Home / General / JOB-KILLING $15 Minimum Wage Fails To Kill Jobs

JOB-KILLING $15 Minimum Wage Fails To Kill Jobs

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fightfor15

Remember when the $15 minimum wage was going to devastate Seattle’s job market? Well, funny thing about that:

The unemployment rate in the city of Seattle – the tip of the spear when it comes to minimum wage experiments – has now hit a new cycle low of 3.4%, as the city continues to thrive. I’m not sure what else there is to say at this point. The doomsayers were wrong. The sky has not fallen. The restaurant business, by all accounts, is booming (in fact, probably reaching a saturation point when one looks at eateries per capita). I think it’s safe to say we’ve got enough data – over almost two years now – to declare that Seattle has not suffered adverse consequences from its increases in the minimum wage, and has certainly not experienced the dire effects foretold by the anti-min wage crowd.

But not every single restaurant in Seattle remained open for all of 2016 so the critics were right QED!!!!!1!!!

Seattle is a prosperous city with a lot of high-paying jobs, and reasonable people can disagree about what the optimal national minimum wage is. But the C- Econ 101 idea that a significantly increased minimum wage inevitably results in job losses can be safely put to bed.

[H/T Howard]

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  • howard

    Since you linked back to the “restaurants closing in 2015” post, I’ll note that the restaurant of the 4 whose owner I know was replaced by a restaurant that is crowded all the time….

    • BobBobNewhartNewhartSpecial

      That’s a good point. Restaurants close all the time for reasons other than the minimum wage. Someone should compile the statistics of the total number of restaurants, and total number of restaurant workers before and now two years after the wage hike.

      • DrDick

        Small business failure rates are quite high generally (about half fail in the first two years) and for food and beverage industry particularly.

  • lawtalkingguy

    watching CATO twerps trip over themselves attacking this was amusing. Of course what does it matter? we are a post facts, post policies society. Just get Tom Hanks or Matt Damon out there, hope to grab as many Senate seats as we can

    • The Great God Pan

      Not Hanks. He gave a really nauseating speech shortly after the election about how Trump is going to do just fine and he looks forward to re-electing him in 2020.

      • bw

        FWIW, that isn’t how Hanks really put it.

        “This is the United States of America. We’ll go on. There’s great like-minded people out there who are Americans first and Republicans or Democrats second,” Hanks told THR. “I hope the president-elect does such a great job that I vote for his reelection in four years.”

        In context, Hanks is simply saying that he’s not going to root for Drumpf to fail (failure being defined as driving the country into a ditch). He’s not saying that Trump is going to do fine, just that the country is, at least in the long run. You can think that’s way Pollyannaish to the point of lulling people into dangerous complacency, but it’s not by any measure a statement that Hanks is going to support Trump in 2020.

        • To paraphrase Michael Jordan, Republicans buy movie tickets, too.

        • rea

          Well, I hope that Trump does such a great job that I vote for his reelection in 2020–don’t you? Pigs will fly first, but it would be a fine thing of Trump suddenly transformed into a leftish Democrat . . .

        • los

          Hanks translated:
          “We’ll be better off than reasonably expected, if the capital hasn’t burnt by this time 2017. Pray, if you’re religious.”

        • The Great God Pan

          You can think that’s way Pollyannaish to the point of lulling people into dangerous complacency

          ,

          This, which is disgusting enough on its own, with added disgust because I suspect he knows that it isn’t true and there is ample reason for people to be alarmed.

          We should all be rooting for Trump to fail so spectacularly that he ends up out of office, because success for him is not success for the country.

          • los

            We should all be rooting for Trump to fail so spectacularly that he ends up out of office, because success for him is not success for the country

            Yes. This is “lesser evil”, not “heighten the conflagration”, because keeping DJT in office with his cuckstab cabal is “heighten the conflagration” (further destruction of constitutional law, etc)

  • apogean

    It should be pointed out that Seattle’s inflation has been running about 1% higher than the national average. But at 3% as opposed to 2%, this is hardly economically ruinous. If very slightly higher inflation is the price we pay for a living wage, great.

