Can you guys help me out I am facing a reality crisis.

Apparently one of two things has happened.

1. All my college professors lied to me and taught me fake economics and gave me a fraudulent degree.

2. Economics prior to 1995 were simply wrong and stuff that economists in the 90's would consider idiotic is actually plausible.

Granted it has been a long time since I have studied but the prevailing argument against raising the minimum wage is that when a business faces increased costs it responds by either cutting cost(firing people in this case) or raising prices(10 cup of coffee) or a mixture of both.

And the higher prices screw all the poor.

Did they solve this and I missed it?

 

[CurlyNight]

I have no problem with higher minimum wages. Even if we lose some jobs, they will be jobs that aren't doing anyone any favors.

Sorry but if your job means you get just enough to eat and a room to sleep in but can't move forward in life then it's not a job worth having.

The risk is that if the Seattle suburbs don't come along for the ride then Seattle could lose companies to the suburbs where the pay will stay low.

Tell that to people with disabilities...

 

[MaxThreshold]

Can you guys help me out I am facing a reality crisis.

Apparently one of two things has happened.

1. All my college professors lied to me and taught me fake economics and gave me a fraudulent degree.

2. Economics prior to 1995 were simply wrong and stuff that economists in the 90's would consider idiotic is actually plausible.

Granted it has been a long time since I have studied but the prevailing argument against raising the minimum wage is that when a business faces increased costs it responds by either cutting cost(firing people in this case) or raising prices(10 cup of coffee) or a mixture of both.

And the higher prices screw all the poor.

Did they solve this and I missed it?

Yes. Apparently $15 an hour is the magical number that brings all that together.

 

[BigSteelThrill]

Can you guys help me out I am facing a reality crisis.

Apparently one of two things has happened.

1. All my college professors lied to me and taught me fake economics and gave me a fraudulent degree.

2. Economics prior to 1995 were simply wrong and stuff that economists in the 90's would consider idiotic is actually plausible.

Granted it has been a long time since I have studied but the prevailing argument against raising the minimum wage is that when a business faces increased costs it responds by either cutting cost(firing people in this case) or raising prices(10 cup of coffee) or a mixture of both.

And the higher prices screw all the poor.

Did they solve this and I missed it?

Yes. Apparently $15 an hour is the magical number that brings all that together.

You believe in God?

 

[MaxThreshold]

Can you guys help me out I am facing a reality crisis.

Apparently one of two things has happened.

1. All my college professors lied to me and taught me fake economics and gave me a fraudulent degree.

2. Economics prior to 1995 were simply wrong and stuff that economists in the 90's would consider idiotic is actually plausible.

Granted it has been a long time since I have studied but the prevailing argument against raising the minimum wage is that when a business faces increased costs it responds by either cutting cost(firing people in this case) or raising prices(10 cup of coffee) or a mixture of both.

And the higher prices screw all the poor.

Did they solve this and I missed it?

Yes. Apparently $15 an hour is the magical number that brings all that together.

You believe in God?

Are you going to be okay? You used the word "God" in a sentence. That must have been INCREDIBLY hard for you to type as a die hard extreme lefty. Better make sure your friends don't see that they might throw you out of the party.

 

[BigSteelThrill]

Can you guys help me out I am facing a reality crisis.

Apparently one of two things has happened.

1. All my college professors lied to me and taught me fake economics and gave me a fraudulent degree.

2. Economics prior to 1995 were simply wrong and stuff that economists in the 90's would consider idiotic is actually plausible.

Granted it has been a long time since I have studied but the prevailing argument against raising the minimum wage is that when a business faces increased costs it responds by either cutting cost(firing people in this case) or raising prices(10 cup of coffee) or a mixture of both.

And the higher prices screw all the poor.

Did they solve this and I missed it?

Yes. Apparently $15 an hour is the magical number that brings all that together.

You believe in God?

Are you going to be okay? You used the word "God" in a sentence. That must have been INCREDIBLY hard for you to type as a die hard extreme lefty. Better make sure your friends don't see that they might throw you out of the party.

I believe in God.

 

[jon_mx]

Eminence just started driving to Seattle.

Oh for god's sake I just got here.

Marvelous.

 

[Slapdash]

Can you guys help me out I am facing a reality crisis.

Apparently one of two things has happened.

