House Democrat demands $50-per-hour federal minimum wage: 'Just do​ the math!'

[Mountain Man]

Minimum wage hikes are one of those interesting areas where it doesn't tend to have the bad effects that people often expect.

Economists and business owners alike have tended to imagine that there must be some bad outcomes of minimum wage hikes. e.g. the OP suggests inflated prices or unemployment increases.

But those effects don't tend to be seen in practice. Pretty much every time any country increases its minimum wage, economists try to study the data really carefully, looking for those bad effects, and just don't seem to see them. In the countries in the world with the highest minimum wages we don't see those effects.

Everyone generally agrees you couldn't just make the minimum wage $1 million an hour and expect no bad effects, so there's agreement that there must be the possibility of it being raised too high too fast. But nobody seems to know what that limit is. Nobody's tried pushing the limits of it. The world's highest minimum wage is ~$20 USD per hour, and that seems to work fine.

So it would be interesting data if there was someone brave enough to try and push the limits of it and raise the minimum wage to high levels.

Your ignorance is showing again. When Seattle residents voted in a $15 minimum wage in 2014, it resulted in employees being laid off or having hours cut, numerous stores reducing their operating hours, and in some cases closing their doors for good.

(2015) Seattle’s $15 minimum wage law goes into effect on April 1, 2015. As that date approaches, restaurants across the city are making the financial decision to close shop. The Washington Policy Center writes that “closings have occurred across the city, from Grub in the upscale Queen Anne Hill neighborhood, to Little Uncle in gritty Pioneer Square, to the Boat Street Cafe on Western Avenue near the waterfront.”

Of course, restaurants close for a variety of reasons. But, according to Seattle Magazine, the “impending minimum wage hike to $15 per hour” is playing a “major factor.” That’s not surprising, considering “about 36% of restaurant earnings go to paying labor costs.” Seattle Magazine,

“Washington Restaurant Association’s Anthony Anton puts it this way: “It’s not a political problem; it’s a math problem.”

“He estimates that a common budget breakdown among sustaining Seattle restaurants so far has been the following: 36 percent of funds are devoted to labor, 30 percent to food costs and 30 percent go to everything else (all other operational costs). The remaining 4 percent has been the profit margin, and as a result, in a $700,000 restaurant, he estimates that the average restauranteur in Seattle has been making $28,000 a year.

“With the minimum wage spike, however, he says that if restaurant owners made no changes, the labor cost in quick service restaurants would rise to 42 percent and in full service restaurants to 47 percent.”

Restaurant owners, expecting to operate on thinner margins, have tried to adapt in several ways including “higher menu prices, cheaper, lower-quality ingredients, reduced opening times, and cutting work hours and firing workers,” according to The Seattle Times and Seattle Eater magazine. As the Washington Policy Center points out, when these strategies are not enough, businesses close, “workers lose their jobs and the neighborhood loses a prized amenity.”

https://shiftwa.org/more-seattle-res...ge-approaches/

(2017) A Seattle law that requires many businesses to pay a minimum wage of at least $13 an hour has left low-wage workers with less money in their pockets because some employers cut working hours, a study released on Monday said.

Low-wage workers on average now clock 9 percent fewer hours and earn $125 less each month than before the Pacific Northwest city set one of the highest minimum wages in the nation, the University of Washington research paper said.

https://www.reuters.com/article/us-s...idUSKBN19H2MV/

(2018) Seattle has served as a national guinea pig for the policy since 2014, when its voted to gradually raise its minimum wage from $9.47 to $15.45 for large employers this year and $16 in 2019. The latest research, released Monday, shows that workers made more money despite getting fewer hours — but that experienced workers made out the best.

The study, conducted by economists at the University of Washington using state unemployment insurance data, found that the increase added about $10 per week on averageto the earnings of low-income workers through 2016, even while reducing weekly hours slightly. But more experienced workers made $19 more per week, the research found, partly by making up for lost hours in Seattle at second jobs workedoutside city limits.

In addition, employee turnover decreased, which the authors believe suggests that employers tried harder to retain their most productive staff members as wages went up.That’s a plus for existing workers, but potentially an obstacle for inexperienced or new workers trying to get that first line on their resume.