    • Captain Oblivious

      Seattle also has a huge housing shortage. How much of the inflation is the result of housing prices skyrocketing?

      • Davis

        Of course. Seattle is a desirable place to live and work, which creates pressure on housing. A $15 minimum wage enhances its reputation.

      • Derelict

        It’s all those newly wealthy fast-food workers flooding into the housing market that’s driving up prices. Therefore, the minimum wage must be repealed so that middle-class white-collar people can, um, not see increases in the value of their homes and, uh, something something.

        See how the $15 min wage is wrecking things!

  • cpinva

    the restaurant industry is possibly the worst one, to use as an example of anything regarding the economic effects of almost any economic decision, from raising the minimum wage, to raising prepared food taxes. this is because, quite simply, it is a notoriously constantly in flux industry: they open/close, on a daily basis, for multiple reasons, but mostly due to poor management/poor service/food/bad location/overpriced for the market/etc. note that the minimum wage isn’t among them.

    as well, among the major boom economies in this country’s history, occurred during a period when the highest marginal federal income tax rate ranged from 90-70%, the 50’s through the 60’s. minimum wages & higher taxes don’t kill our economy, offshoring & outsourcing do.

    • Captain Oblivious

      I once read somewhere that 80% of new, independently-owned restaurants (i.e., not franchises or chain-owned) go out of business or are sold at a loss within two years of opening.

      • DrDick

        It is 50% for small businesses generally, so that does not sound totally unreasonable. The truth is that most business men are not really all that smart and few actually know what they are doing (especially if they have a business degree).

    • efgoldman

      the restaurant industry is possibly the worst one, to use as an example of anything regarding the economic effects of almost any economic decision…. it is a notoriously constantly in flux industry

      Why anybody wants to do it has long been a mystery to me (but then, so are mountain climbing and triathlons). The risk/reward ratio seems to be quite out of whack.

  • MilitantlyAardvark

    There was a very screechy recent Forbes article about this. Much gloating “more in sorrow than anger” about how McDonald’s staff being replaced by touch-screen kiosks showed that the $15 minimum wage was a yuuge job destroyer:

    http://www.forbes.com/sites/realspin/2016/11/29/thanks-to-fight-for-15-minimum-wage-mcdonalds-unveils-job-replacing-self-service-kiosks-nationwide/#6a8242da762e

    Apparently the fight for 15 is some sort of Soviet-style central planning initiative….

    • Derelict

      I just edited someone’s PhD on this very subject. Turns out that the real driver beyond self-serve kiosks in fast-food settings has nothing to do with cutting payroll costs. Rather, it’s a move to cater to younger customers who expect both extremely fast service and the presence of automation in such settings.

      In other words, it’s the market that’s driving automation, not any backlash by business against the $15 wage.

      • MilitantlyAardvark

        I rather suspected that. I was amused by the writer’s attempt to bluster about the Soviet union though.

      • efgoldman

        it’s a move to cater to younger customers who expect both extremely fast service and the presence of automation

        We can choose from several supermarket chains. Only one (a national company with an old regional name) has self-service registers – which are almost always empty. Anecdata, I know, but at least in this small example, customers obviously prefer the interactions with live cashiers (who also bag the groceries.)
        OTOH, at the local McD’s and BK, the human cashiers get the orders wrong so often one might rather punch them into a screen.

        • Matt McIrvin

          Self-service supermarket registers are awful because of the problems of scanning, pricing and bagging some huge and disparate collection of goods–the machine just can’t do most of that work, so the customer has to, without the practice of an experienced cashier and bagger, and without confusing the machine somehow. Whenever I try to use one of those, it seems as if the process breaks down in some way and I need assistance about three quarters of the time, unless I’m only buying one or two items.

          With self-service fast-food registers, it’s only the order-taking part of the chain that gets replaced; human employees are doing all the nontrivial object-handling work anyway.

