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Seattle's Painful Lesson in Economics (re: $15 minimum wage)

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Tide1986

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A column by Megan McArdle for Bloomberg View:

https://www.bloomberg.com/view/arti...inful-lesson-on-the-road-to-a-15-minimum-wage
This morning's data gives ammunition to the mayor's opposition. The University of Washington released its second study, this one covering the increase from $11 an hour to $13. And this study found huge effects: For every 1 percent increase in their hourly wage, low-wage workers saw a 3 percent reduction in the number of hours worked. As a result, they lost about $125 in earnings a month, clawing back the entire gain from the earlier hike and more.
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At some level, we all intuitively understood that this was true. If the minimum wage increases by a penny an hour, probably even most rock-ribbed conservatives would not predict mass firings. On the other hand, if the wage was arbitrarily set to $100 an hour, even ardent labor activists would presumably expect widespread unemployment to follow. You can’t flat-out say “minimum wages don’t increase unemployment,” because the size of the increase, and the level of the resulting wage, obviously matter at some margin.
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Seattle may have discovered that margin. And unfortunately, it may yet discover even further, uglier margins when the data is in on the full increase to $15. That’s the danger of striking out for uncharted territory; sometimes, you end up where there be dragons.
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tattooguy21

tattooguy21

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Or people try to change things based on mob mentality and populism, scared of what the angry people outside will tweet INSTEAD OF following basic math to deduce that a business, whose goal is profit, Will not absorb the hit of increased wages. It will be passed too either

1) the consumer (all too often) or
2) reduced unemployment numbers or wages for other workers at the same company (as we see here.)
 
92tide

92tide

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here is another take

link

A team of researchers at the University of Washington has released an analysis of the economic impacts of the 2015 and 2016 increases in the Seattle minimum wage. The study, Jardim et al. (2017), looks at the first two stages of a phased-in set of increases that will eventually take the minimum wage in the city to $15.00 per hour. The authors of the study argue that they find large job losses associated with these first two rounds of increases, in which the minimum wage for most workers rose from $9.47 per hour to $11.00 per hour in April 2015 and then to $13.00 per hour in January 2016.1

The authors’ analysis, however, suffers from a number of data and methodological problems that bias the study in the direction of finding job loss, even where there may have been no job loss at all. One initial indicator of these problems is that the estimated employment losses in the Seattle study lie far outside even those generally suggested by mainstream critics of the minimum wage (see, for example, Neumark and Wascher [2008])—as the authors themselves acknowledge.

In this report, we describe the most important shortcomings in the new analysis and make suggestions for how the researchers can attempt to correct for these problems in future iterations of their long-term study of the Seattle minimum wage.
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CajunCrimson

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92tide said:
here is another take

link
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In this report, we describe the most important shortcomings in the new analysis and make suggestions for how the researchers can attempt to correct for these problems in future iterations of their long-term study of the Seattle minimum wage.
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In other words....."you aren't using the right statistics, you used the wrong ones"
 
Bamabuzzard

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Just curious but does this $15/hr minimum wage requirement apply to small businesses as well? "I don't need no stinking study" to know if this was implemented in my area (adjust the $15/hr down to the cost of living in my area) it would shut down A LOT of local small businesses. People just assume simply because someone owns a business they are rolling in huge profit margins. That simply isn't true. A lot, and I mean A LOT of small business owners are in business for themselves for the independence, not because they are rolling in high profit margins. They aren't rolling up $100 bills and smoking them for fun. I think a lot of people who support these type extreme ideas need to get more educated and informed on what goes on in the real world of small/local businesses before organizing protests.
 
Bamabuzzard

Bamabuzzard

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crimsonaudio said:
It'll make zero difference - these people are fantastic at spending other people's money.
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I hear ya and you're probably right in that it wouldn't make one bit of difference. As long as it doesn't come out of their pockets they'll continue to sweep it under the rug of "fair". Not realizing that concept of "fair" is a two way street. Or they do realize it and really don't care.
 
Crimson1967

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Bamabuzzard said:
Just curious but does this $15/hr minimum wage requirement apply to small businesses as well? "I don't need no stinking study" to know if this was implemented in my area (adjust the $15/hr down to the cost of living in my area) it would shut down A LOT of local small businesses. People just assume simply because someone owns a business they are rolling in huge profit margins. That simply isn't true. A lot, and I mean A LOT of small business owners are in business for themselves for the independence, not because they are rolling in high profit margins. They aren't rolling up $100 bills and smoking them for fun. I think a lot of people who support these type extreme ideas need to get more educated and informed on what goes on in the real world of small/local businesses before organizing protests.
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I read once where a lot of small businesses you have people paying to have a full time job.

I agree it isn't a bed of roses and my hat's off to those who do it. I don't have the drive or skills needed to do it.


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L

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Bamabuzzard said:
Just curious but does this $15/hr minimum wage requirement apply to small businesses as well? "I don't need no stinking study" to know if this was implemented in my area (adjust the $15/hr down to the cost of living in my area) it would shut down A LOT of local small businesses. People just assume simply because someone owns a business they are rolling in huge profit margins. That simply isn't true. A lot, and I mean A LOT of small business owners are in business for themselves for the independence, not because they are rolling in high profit margins. They aren't rolling up $100 bills and smoking them for fun. I think a lot of people who support these type extreme ideas need to get more educated and informed on what goes on in the real world of small/local businesses before organizing protests.
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Businesses over 500 employees had a higher minimum wage than others. I don't know all the details but there were differencs. I think at present it was $13 for big business, and $11 for smaller.
 
cuda.1973

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It is still collectivist crap, cooked up by people who never ran a business, and think it is ok to spend someone's money, for them.

For the good of the collective, don'tcha know.
 
Tide1986

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Lessons from Maine:

http://www.chicagotribune.com/business/ct-maine-minimum-wage-20170628-story.html

As the Maine House voted on a bill to reduce the minimum wage for tipped restaurant workers, Jason Buckwalter and a dozen fellow servers listening to the vote call from the backroom of a Bangor steakhouse all hoped to hear one thing: that state legislators had voted to lower their wages. Some cried with relief, Buckwalter said, when lawmakers voted 110-37 in favor of lowering the minimum wage.

The June 13 vote brought a conclusion to a political saga that has upended conventional wisdom about the minimum wage.

Workers have traditionally supported such increases, which advocates say are critical to lifting millions out of poverty.

But in Maine, servers actively campaigned to overturn the results of a November referendum raising servers' salaries from $3.75 in 2016 to $12 by 2024, saying it would cause customers to tip less and reduce their take-home income.
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Sue Vallenza, a 55-year-old bartender at the Pilot House in Kennebunk, Maine, said she saw her hourly tips drop by more than $2 per hour, from the $20 to $30 per hour she made before.

"I don't need to be 'saved,' and I'll be damned if small groups of uninformed people are voting on my livelihood," Vallenza said. "You can't cut someone off at the knees like that."
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