Will I still be allowed to hunt for food?
Society is something better encouraged than gamified.
Turns out economics is actually more difficult than "higher minimum wage is good/bad".
The unemployment statistics were not influenced by raising the minimum wage here, so you can assume that the people who lost their low paid jobs simply moved elsewhere and got better paid jobs. It's mostly the employers' loss, which is how it should be. If you can't afford to start a business, don't start a business.
Start: 100 people paid $100
After minimum wage change: 90 people paid $125, 10 people paid $0
After tax increase: 90 people paid $113 + $12 taxes, 10 people paid $108 from taxes
Now everyone is paid at least as much as they were before, and fewer people are forced to perform labour
In practice it was only 3% unemployment not 10%, which means the tax increase is less and there is more of an incentive to continue working. You can also pay the displaced workers less than their original wage, to reach an equilibrium where everyone is happy with either work+more money, or leisure+less money. Or have it be age-based with an earlier retirement. Or have people work part-time.
We need to stop seeing having a job as being inherently good. Being able to live is good. Humanity should strive for 100% unemployment.
That’s a big success for the former group for sure. Whether that’s a policy success is slightly hazier than you presented I think, without other interventions to support those who are more likely to be harmed by the reduction in employment.
I agree that a lost job should carry some kind of premium compared to a total increase in wages paid, and you also have to go and look at the total hours worked to get a good picture, but if the total relative increase in remuneration was higher than about 10% or so I think that's probably enough to be able to hand wave the employment decrease.
If it only turns out to be 5% I'd be a bit iffier about it.
In the UK we have a pretty generous minimum wage (for over 21s), I think even relative to $20 in California, and the effect on employment has been very small while minimum wage jobs now give a pretty OK life, so I'm inclined to support high minimum wages generally.
I don't think it's nearly that clear. Western nations are at a near record low unemployment rate. We should want to remove low paying jobs.
Are you implying that there are people in the world who just can't do anything productive enough to be worth $20/hour? That they are so useless that this was the only thing worth doing with them?
That seems fucking insane. If that's true, we have a huge problem with misallocation of value.
The gap between what a minimum wage job pays and what it costs to scrape by is covered by government or charity, if they didn't do that the workers would die, which means the jobs don't get done, so that means the resource spent by governments or charities as a result of a low minimum wage is a subsidy for the employer. Instead of paying what it costs they get it for cheaper to create a fiction of "employment".
That seems unlikely to be just that though, this study was just on the people who lost jobs. If 20,000 people are out of a job, there is probably another larger cohort on less hours. And we also don't know how much wages rose. The people who were fired were the ones who could only justify being paid the minimum. The ones who stayed might already have been paid more like $17, $18 or $19/hr.
So yes to what you say, but the study doesn't say anything about whether total compensation went up or down.
If fast food companies have perfect knowledge of their market, then the immediate job loss would be all that happens, but they don't so it will take some time to adapt to the new market, and see if consumers will bear the increase in cost.
That's not even considering substitutes for labor, which have never been as competitive as they are now. AI, robotics, single-purpose machines, etc. One negative to a minimum wage is that we don't actually know the market price of labor. When there is a shift from humans to machines for labor, it will happen quickly and without warning, rather than slowly as humans become dissatisfied with decreasing wages.
With Silicon Valley being in California, one might think this is done on purpose—favoring the automation sector over the wage holders.
Once these companies get some scale in California, they can then drive prices lower to be competitive in other states.
In the end, sacrificing minimum wage workers in California will lead to (generally California based) automation companies taking this revenue across the country.
It's things like self-ordering, machines that make change (if cash handling still matters), conveyor ovens/charbroilers, more centralized food prep, self-service and automated beverage dispensing.
Plenty of automation is happening outside of California though. Here's an Illinois bases company's blurb about beverage automation [1].
Reducing labor in small amounts increases service capacity, and in large enough capacity lets you operate a restaurant with a smaller minimum crew.
[1] https://dimontegroup.com/projects/cornelius-quick-serve-pro/
Would that be incomplete? Higher minimum wage could cause higher employment in other sectors or raise their revenue and wages.
- Wages often go over or close to the minimum anyway, due to market forces, and do so without costly bureaucracy/enforcement/taxation/distortion
- Minimum wages make everyone whose marginal value is less than the minimum wage unemployable (since you would choose not to hire someone for $20/hour if their marginal value is $15). This is disastrous for someone who'd love to work at $x/hour, but who lives in a state which legislates a minimum wage > $x/hour, since they go from being employed at a low wage to unemployed.
Yes, when there is an shortage or competitive number of low wage workers, not when unemployment rate is approaching 5% overall and close to 20% for low income earning bracket in most places.
People don't work in low income jobs because it is the easiest option, but because it is the only option often.
Fast food is a stepping stone job, and if employeers have to pay more for labor then they will be pickier about it.
Let's think about the reverse. If we cut minimum wage, the sector would be much more loose about hiring first time workers, convicts, or people just not fit for other jobs. The people could grow their skills and contribute more to society, a society where low end business constantly complain about how hard it is to find skilled workers.