          • carolannie

            AND with self-service you don’t get a discount for doing all that work for free!

          • Michael Cain

            without the practice of an experienced… bagger

            Incompetent baggers are what drove me to the self-service stations in the first place. I have a big canvas bag and I can pack it so that it holds everything, sits flat and stable, and nothing gets broken. From time to time I let the paid people bag, and they leave my canvas bag half-empty and use two paper/plastic bags as well. Don’t get me started on what they might put in with crushable things. Last time I tried I looked at it and said, “This is just unacceptable,” emptied everything and repacked it while everyone glared at me.

            • bender

              We’ve had a local no free bags ordinance for several years. At first few customers brought their own bags and the baggers were terrible in the ways you describe. Now about half the customers provide their own bags, and the baggers are getting better at packing them compactly. They still use up too many bags when left to their own devices.

              I go through the regular line with my big bag, unload the groceries onto the belt in the approximate order they should be packed, and start packing them (hard, dense and flat items on the bottom, toilet paper and peaches on top) while the final items are being rung up. I let one of the paid workers finish packing while I’m paying, and correct them if they are doing it wrong.

              I never use self service checkout lines even if I have only one item, because that is taking away someone’s union job. I’m shocked and disappointed that no one else here thinks that is important. I have no problem with touch screens for ordering from a limited menu.

            • los

              This is not even a matter of training. Uninformed employees are management failure. Salary cut!

        • Dr. Ronnie James, DO

          Anecdote ahoy: my local CVS is almsot all self serve. At least some (I cant say all) of the workers who previously worked the registers now are out sweeping up, or are out in the aisles helping customers find things

        • los

          siri doesn’t flip burgers, because robotics cost far more than just the control electronics.

        • Jon_H11

          Have you lived in a college town? Young people won’t go near the non self-serve registers. It’s definitely a generational thing. I’ll choose a Wawa or Sheetz over Mcdonald’s or subway just because I don’t have to interact with the cashier.

          • Origami Isopod

            Problem is, as Matt says above, half the time you end up having to call a staffer over anyway to punch their number in and fix a problem.

    • Richard Gadsden

      McDonald’s has put in touch-screens everywhere, including places where the minimum wage hasn’t gone up.

      Also, I prefer the kiosks, as do a lot of people on the autism spectrum, and people who struggle with the local language. I believe they’ve prioritised areas with lots of tourists for the kiosks – I’ve noticed that they’ve been put in everywhere in cities, but much less so in the suburbs, and I’ll bet that’s tourism-driven.

      • efgoldman

        they’ve been put in everywhere in cities, but much less so in the suburbs, and I’ll bet that’s tourism-driven.

        Wouldn’t surprise me if the expense of buying (leasing?) and installing the equipment is borne by the franchise owner, not by Mickey.

  • Davis

    There has never been evidence that raising the minimum wage reduces unemployment.

    • No, but there has never been an increase that was particularly significant. But unless we believe there’s no minimum wage that will result in job losses–then why not a $7,500 an hour minimum wage!–the question is where’s that point. Every previous national minimum wage increase has been modest and often incremental. But in today’s dollars, it’s never been over $11 per hour. Others have noted the obvious point, that Seattle is able to sustain that high a wage because of the local economy, local income levels, inflation, housing prices, etc. Same is probably true of metro areas like NYC, Boston, Bay Area, DC, possibly Chicago and LA, maybe others.

      But that leads to the converse point here: there’s no evidence $15 an hour wouldn’t cause serious harm as a national minimum wage. [The “research” that “shows” previous wage increases cost jobs was garbage funded and based on data supplied by the fast food industry.] If we accept there’s some point at which it would cost jobs, it’s quite plausible that level is between what in today’s dollars would be $11 and $15 per hour. And if so, a $15 per hour minimum wage might do the most harm in rural Maine, Northern MI/WI, the Mississippi Delta, New Mexico, the Plains, the rural South, Appalachia, etc.