1. All my college professors lied to me and taught me fake economics and gave me a fraudulent degree.

2. Economics prior to 1995 were simply wrong and stuff that economists in the 90's would consider idiotic is actually plausible.

Granted it has been a long time since I have studied but the prevailing argument against raising the minimum wage is that when a business faces increased costs it responds by either cutting cost(firing people in this case) or raising prices(10 cup of coffee) or a mixture of both.

And the higher prices screw all the poor.

Did they solve this and I missed it?

If you were actually taught that, I'd go with #1.

 

[Politician Spock]

Can you guys help me out I am facing a reality crisis.

Apparently one of two things has happened.

1. All my college professors lied to me and taught me fake economics and gave me a fraudulent degree.

2. Economics prior to 1995 were simply wrong and stuff that economists in the 90's would consider idiotic is actually plausible.

Granted it has been a long time since I have studied but the prevailing argument against raising the minimum wage is that when a business faces increased costs it responds by either cutting cost(firing people in this case) or raising prices(10 cup of coffee) or a mixture of both.

And the higher prices screw all the poor.

Did they solve this and I missed it?

Higher prices do screw all the poor. That's why the poor can't keep just making the same amount as prices increase all around them.

Even worse is when prices increase all around and people make even less today than they did yesterday because middle class jobs are shrinking and minimum wage jobs are all they can find.

I'm not saying Seattle has found the solution, but we still haven't recovered the middle class jobs we lost on 2008.

 

[Maurile Tremblay]

Can you guys help me out I am facing a reality crisis.

Apparently one of two things has happened.

1. All my college professors lied to me and taught me fake economics and gave me a fraudulent degree.

2. Economics prior to 1995 were simply wrong and stuff that economists in the 90's would consider idiotic is actually plausible.

There's probably some truth to both of those things, and there are other possibilities as well. Your professors may have oversimplified some things (#1), or gotten some stuff wrong (#2), but it's also possible that you misunderstood what they sought to teach you, or that you misremember it now.

Granted it has been a long time since I have studied but the prevailing argument against raising the minimum wage is that when a business faces increased costs it responds by either cutting cost(firing people in this case) or raising prices(10 cup of coffee) or a mixture of both.

Or by settling for reduced profits, or a mixture of all three.

And the higher prices screw all the poor.

Maxing $X more money while paying $Y more in higher prices does not screw anyone for whom X > Y. Anyone making minimum wage who keeps his job will fit into that category when the minimum wage is increased (if his purchasing habits remain constant).

 

[Loan Sharks]

Can you guys help me out I am facing a reality crisis.

Apparently one of two things has happened.

1. All my college professors lied to me and taught me fake economics and gave me a fraudulent degree.

2. Economics prior to 1995 were simply wrong and stuff that economists in the 90's would consider idiotic is actually plausible.

Granted it has been a long time since I have studied but the prevailing argument against raising the minimum wage is that when a business faces increased costs it responds by either cutting cost(firing people in this case) or raising prices(10 cup of coffee) or a mixture of both.

And the higher prices screw all the poor

Did they solve this and I missed it?

If you were actually taught that, I'd go with #1.

Interesting, the when the poorest people see an increase in wealth they spend a disproportionate amount on staples as opposed to luxury items. I.e food which increases the demand and you tend to see a increase in the price of necessities. And the poor and unemployed are harmed by the higher prices for basic goods.

So do you think that raising minimum wage does not raise prices or that the higher prices will not reduce buying power of low or no income people.

 

[Loan Sharks]

Can you guys help me out I am facing a reality crisis.

Apparently one of two things has happened.

1. All my college professors lied to me and taught me fake economics and gave me a fraudulent degree.

2. Economics prior to 1995 were simply wrong and stuff that economists in the 90's would consider idiotic is actually plausible.

Granted it has been a long time since I have studied but the prevailing argument against raising the minimum wage is that when a business faces increased costs it responds by either cutting cost(firing people in this case) or raising prices(10 cup of coffee) or a mixture of both.

And the higher prices screw all the poor.

Did they solve this and I missed it?

Higher prices do screw all the poor. That's why the poor can't keep just making the same amount as prices increase all around them.

Even worse is when prices increase all around and people make even less today than they did yesterday because middle class jobs are shrinking and minimum wage jobs are all they can find.