High minimum wage contributes to more people on social safety nets living on low fixed incomes because the gulf between that and paid employment becomes too great and there is no low wage on ramp for them.
Why? It would seem to me that there's plenty of room in the balance sheets to just pay people more.
roenxi•2h ago
However, the theory always said that a minimum wage rise reduces the number of jobs so it is a strong chance that around 20,000 people were put out of work by this policy.
ath3nd•1h ago
20,000 people were put out of jobs by employers who didn't want to pay them what they are worth and instead wanted to exploit them. If you can't afford to pay livable wages to your workers, your business shouldn't exist.
unnamed76ri•1h ago
We don’t need kids working in coal mines but we also don’t need to make it near impossible for them to get work experience at a part time job because their skill level doesn’t align with $20/hr.
dvrj101•1h ago
unnamed76ri•1h ago
skippyboxedhero•1h ago
In the UK which has a youth wage, has had negative productivity growth, and has had a series of extremely unpopular governments who needed to use minimum wage growth to support their growth, you have seen large employers mix towards younger staff (where that is possible, in other cases you have seen employers use government programs to import below minimum wage migrants) and let go older staff en masse (employers in the UK also have auto-enroll into pensions, but only over 22).
It simply isn't possible, particularly in economies that have structural problems, for productivity growth to just appear magically when politicians request it.
This is a classic problem with economic intervention: you intervene, change incentives, agents do something unexpected, and the result is more intervention, more distortion, on and on. Politically, this is gold because politicians look like they are doing something. No-one asks whether that thing needs to be done at all.
ath3nd•1h ago
Said who? The same people who don't pay internships.
> but we also don’t need to make it near impossible for them to get work experience at a part time job because their skill level doesn’t align with $20/hr.
When minimum wage goes up, other more skilled labor also goes up, and adults will go somewhere better paid. Then the business will have no choice but hire the kids at the $20/hr and they will get that work experience you so want to bestow upon them. It's funny you are trying to twist it like it's gonna be a problem to find work experience for the poor poor kids, while all we know the business care about is how to exploit people at the lowest possible pay.
It's always "think of the children" with a specific crowd, an unhealthy obsession with children, I'd say.
Think of the children and ban XYZ books cause poor children can't comprehend what they are reading (allows us to ban books we don't like)
Think of the children and introduce chat control so we can track everybody and monetize their data (allows us to exploit everybody)
Think of the children and don't raise the minimum wage cause poor children can't find internships and part time jobs (allows us to exploit everybody)
There is a pattern here, not sure if you are ready to acknowledge it.
unnamed76ri•54m ago
“We are going to increase minimum wage so you can have a livable wage!”
“Yay!…wait now I have no wages. Why didn’t this work like you said?”
bravesoul2•1h ago
Now if they pay the teenager half the wage the same adult is doing then someone is getting a raw deal.
mc32•1h ago
Now, for many that’s okay. People just have to be okay that that happens.
Also, now those people affected have no wages.
ath3nd•1h ago
Nah, most of them are most likely already employed somewhere else at a 25% wage increase.
Note that the unemployment actually didn't spike up according to a different study: https://www.nbcbayarea.com/investigations/california-minimum... so that allows us to assume these people got a better wage somewhere else, at only a marginal increase to the consumer.
mc32•18m ago
One possible outcome is that if high minimum wages are placed across the board in all states and the feds enforce e-verify that we'll become a bit like Switzerland where everyone nominally earns more compared to other OECD countries but also things (good and services) are relatively more expensive too. It potentially could pull people who've been out of the labor pool (undercut by low wages/cheap labor) back in to it, if the right policies are put in place.
It's probably not a bad deal for US workers as we all would have a higher standard of living but also live in a more expensive society --in the end that's probably better for everyone (in the US).
relaxing•1h ago
I’d like to see if there’s an increase in GPAs thanks to greater time for studying, or greater fitness from having more time to play a sport and lesser proximity to french fries.
georgeburdell•1h ago
skippyboxedhero•1h ago
Minimum wage is minimum productivity. If a business is able to increase productivity, they will pay more and fire staff. If they won't then they shut down. And the side-effect, which cannot be measured by economists so doesn't exist, is that some will evade the limit. The theory isn't that minimum wage reduces jobs, it depends in every case...but the best that can be said is that it has no impact.
Card and Kruger, for example, was/is presented as some kind of massive revolution. It is completely useless. Studies concentrate on fast food because it is one of the only sectors that has managed to increase productivity, the wider consequences are ignored. The only reason this industry for DiD minimum-wage papers exist is to give policymakers a button to push when their popularity is collapsing. The idea of the government dictating minimum labour productivity makes no sense (in the US, the policy mix also makes no sense because you have uncontrolled labour supply but the government sets minimum labour productivity...why? It is heaviest incentive for breaking the laws that you set, minimum productivity is set with the knowledge that it won't apply to many people).
delusional•1h ago
You're doing what you disavow here. If it doesn't affect the number of jobs, then it increases the value of that job. If you can sell a carrot for a dollar more, and still sell out of carrots, you have a increased the economic activity without increasing production. The same is true for hours.
This is not about increasing productivity. It's about increasing the share of that productivity that's paid out to workers.