      I get that $15 is useful rhetorically because it’s a nice round number. But that doesn’t mean it’s the right number for policy. And it’s not just me saying it. It’s the position of Alan Kreuger, who with David Card did the groundbreaking research showing that state minimum wage increases had not only not cost jobs, but stimulated economies.

      • aaronl

        I’ve seen Dean Baker make the same argument — that we can give significant increases in the minimum wage in some wealthy urban areas, and we can give or phase in increases in the minimum wage in other areas, but that you can’t define a national minimum wage based upon what can be supported in a booming, urban economy.

        But the larger point remains this: You can implement increases in the minimum wage, you can even eliminate the “tipped minimum wage” in favor of making sure that waitstaff have a dependable, basic income, and you won’t destroy the local economy or restaurant industry.

        • efgoldman

          you can’t define a national minimum wage based upon what can be supported in a booming, urban economy.

          It is true that $600/week ($15 x 40 hours) goes a lot farther in West Bumfuck PA, a small (two traffic light) town where we visited my sister in law last summer, than it does in metro/suburban New England.
          It’s also true that I couldn’t stand to live there.

          • Nobdy

            Well everyone knows that East Bumfuck is the cultural center of the area (they have a coffee shop that hosts an open-mic night every other Wednesday.)

            • Origami Isopod

              Meanwhile, the North Bumfuckians are worried about being gentrified right out of their neighborhood…

            • los

              The other “Bar and Grill” coudn’t afford even a stage, much less the cage.

        • Oh, I hope I didn’t come off as being against raising the minimum wage quite a bit, even to $15/hr in some places. When I worked in the MI legisture I spent a ridiculous amount of time on living wage ordinances, and became familiar with the Kreuger/Card work then. I want to push the limits. But I want to figure out what they are with minimal damage.

          • One other thing: I think a lot of people think of raising the minimum wage as a means of making businesses act more justly and paying their employees a “living wage.” I think that’s misguided, because a diner or a lawn service isn’t going to be able to pay what people need. Raising the lowest wages won’t make up for the shortcomings in our social welfare state. EITC helps, and some form of minimum income might be a good longterm goal, but unless there’s at least nearly free healthcare, and there’s adequate public transit in urban and suburban areas, and sufficient assistance for child and elder care, and affordable housing, and other things we do a crappy job of providing, low-wage workers won’t be at what we would consider a living wage, too many costs that shouldn’t come out of their earnings will continue to cost them money, or cost them opportunities.

            • carolannie

              Yes. Let’s just figure out how to make a UBI the key to small business success (which it really is!) in people’s minds instead of some commie idea. You always have the mental midgets who think people won’t work unless they fear starvation, but research indicates people love to work, they just hate being in a state of fear

          • Matt McIrvin

            Part of the problem is that there’s a significant constituency who want to eliminate minimum wages entirely. I’ve seen them actually use the “why not a $7,500 an hour minimum wage, then?” argument as a way of claiming that the correct value is $0.

            The way things are going at the moment, we’ll be lucky to keep the current value in place.

            • But that’s a transparently stupid argument. It’s like saying “the right dose of this drug is higher than X, but that doesn’t mean you just mainline it all day” and the response being “then it’s unnecessary.”

              Yes, I know bad arguments are often effective in the media and the public, but this one isn’t. Minimum wage increases are almost always popular, and the existence of the minimum wage is accepted by huge majorities.

              • los

                Matt McIrvin says:

                “why not a $7,500 an hour minimum wage, then?” argument as a way of claiming that the correct value is $0.

                DanaHoule says:

                “the right dose of this drug is higher than X, but that doesn’t mean you just mainline it all day” and the response being “then it’s unnecessary.”

                Homeonomics: starve the beast all day
                /norquisling

              • efgoldman

                But that’s a transparently stupid argument.

                Since when has that stopped the Republiklown “Let’s punish the poor for being poor” brigade?