Indeed, the study showed that fewer new workers entered Seattle’s low-wage labor market compared to the rest of Washington. “Seattle’s minimum wage ordinance appears to have delivered higher pay to experienced workers at the cost of reduced opportunity for the inexperienced,” the study’s authors wrote.

https://www.cnn.com/2018/10/23/econo...age/index.html

(2019) The study found that more than half of Seattle child care businesses were affected by increased labor costs as the policy increased to $13 per hour, and that the majority will be impacted as the policy increases to $15 per hour between 2019 and 2021.

The most common strategic response reported by the businesses has been to raise prices or fees of child tuition and to reduce hours of or number of staff. Center directors reported that employee wages and benefits comprise the majority of business expenses and that child tuition was the primary source of business income. Thus, most businesses reported they would need a mix of strategies to accommodate increased labor costs to ensure that added expenses were not falling entirely onto the families they serve.

https://www.washington.edu/news/2019...age-ordinance/

So, yeah, it hasn't been great news for Seattle workers over the past decade.

[Chaotic Void]

The kicker was the $50/hour. It's in the very name - "progressive" - there will never be a point at which the "progressives" are satisfied, or they wouldn't be "progressing". The talk used to be $15/hr -- now $50? So what's next?

Yeah... Even if they were to foolishly just raise the Minimum Wage and not address any other problems, that still won't fix everything. Not only is Pay Scaling a (poorly executed) thing, but that still won't help everyone. Let's use the much smaller $15 an hour as an example... it might work in some places, but if Cost of Living is so high that it would require someone to be making $18 an hour in another area, it won't do them any good.

[Mountain Man]

I'll remind you that California has a fairly successful economy in general. It's not known for its collapsed economy and high unemployment.

Honestly, I laughed so hard at this that I nearly had tears in my eyes!

(2023) The much-celebrated California boom is facing a harsh reality.

Everything was looking good, based on enormous growth in capital gains in tech stocks and property, and some in Sacramento assumed the bounty would last — until it didn’t. The latest bad news is the evaporation of the state budget surplus that is now rapidly turning into a deficit that could run as high as $22 billion to $40 billion, particularly if there’s a recession.

But although there are dangers ahead, there’s no need to panic. This painful reality can be turned to our advantage and help us pivot our economy toward greater economic diversity and opportunity for most Californians, particularly ethnic minorities.

The fact is, we cannot continue to rely on the tax revenue generated by tech, media and ever-rising property prices to fund our budget and economy. Today, property values are dropping faster in California’s three largest metropolitan areas, including the Southland, than in the rest of country, and even San Francisco’s once-thriving business district faces persistent vacancies.

Meanwhile, new initial public offerings, a critical source of tax revenue, are suffering their biggest decline in two decades, and Hollywood is enduring layoffs at Disney, Warner Bros., Paramount and CBS. In 2022, stocks in media companies lost $500 billion in value, and stocks in tech firms suffered a reversal of an astounding $4 trillion. Tech firms laid off at least 120,000 employees last year.

True, the unemployment rate continues to drop and is close to pre-pandemic levels. But it is falling more slowly in California than in the rest of the country.

Even high-end employment is increasingly leaving the state. California’s growth in the high-paying “advanced” industries (a 50-sector group of industries defined by the Brookings Institution) has lagged behind that of cities like Nashville, Raleigh, N.C., and Austin, Texas. During the second quarter of 2022, California’s economic output shrank by a half-percent while that of archrival Texas grew by 1.8%.

[...]

California has the nation’s highest cost-adjusted poverty rate, limited opportunities for working-class families and, remarkably, the highest rate of functional illiteracy. No California metro area ranks in the U.S. top 10 in terms of well-paying blue-collar jobs.

https://www.latimes.com/opinion/stor...-state-economy

Please, stop pretending you know anything about US politics and the economy, because you obviously don't.

[tabibito]

I suspect that $50/hour would return the buying power of wages to somewhere in the ball park of the buying power of wages in the 1960s.