I'm not saying Seattle has found the solution, but we still haven't recovered the middle class jobs we lost on 2008.

So you are saying that giving the workers a higher minimum wage to help them keep up offsets the fact that the unemployed will have a bigger reduction in buying power?

 

[DiStefano]

Was in Paris recently and walked past a McDonald's. You stand at the computer terminal and punch in your order, and pay for it. Then walk to the delivery spot and get your burger and fries or whatever. No low paid labor to be seen.

 

[Loan Sharks]

Can you guys help me out I am facing a reality crisis.

Apparently one of two things has happened.

1. All my college professors lied to me and taught me fake economics and gave me a fraudulent degree.

2. Economics prior to 1995 were simply wrong and stuff that economists in the 90's would consider idiotic is actually plausible.

There's probably some truth to both of those things, and there are other possibilities as well. Your professors may have oversimplified some things (#1), or gotten some stuff wrong (#2), but it's also possible that you misunderstood what they sought to teach you, or that you misremember it now.

Granted it has been a long time since I have studied but the prevailing argument against raising the minimum wage is that when a business faces increased costs it responds by either cutting cost(firing people in this case) or raising prices(10 cup of coffee) or a mixture of both.

Or by settling for reduced profits, or a mixture of all three.

And the higher prices screw all the poor.

Maxing $X more money while paying $Y more in higher prices does not screw anyone for whom X > Y. Anyone making minimum wage who keeps his job will fit into that category when the minimum wage is increased (if his purchasing habits remain constant).

1. Settling for reduced profits is a pretty unrealistic expectation. Any business who takes the loss is gonna get chewed up by competitors who remain more profitable.

2. You are only taking minimum wage earners into consideration, if basic good prices go up anyone on food stamps now has less buying power.

 

[Maurile Tremblay]

1. Settling for reduced profits is a pretty unrealistic expectation. Any business who takes the loss is gonna get chewed up by competitors who remain more profitable.

2. You are only taking minimum wage earners into consideration, if basic good prices go up anyone on food stamps now has less buying power.

1. It's very realistic to think that increases in the minimum wage will reduce the profitability of certain businesses. That's why certain businesses lobby so hard against increases in the minimum wage.

2. Yes, to the (apparently rather small) extent that minimum wage laws cause inflation, it will hurt those who are on fixed incomes that are not indexed to inflation. (Note that food stamps are indexed to inflation.) Mostly, though, inflation hurts people who are holding a lot of cash -- which does not typically describe the poor.

 

[Loan Sharks]

1. Of course, but there are many factors that go into that such higher costs equal higher prices which is less sales etc.

2. So you are of the opinion that raising minimum wage will not result in (or rather small) price increases. Fair enough if you don't think this will raise prices then it it basically companies and investors eating a loss to help people. If your position is that harming companies and investors to help the working poor is your position I can respect that.

I however do not think that the price increases would be insignificant that coupled with loss of jobs would greatly blunt any perceived benefit of the wage raise.

 

[Christo]

I have no problem with higher minimum wages. Even if we lose some jobs, they will be jobs that aren't doing anyone any favors. Sorry but if your job means you get just enough to eat and a room to sleep in but can't move forward in life then it's not a job worth having.

My counter-argument is that remaining as a burger-flipper shouldn't be incentivized.

 

[Slapdash]

Can you guys help me out I am facing a reality crisis.

Apparently one of two things has happened.

1. All my college professors lied to me and taught me fake economics and gave me a fraudulent degree.

2. Economics prior to 1995 were simply wrong and stuff that economists in the 90's would consider idiotic is actually plausible.

Granted it has been a long time since I have studied but the prevailing argument against raising the minimum wage is that when a business faces increased costs it responds by either cutting cost(firing people in this case) or raising prices(10 cup of coffee) or a mixture of both.

And the higher prices screw all the poor

Did they solve this and I missed it?

If you were actually taught that, I'd go with #1.

Interesting, the when the poorest people see an increase in wealth they spend a disproportionate amount on staples as opposed to luxury items. I.e food which increases the demand and you tend to see a increase in the price of necessities. And the poor and unemployed are harmed by the higher prices for basic goods.

So do you think that raising minimum wage does not raise prices or that the higher prices will not reduce buying power of low or no income people.

Not sure where I see people are being "screwed", even in your overly-simplified hypothetical.