      • Matt McIrvin

        Republicans (and even some Democrats) have been arguing that the current federal minimum wage is too high for Puerto Rico, and trying to get it driven down to something like $4.25 there. PR is considerably poorer per capita than any state, but even so, that seems extreme–its mean household income is more than half of Mississippi’s. Still, I could see an argument that a $15 minimum shouldn’t apply to PR.

        Of course, it’s probably mostly a foot in the door for people who believe there should be no minimum wage whatsoever.

      • Jon_H11

        No, but there has never been an increase that was particularly significant.

        In 1950 it jumped from $4.00 to about $7.50 in 2013 dollars. And unemployment went down significantly. That might not be $7.25 to $15.00, but it’s still a big jump percentage wise and there were no ill effects.

    • Yes, but per Noah Smith:

      [S]imple Econ 101 short-run partial-equilibrium price theory of undifferentiated labor has been falsified. If econ pundits, policy advisors, and other public-facing econ folks were scientifically minded, we’d stop using this model in our discussions of labor markets. We’d stop casually throwing out terms like “labor demand” without first thinking very carefully about how that concept should be applied.

  • I Guess Bust

    If you think raising the minimum wage is bad you are a reactionary. End of story.

  • NewishLawyer

    Articles about how low the unemployment figures are make me feel stressed and weird about my own employment situation. I am rather tired of this boom
    and bust freelancing from the law school crisis.

    It’s not great feeling like a freak and feeling like I find a new defiency on every single job interview that I have to pave over.

    /pityparty

    • vic rattlehead

      I’ll join the pity party. I know the feeling. And I’m not really experienced or connected enough to start my own firm-but at this point creating my own job seems like the only way to get a real full time job.

  • Woodrowfan

    if you can’t pay your workers a living wage then the problem is not their wages, it’s your business plan.

    • efgoldman

      the problem is not their wages, it’s your business plan.

      Which, if you’re Wal-Mart (and maybe others – I don’t know) includes old ebil gummint picking up the supplemental costs that keep your employees fed and with medical care.

    • DrDick

      As FDR put it, if you cannot pay your workers a living wage (which is much more than a mere subsistence wage), you do not deserve to be in business.

    • Brett

      I’d rather workers be able to afford at least part of a living wage on work rather than not having a job at all, especially since governments are almost always super-reluctant to step up public hiring in the face of chronically high unemployment. I’m not just talking about the US here.

      That said, incremental increases in the minimum wage don’t seem to be causing that issue yet, so we might as well continue.

  • Lurking Canadian

    Your faith is touching, but naive. All this evidence shows, to the right people, is that the minimum wage hike hasnMt led to job losses YET. Someday there will be a recession in Seattle. At that point, they will have the proof they need to show that minim wage hikes cause recessions.

    Remember, Barney frank caused the 2006 housing bubble by passing a law in 1978. Elephants have long memories.

    • Nobdy

      Can we blame a high minimum wage in small parts of the country for the upcoming Trump recession? I think we can!

    • John Revolta

      The wheels of the Gods grind slowly, but for $15 an hour they’d better grind my Komodo Dragon Roast just the way I like it.

      • efgoldman

        they’d better grind my Komodo Dragon Roast just the way I like it.

        Tastes like chicken.

    • ColBatGuano

      They don’t have to wait for a recession, they can just keep pointing to one or two random restaurants that close as proof. The evidence is incontrovertible.

  • carolannie

    The notions that raising wages, allowing immigration etc kill jobs are all part of what James Kwak call economism, a version of truthiness: https://baselinescenario.com/2016/12/02/economics-101-economism-and-our-new-gilded-age/

  • Nobdy

    This was the subject of the worst piece of writing I have had the displeasure of reading by a conservative in the last 6 months, called You’re Not Worth $15.

    The premise is simple. Guy calls up a wing joint, lists off a complex order, and the woman taking orders asks him to repeat it step by step for unknown reasons (restaurant noisy? Policy set by managers? Guy is a mumbler?) He decides that this is infuriating and she should be receiving at most $2 an hour for her terrible work ethic and poor customer service skills (She is polite and apparently gets the order right.)