[CivilDiscourse]

Minimum wage hikes are one of those interesting areas where it doesn't tend to have the bad effects that people often expect.

Economists and business owners alike have tended to imagine that there must be some bad outcomes of minimum wage hikes. e.g. the OP suggests inflated prices or unemployment increases.

But those effects don't tend to be seen in practice. Pretty much every time any country increases its minimum wage, economists try to study the data really carefully, looking for those bad effects, and just don't seem to see them. In the countries in the world with the highest minimum wages we don't see those effects.

Everyone generally agrees you couldn't just make the minimum wage $1 million an hour and expect no bad effects, so there's agreement that there must be the possibility of it being raised too high too fast. But nobody seems to know what that limit is. Nobody's tried pushing the limits of it. The world's highest minimum wage is ~$20 USD per hour, and that seems to work fine.

So it would be interesting data if there was someone brave enough to try and push the limits of it and raise the minimum wage to high levels.

Nothing generally happens when the price of labor is below it's equilibrium point. When the whole $15 wage argument started the federal minimum wage was around 7.25, while virtually nobody was being paid minimum wage. Most "minimum wage jobs" were actually paying around $10-11 an hour. At that point, you can raise the minimum wage anywhere below that equilibrium point without impacting the supply or demand curves. The small amount of companies that were paying at minimum wage would take a hit, but that was a very small amount of the workforce. (Currently only 1.3% of workers make minimum wage)

Take the proposed $50 pay hike.

The median wage in California is $31.73 an hour. That means 50% of Californians are at or below $31.73 an hour. Do you think raising the salary of MORE than half the state, at once, through a price floor will have minimal to no impact to the state?

[seer]

House Democrat demands $50-per-hour federal minimum wage: 'Just do the math!'

Well she is a moron, so there is that...

[seer]

I suspect that $50/hour would return the buying power of wages to somewhere in the ball park of the buying power of wages in the 1960s.

That is just silly, you would only dramatically raise the cost of goods and services to the point that $50 would only barely keep up...

[tabibito]

That is just silly, you would only dramatically raise the cost of goods and services to the point that $50 would only barely keep up...

Which has nothing to do with the buying power of a dollar. A family of 7 could live in "comfortable frugality" in the 1960s on one wage without much if anything by way of social security payments. These days, living on a single wage is out of the question for anyone at or near minimum incomes.
Raising the minimum wage to $25 or thereabouts would impact how exactly, in America? That translates to roughly 6% increase in direct costs for a retailer, and about the same for indirect costs along the supply chain. Most of that would be paid for by eliminating the automatic addition of tips to a bill. More to the point, the government shouldn't need to be subsidising underpaid employees through such things as food stamps. If a person is worth employing, he is worthy of an acceptable wage.

[seer]

Which has nothing to do with the buying power of a dollar. A family of 7 could live in "comfortable frugality" in the 1960s on one wage without much if anything by way of social security payments. These days, living on a single wage is out of the question for anyone at or near minimum incomes.

Yes back when there was little or insignificant minimum wage, which really did not have an impact until the mid 70s. So the minimum wage had no real impact back then.

Raising the minimum wage to $25 or thereabouts would impact how exactly, in America? That translates to roughly 6% increase in direct costs for a retailer, and about the same for indirect costs along the supply chain. Most of that would be paid for by eliminating the automatic addition of tips to a bill. More to the point, the government shouldn't need to be subsidising underpaid employees through such things as food stamps. If a person is worth employing, he is worthy of an acceptable wage.

Have you ever ran a business? If we had to pay our workers $25 an hour, our increase to our customers would be more like 12%. The fact is minimum wage only adds to inflation.

[tabibito]

Yes back when there was little or insignificant minimum wage, which really did not have an impact until the mid 70s. So the minimum wage had no real impact back then.

Minimum wages always have an impact proportional to their levels relative to prices.

Have you ever ran a business? If we had to pay our workers $25 an hour, our increase to our customers would be more like 12%. The fact is minimum wage only adds to inflation.