It sounds like you don't like the price of necessitates being driven up by increased ability for people to afford them. I don't really see that as an issue, unless you prefer that people not be able to buy basic goods without credit.

For your question: it depends.

 

[Christo]

I wonder how many minimum wage jobs places with 500+ employees typically employ.

Just about every chain out there.

 

[Maurile Tremblay]

1. Of course, but there are many factors that go into that such higher costs equal higher prices which is less sales etc.

I think we agree on this. I was adding reduced earnings to your list of higher prices and smaller workforces -- all three, often in combination, are realistic responses to increases in the minimum wage.

2. So you are of the opinion that raising minimum wage will not result in (or rather small) price increases. Fair enough if you don't think this will raise prices then it it basically companies and investors eating a loss to help people. If your position is that harming companies and investors to help the working poor is your position I can respect that.

I however do not think that the price increases would be insignificant that coupled with loss of jobs would greatly blunt any perceived benefit of the wage raise.

Increasing the cost of unskilled labor will obviously increase the cost of goods produced by companies that employ a lot of unskilled laborers. The price of a Big Mac will go up for sure.

But that's not inflation. Inflation is when the price of everything, on average, goes up -- not just Big Macs. For simplicity, consider a barter system in which the economy is made of Big Macs and apples. Today the price of a Big Mac is three apples. Tomorrow the price of a Big Mac is four apples. We could say that the price of a Big Mac increased, but we could just as accurately say that the price of an apple decreased. Things go up or down in price relative to other things. Adding money to the equation doesn't necessarily change that. When Big Macs become more costly to produce relative to apples, Big Macs will go up in price in terms of apples (and dollars), and apples will go down in price in terms of Big Macs (and dollars), and there need not be any inflation generally. Inflation typically occurs not when the price of Big Macs goes up, but when the price of dollars goes down. Often, when the price of dollars goes down it's because the government has printed more money, so that dollars have become less scarce. (Other things being equal, scarce things are more dear than plentiful things.) There are other ways for the price of dollars to go up or down, usually (in this country) involving actions by the Federal Reserve. And minimum wage laws may also have an effect on the price of dollars, because as more dollars are put into the hands of people who spend them (rather than people who save them), dollars change hands more frequently as more stuff is bought and sold; and as dollars change hands more frequently, out there circulating for all the world to fleetingly possess, they have the appearance of being more plentiful and therefore less dear.

This effect -- of driving the price of dollars down relative to other stuff in general (i.e., inflation) -- is separate from the effect of driving the price of Big Macs up relative to apples (which does not count as inflation). The inflationary effect of minimum wage laws appears to be quite small, even if the price of Big Macs goes up significantly.

 

[Max Power]

$15 an hour seems like a pretty aggressive bump. Prices will definitely be going up or jobs cut. I think this is going to be a tough one for Seattle. Could even drive some businesses out of the area.

 

[Wrigley]

coming soon to a McD's near you

 

[John Bender]

1. Of course, but there are many factors that go into that such higher costs equal higher prices which is less sales etc.

I think we agree on this. I was adding reduced earnings to your list of higher prices and smaller workforces -- all three, often in combination, are realistic responses to increases in the minimum wage.

2. So you are of the opinion that raising minimum wage will not result in (or rather small) price increases. Fair enough if you don't think this will raise prices then it it basically companies and investors eating a loss to help people. If your position is that harming companies and investors to help the working poor is your position I can respect that.

I however do not think that the price increases would be insignificant that coupled with loss of jobs would greatly blunt any perceived benefit of the wage raise.

Increasing the cost of unskilled labor will obviously increase the cost of goods produced by companies that employ a lot of unskilled laborers. The price of a Big Mac will go up for sure.