    On the one hand, it made me want to punch the author in the face. On the other hand, it is illuminating because it really DOES show how conservatives think.

    None of this is about economics or job growth or any of that. It’s 100% about their desire to stomp on their “lessers” and be cruel and hateful. They don’t oppose a living wage because they believe it is not economically viable or are philosophically opposed to government intervention in the market. They oppose it precisely BECAUSE it is a living wage that might grant dignity to low-level workers.

    The Trump era is going to tear a lot of masks off a lot of monsters.

    • efgoldman

      They oppose it precisely BECAUSE it is a living wage that might grant dignity to low-level workers.

      This, gezzattly.
      When I was younger, I thought that everybody ought to do two years of military or alternate service, no exceptions. Maybe, instead, everybody ought to be required to do six months of some kind of customer-facing retail or fast food scut work. Might teach them a thing or two.

      Might not, too.

    • los

      “DOES show how conservatives think”
      worth less than a bucket of barroom spit.

    • los

      called You’re Not Worth $15

      I skimmed. The employee confirmed the customers many option choices. It appears that “bling shop” uses a checklist form (probably integrated tied into point of sale) to fill orders. Both practices reduce errors.

      author @JesseKellyDC is standard smug cuckapparat[1] who has never worked a real job or managed a real business, thus lives of off Kochprop welfare[2]

      And as efgoldman commented: everybody Jesse Kelly

      ought to be required to do six months of some kind of customer-facing retail or fast food scut work

      (though “Dirty Jobs” TV series was good)

      _________
      1. IIRC, resurgent is Erickson’s site. But cuckstab or altcuckstab hardly matters, because hyper-confidence in one’s own errors infects cucks and altcucks .
      2. … a “privatized tax” that corporations pass along to customers whose political views may differ.

      • los

        (2. … funded by a “privatized tax” that corporations pass along…)

    • los

      illuminating because it really DOES show how conservatives think… 100% about their desire to stomp on their “lessers” and be cruel and hateful

      inferiority fears.. self-esteem issues, blah blah. (“Those who can’t flip burgers, become bitter whining Right Wing Snowflakes”)

      Trump era is going to tear a lot of masks off a lot of monsters

      For a long time, the cuckstream media “monsters” (Ann Coulter, O’Reilly, etc), have been swaggering with their pants down and leaking on the public.

  • CrunchyFrog

    Minimum wage increases generally improve the local economy in situations where the minimum wage was very low, as it is in the US. People on minimum wage will spend every extra dollar they earn, and while some of that will go to out of town businesses like Amazon most of it gets fed right back into the local economy, and almost immediately.

  • NorEastern

    High minimum wages work very well in jobs that cannot be exported overseas. A McDonald’s burger flipper’s job is never going to be exported to India. But in the garment industry at $15 an hour an owner would have to close up shop.

    The real problem with a Federal mandate to raise the minimum wage is that every area needs a tailored minimum wage. $15 an hour is not sufficient in NYC, while $15 an hour is quite lucrative in rural Mississippi.

    • ColBatGuano

      I’d hate to see what the powers that be in Mississippi would decide what a “tailored” minimum wage should be.

    • Brett

      And that’s what makes it hard, too, because having differential minimum wage rates allows for arbitrage. State-level minimums are probably the ideal there, because they’re big enough* that the vast majority of jobs aren’t going to be arbitraged over it (manufacturing jobs might, but they’re only a small percentage of the work-force these days).

      * With some possible exceptions among border towns and those tiny states up in New England.

  • Brett

    Didn’t Seattle do a study earlier this year that tried to tease out the effects of the minimum wage increase so far and came to the conclusion that they did reduce work-time and employment? It wasn’t a huge effect – about 1.1% relative unemployment for low-wage workers and 15 minutes less work-time on average – but we’re not at the full $15/hr wage yet either.

    The key being low-wage workers, there. Unemployment overall can still go down while increasing for low-wage workers if a bunch of richer people move in or have reductions in their unemployment rate that swamp the losses in the low-wage sector.

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