6% + 6% = 12%. The increased wages only affect that part of a business expense which is allocated for wages, plus the increased costs incurred through wage increases along the supply line. If workers are paid a decent wage, there is no excuse for automatic tips to be added to a bill. Businesses do have a habit though of more than recouping the increased costs, so the price increases might be around 16 - 20%. Of course, the blame will be slated to the workers - just the way it was in the 1970s. It is only about 10 years ago that the politicians and reporters finally got around to admitting to the "oil price shock" as the underlying cause of inflation back then, but unions "rapaciousness" still get blamed. When a business does it, it's sound business practice: when unions do it, it's rapaciousness.

It seems that you are quite content to have workers being gouged while businesses are free to maintain their profits with ever increasing prices, and the businesses are content to allow the food stamp programmes and such to make up for their parsimony. Keep wages low enough, and none of the workers will be able to buy any products and services - including yours.

People work so that they can have a decent lifestyle (or at least the hope for one), not so that their employers can have their three mansions and annual holidays overseas. And the small business owners can't stay in business without increasing their prices ... but you think employees can?

[seer]

6% + 6% = 12%. The increased wages only affect that part of a business expense which is allocated for wages, plus the increased costs incurred through wage increases along the supply line. If workers are paid a decent wage, there is no excuse for automatic tips to be added to a bill. Businesses do have a habit though of more than recouping the increased costs, so the price increases might be around 16 - 20%. Of course, the blame will be slated to the workers - just the way it was in the 1970s. It is only about 10 years ago that the politicians and reporters finally got around to admitting to the "oil price shock" as the underlying cause of inflation back then, but unions "rapaciousness" still get blamed. When a business does it, it's sound business practice: when unions do it, it's rapaciousness.

What are you talking about? It is simple, if the baker, butcher and candlestick maker have to pay their workers more the vast majority of that cost will be passed on to customers. Making it more expensive for everyone until the Baker's assistant can't afford the bread he is baking.

It seems that you are quite content to have workers being gouged while businesses are free to maintain their profits with ever increasing prices, and the businesses are content to allow the food stamp programmes and such to make up for their parsimony. Keep wages low enough, and none of the workers will be able to buy any products and services - including yours.

Really? Have less and less people, per capita, used food stamps as the minimum wage rose over the years? I doubt there is any correlation.

People work so that they can have a decent lifestyle (or at least the hope for one), not so that their employers can have their three mansions and annual holidays overseas. And the small business owners can't stay in business without increasing their prices ... but you think employees can?

Are you a Communist?

[Cow Poke]

For small businesses, one of the very few expenses they can control would be labor. When the 'dollars per hour' figure is mandated (unfunded mandate, actually) they often are forced to operate with fewer workers. In order to remain competitive, they will often be forced to do their best to operate with as few employees as they possibly can.

[Mountain Man]

That is just silly, you would only dramatically raise the cost of goods and services to the point that $50 would only barely keep up...

Minimum wage means minimum purchasing power, and that will always be case no matter how high you raise it, because the economy will immediately self correct in response to more money in the system.

[tabibito]

For small businesses, one of the very few expenses they can control would be labor. When the 'dollars per hour' figure is mandated (unfunded mandate, actually) they often are forced to operate with fewer workers. In order to remain competitive, they will often be forced to do their best to operate with as few employees as they possibly can.

When businesses are faced with rising costs, they raise prices - sound business sense - the alternative is to go broke.
When employees are faced with rising costs?
No major wage rises have occurred, yet prices are going up - so of course it is rising wages that cause inflation, it's obvious.?????????????????????????

[Chaotic Void]

For small businesses, one of the very few expenses they can control would be labor. When the 'dollars per hour' figure is mandated (unfunded mandate, actually) they often are forced to operate with fewer workers. In order to remain competitive, they will often be forced to do their best to operate with as few employees as they possibly can.

The bitter irony of the Minimum Wage is the fact that it's just one of many regulations that makes it that much harder long-term to compete with larger corporations due to all the front-loading. It's not impossible, especially if you have a dedicated niche audience like some cultural grocery stores, but in an unstable economy where you're one bad month away from shuttering the doors...

(Course, given the sexist and racist origins of the Minimum Wage, I'm surprised it hasn't been Cancelled yet. )