But that's not inflation. Inflation is when the price of everything, on average, goes up -- not just Big Macs. For simplicity, consider a barter system in which the economy is made of Big Macs and apples. Today the price of a Big Mac is three apples. Tomorrow the price of a Big Mac is four apples. We could say that the price of a Big Mac increased, but we could just as accurately say that the price of an apple decreased. Things go up or down in price relative to other things. Adding money to the equation doesn't necessarily change that. When Big Macs become more costly to produce relative to apples, Big Macs will go up in price in terms of apples (and dollars), and apples will go down in price in terms of Big Macs (and dollars), and there need not be any inflation generally. Inflation typically occurs not when the price of Big Macs goes up, but when the price of dollars goes down. Often, when the price of dollars goes down it's because the government has printed more money, so that dollars have become less scarce. (Other things being equal, scarce things are more dear than plentiful things.) There are other ways for the price of dollars to go up or down, usually (in this country) involving actions by the Federal Reserve. And minimum wage laws may also have an effect on the price of dollars, because as more dollars are put into the hands of people who spend them (rather than people who save them), dollars change hands more frequently as more stuff is bought and sold; and as dollars change hands more frequently, out there circulating for all the world to fleetingly possess, they have the appearance of being more plentiful and therefore less dear.

This effect -- of driving the price of dollars down relative to other stuff in general (i.e., inflation) -- is separate from the effect of driving the price of Big Macs up relative to apples (which does not count as inflation). The inflationary effect of minimum wage laws appears to be quite small, even if the price of Big Macs goes up significantly.

Now that we've cleared up the semantic aspect of what inflation is, is whatever Seattle is doing detrimental to the/their economy irrespective of how you want to classify it?

 

[BigSteelThrill]

$15 an hour seems like a pretty aggressive bump. Prices will definitely be going up or jobs cut. I think this is going to be a tough one for Seattle. Could even drive some businesses out of the area.

Other businesses will increase. If there is a void and profit o be made, it will be filled.

 

[Politician Spock]

Can you guys help me out I am facing a reality crisis.

Apparently one of two things has happened.

1. All my college professors lied to me and taught me fake economics and gave me a fraudulent degree.

2. Economics prior to 1995 were simply wrong and stuff that economists in the 90's would consider idiotic is actually plausible.

Granted it has been a long time since I have studied but the prevailing argument against raising the minimum wage is that when a business faces increased costs it responds by either cutting cost(firing people in this case) or raising prices(10 cup of coffee) or a mixture of both.

And the higher prices screw all the poor.

Did they solve this and I missed it?

Higher prices do screw all the poor. That's why the poor can't keep just making the same amount as prices increase all around them.

Even worse is when prices increase all around and people make even less today than they did yesterday because middle class jobs are shrinking and minimum wage jobs are all they can find.

I'm not saying Seattle has found the solution, but we still haven't recovered the middle class jobs we lost on 2008.

So you are saying that giving the workers a higher minimum wage to help them keep up offsets the fact that the unemployed will have a bigger reduction in buying power?

No. I'm saying inflation, however it's done, screws all the poor. The poor needing higher wages is a symptom of the problem, not the source of the problem. Paying them more is just treating the symptom. If you want to solve the problem, go to the source of the inflation.

 

[Homer J Simpson]

coming soon to a McD's near you

What do you think is holding them back?

 

[Max Power]

$15 an hour seems like a pretty aggressive bump. Prices will definitely be going up or jobs cut. I think this is going to be a tough one for Seattle. Could even drive some businesses out of the area.

Other businesses will increase. If there is a void and profit o be made, it will be filled.

I'm just saying if you're a small business or start up business that relies heavy on labor, Seattle is no longer a good option for you. If a business can save 30% on labor costs by moving, I think they'd consider it.

 

[Maurile Tremblay]

Now that we've cleared up the semantic aspect of what inflation is, is whatever Seattle is doing detrimental to the/their economy irrespective of how you want to classify it?

I suspect it will cause increased unemployment among the least-skilled workers, with higher wages earned by minimum-wage workers (and near minimum-wage workers) who keep their jobs. The prices of certain goods will increase, and the profits earned by some businesses will decrease.

Whether all of that amounts to a detriment to the economy will be the subject of disagreement, depending on whether people value higher average wages among the bottom quintile of income earners, lower unemployment, greater returns on capital investment (higher stock prices, etc.), or something else.

I'm guessing that I will judge it to be detrimental to the economy because I consider lower unemployment more important than a lot of those other things, but we'll have to see how it plays out before anyone can be certain of the effects.

 

[BigSteelThrill]

Now that we've cleared up the semantic aspect of what inflation is, is whatever Seattle is doing detrimental to the/their economy irrespective of how you want to classify it?

I suspect it will cause increased unemployment among the least-skilled workers,

Short term.

