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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsEarly Returns From Seattle's Minimum-Wage Experiment
The minimum wage arouses fierce passions among many people, and even fiercer confidence. Both sides in the minimum wage debate are completely sure that all the evidence is on their side and that the studies proffered by the other side have been debunked. If only one side or another had been debunked. But the quality of empirical evidence available is simply not that high.
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We can, however, pick up little bits of data here and there, which may, over time, amount to a reasonable approximation of its effects. And so it was with great interest that I approached a new study out of Seattle, which analyzed the effects of the citys new $15-an-hour minimum wage.
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If you can make slightly more money by working slightly fewer hours, who wouldnt take that deal? The trouble is that this is the average effect. If the cutbacks in hours worked are "lumpy" -- if some people saw big reductions, while others saw little or none -- then the people whose hours were reduced a lot could well be worse off, while the people who got the wage hikes and the same number of hours might be substantially better off. This is particularly true if one of those lumps consists of people who become unemployed entirely.
Which it seems to. According to the study, the share of those low-wage workers who were still employed after the law took effect fell by 1.2 percent. Thats not Great Depression-level unemployment by any means. And some of it could consist of people who would, say, rather be home with their kids, and who no longer need to work because their partner just got a substantial raise thanks to Seattles higher minimum wage. However: 1.2 percent is not nothing. And given that its not really all that easy to support a family on $11 an hour in Seattle, Im pretty skeptical that this represents a lot of voluntary unemployment. Theres also evidence that about 3 percent of previous workers had to look for work outside the city of Seattle.
more...
http://www.bloomberg.com/view/articles/2016-08-11/early-returns-from-seattle-s-minimum-wage-experiment
scscholar
(2,902 posts)I'm seeing a lot larger increase than the 1.2% they claim, but I work for several restaurant chains so I understand my sample bias.
Warpy
(111,352 posts)back or replaced by new hires as business increases from increased demand fueled by the minimum wage increase.
Money at the bottom always has a ripple effect and tends to increase as the ripples spread outward and upward. That's so counter intuitive that dumb people are never going to acknowledge it, but that's the reason no employer has ever called for a rollback 6 months after the increase has gone into effect.
People who can suddenly make enough money to make it worthwhile often look for more, not fewer, hours. Only a poor-hating Republican asshole thinks the opposite is true. Having new trinkets suddenly become possible to attain is a great motivator for having the Protestant Work Ethic kick in to even the most lackadaisical worker.
Yeah, it's Bloomberg. Boy are they going to be in for a shock in a few months.
msongs
(67,443 posts)LWolf
(46,179 posts)It is, though, only one factor. Raising the minimum wage is not going to solve the income problem by itself.
Data is continuously manipulated. For example, when the economy crashed and unemployment was too high, some people patted their "side" on the back when those rates began to come back down. What they didn't include in their celebratory boasts, though, was that some people fell off those rolls because they reached the end of their benefit, without ever finding a job. And, of course, as job creation was celebrated, what went under the rug was that so many of those jobs were for less pay and fewer hours, and many people had to work 2 and 3 jobs to survive.
It's routine for employers to fill jobs with part-time employees, and to make sure they work just UNDER the number of hours that they would have to be given benefits.
This was an interesting article. McArdle did point out that the findings are "necessarily limited." While she talked about the important part unemployment pays, and speculated a little about why it is a bit higher. She failed, though, to show a causal link between raising the minimum wage and a rise in unemployment.
Hortensis
(58,785 posts)wanted a hike to $15/hour when it meant that between 1.2 and 4% of jobs would disappear, what do you think the vast majority would choose?
Btw, has enough time passed for the increased money entering the local economies to reach its full potential in new or expanded businesses, or additional jobs?