 

[John Bender]

Now that we've cleared up the semantic aspect of what inflation is, is whatever Seattle is doing detrimental to the/their economy irrespective of how you want to classify it?

I suspect it will cause increased unemployment among the least-skilled workers, with higher wages earned by minimum-wage workers (and near minimum-wage workers) who keep their jobs. The prices of certain goods will increase, and the profits earned by some businesses will decrease.

Whether all of that amounts to a detriment to the economy will be the subject of disagreement, depending on whether people value higher average wages among the bottom quintile of income earners, lower unemployment, greater returns on capital investment (higher stock prices, etc.), or something else.

I'm guessing that I will judge it to be detrimental to the economy because I consider lower unemployment more important than a lot of those other things, but we'll have to see how it plays out before anyone can be certain of the effects.

Good answer MT. Appreciate it

 

[Mark Davis]

Now that we've cleared up the semantic aspect of what inflation is, is whatever Seattle is doing detrimental to the/their economy irrespective of how you want to classify it?

I suspect it will cause increased unemployment among the least-skilled workers,

Short term.

Why short term? You made this comment way back in the DC thread where Wal Mart was going to abandon building plans when DC wanted to make big box retailers pay a higher minimum wage. Where exactly is the replacement to those jobs in an economic sense?

 

[The Big Guy]

coming soon to a McD's near you

What do you think is holding them back?

I am not sure. I order from one of these multiple times a week at the wawa. I have seen the same touch screen ordering devices in other places, so it only follows that they will come soon to fast food. They just have to figure out how to program them to get you to supersize everything and they will be rolled out en masse.

 

[Politician Spock]

coming soon to a McD's near you

What do you think is holding them back?

I am not sure. I order from one of these multiple times a week at the wawa. I have seen the same touch screen ordering devices in other places, so it only follows that they will come soon to fast food. They just have to figure out how to program them to get you to supersize everything and they will be rolled out en masse.

There is a place in Laguardia airport that uses them too.

 

[Politician Spock]

Now that we've cleared up the semantic aspect of what inflation is, is whatever Seattle is doing detrimental to the/their economy irrespective of how you want to classify it?

I suspect it will cause increased unemployment among the least-skilled workers,

Short term.

Why short term? You made this comment way back in the DC thread where Wal Mart was going to abandon building plans when DC wanted to make big box retailers pay a higher minimum wage. Where exactly is the replacement to those jobs in an economic sense?

Long term, they eventually are no longer considered unemployed, and become "no longer looking for work" and not computed in the unemployment calculation.

 

[TwinTurbo]

As other posters have referenced, a likely outcome is increased automation. At a certain point, the minimum wage will force business owners to replace some of the low skilled employees with machines to save costs and improve efficiency. It happens in every industry. Expect to see more self-serve, order taking kiosks soon in Seattle.

 

[BigSteelThrill]

Now that we've cleared up the semantic aspect of what inflation is, is whatever Seattle is doing detrimental to the/their economy irrespective of how you want to classify it?

I suspect it will cause increased unemployment among the least-skilled workers,

Short term.

Why short term? You made this comment way back in the DC thread where Wal Mart was going to abandon building plans when DC wanted to make big box retailers pay a higher minimum wage. Where exactly is the replacement to those jobs in an economic sense?

More money at the local area on people who spend it. Long term it is a corrective measure of many of our ongoing economic issues.

 

[cstu]

Now that we've cleared up the semantic aspect of what inflation is, is whatever Seattle is doing detrimental to the/their economy irrespective of how you want to classify it?

I suspect it will cause increased unemployment among the least-skilled workers, with higher wages earned by minimum-wage workers (and near minimum-wage workers) who keep their jobs. The prices of certain goods will increase, and the profits earned by some businesses will decrease.

Whether all of that amounts to a detriment to the economy will be the subject of disagreement, depending on whether people value higher average wages among the bottom quintile of income earners, lower unemployment, greater returns on capital investment (higher stock prices, etc.), or something else.

I'm guessing that I will judge it to be detrimental to the economy because I consider lower unemployment more important than a lot of those other things, but we'll have to see how it plays out before anyone can be certain of the effects.

I support this but I'd expect better service as well knowing the kid behind the counter is making $15 an hour.

 

[DrJ]

Sounds like there's some good from this, like the order taking kiosks and stuff. I like reducing waste. If they could have one of those drones deliver it, even better.