The minimum wage is almost always a matter of controversy. Right now, people are pushing for a $15 per hour minimum wage. Current federal law requires $7.25 per hour for non-tipped jobs, with many states having higher levels. So, why did the New York Times argue for a removal of the minimum wage altogether? Here’s their logic:
An increase in the minimum wage…would restore the purchasing power of bottom-tier wages. It would also permit a minimum-wage breadwinner to earn almost enough to keep a family of three above the official poverty line. There are catches, however. It would increase employers’ incentives to evade the law, expanding the underground economy. More important, it would increase unemployment: Raise the legal minimum price of labor above the productivity of the least skilled workers and fewer will be hired.
If a higher minimum means fewer jobs, why does it remain on the agenda of some liberals? A higher minimum would undoubtedly raise the living standard of the majority of low-wage workers who could keep their jobs. That gain, it is argued, would justify the sacrifice of the minority who became unemployable. The argument isn’t convincing. Those at greatest risk from a higher minimum would be young, poor workers, who already face formidable barriers to getting and keeping jobs.
To keep reading, click here: Why the New York Times Endorsed a $0 Minimum Wage (and You Should Too) And while I always want you to click through, I do need to note that if you don’t click through you should know anyway that this NYT quote is from 1987. That’s why it doesn’t sound like something the NYT would write.
This is a really irresponsible article. The US government themselves (in conjunction with 600+ economists) have debunked the myth that increasing minimum wage will lead to job loss. To present the NYT’s position as a “popular” one that will do more harm than good actually misrepresents the economics a great deal, and does a really good job of harming the people you claim you’re helping. Really disappointed in this one, despite generally enjoying your articles.
http://www.dol.gov/minwage/mythbuster.htm
You understand that the article was from 1987, right? A lot of people were drinking the Reagan Kool-Aid back then. However, most of the principles of Reaganomics have since been debunked — as you pointed out — and, as a result, people’s,, including the NYT’s, positions have evolved.
I’m aware that the clickbait headline is from the 1980s, yes. I’m responding to the actual content of the article, which ended with the summary “Force wages up artificially and you’ll see the elimination of the easiest jobs. That’s the last thing our economy needs.” Sounds like Suzanne didn’t get the memo that you and I did.
There is plenty of research that debunks the myth that raising the minimum wage decreases employment. A simple google search will inform you.
Raising the minimum wage does, however, help to protect the least powerful in our society from predatory practices of some less ethical employers.
Actually, the CBO admits increasing the minimum wage will likely reduce the number of people employed.
https://www.cbo.gov/publication/44995
Where I live (a higher minimum wage area), I’m increasingly seeing kiosks where I used to see employees. Movie and train tickets are sold by kiosk and many grocery stores have more self-service checkouts than human checkouts.
“I’m increasingly seeing kiosks where I used to see employees.” But that’s already been happening with incremental increases in minimum wages over the past 10 years.
Most of the time I don’t feel like engaging in this argument of “living wage V no minimum wage” because it isn’t getting to the issue. Productivity has increased phenomenally due to technology and innovation and wages have not kept up. Ideally, people would be able to work less or drop out of the workforce completely since fewer people are needed to keep productivity high. And then you start reducing materialism/consumerism/affluenza and you get into a situation where you don’t even need high productivity for the sake of high productivity. By default, our society is within striking distance of having the population work fewer hours and maintain a fair standard of living. The issue is just so far beyond the “Raise minimum wage!” soundbite.
TL;DR: Cheap, smart robots are going to take our jobs no matter what and that doesn’t have to be a bad thing.
fewer people are needed to keep productivity high
I don’t want to be one of the fewer people working. I want to be one of the dropouts. How do I arrange that?
Reduce the need to work by consuming less in order to have your money stretch further. Some people (let’s not call them dropouts though) also make their giant pile of inherited money do all of the work for them, but start by consuming less if you don’t have that pile.
I’m glad you wrote this, as your readers occasionally forget a key truth about HR: you’re not on the employees’ side.
Employers would be delighted to be able to pay low-skill workers any wage they would accept, and would no doubt employ more of them. That’s not a good thing. Unemployed people at least have the time to care for their families, pursue their education, rest, etc. People earning the lowest wages the market will bear would have neither their time nor remotely enough money to live on. (And what choice would they have but to accept these wages, really? You don’t get unemployment if you’re turning down work.)
And as the other commenters noted, this nonsense goes hand in hand with all sorts of other “pro-business” stuff that was popular in the eighties. It would soon be apparent that without strict regulation, business would exploit its labor force in every way it could. Some people have conveniently short memories.
Anyone who supports a $0 minimum wage clearly hasn’t tried supporting a family on a minimum wage job.
Excess Teen Unemployment
02/16/13 – AEI Ideas by Mark Perry [edited]
( http://www.aei-ideas.org/2013/02/
lets-review-the-adverse-effects-of-raising-the-minimum-wage-on-teenagers-when-it-increased-41-between-2007-and-2009/ )
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The minimum wage rose 41% in three stages between 2007 and 2009. This had a disastrous effect on teenagers. The jobless rate for ages 16-19 increased from about 16% to more than 26% (10 percentage points). The overall US jobless rate also increased from about 5% to 10%.
The graph attempts to isolate the effect on teenagers by plotting “excess teen unemployment” the difference between the teenage and overall jobless rates.
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See the graph at the link. Excess teen unemployment closely traced increases in the minimum wage. Teens are a measurable segment of all people of low experience, knowledge, and productivity.
Nearly all economic models predict that the higher minimum wage reduces teenage employment, even beyond what you would expect in a recession
WSJ: “Studies confirm that when teens work during summer months or after school they have higher lifetime earnings than those who don’t work. Raising the minimum wage may inadvertently reduce lifetime earnings.”
Defenders of the minimum wage say it accomplishes a social good without much harm. They are wrong. The worst effect applies to people of low ability who may never earn more. They are thrown out of work or receive fewer non-wage benefits and accomodations until inflation lowers the real burden of the minimum wage.
Proposals to index the minimum wage to inflation would permanently unemploy people of low ability or who now benefit from non-wage accomodations to their lower productivity.
Both teens with good prospects and adults with poor skills are visibly damaged by a minimum wage, which reduces their ability to work and learn.
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The US Dept of Labor is part of our currently quite socialist government. Our Government promotes a minimum wage as a campaign goody, regardless of its effect. The effect has been minimal and bad, but it shows that its heart is good and it deserves votes.
The Dept of Labor refers to a letter signed by 600 economists wanting a higher minimum wage, but only $10.10 an hour. Some opposing research finds that 72% of polled economists see the minimum wage as bad. Yeah, they are probably all evil capitalists out to squeeze the little guy (sarc). On the other hand, the government is full of selfless politicians who would have been Mother Theresa, except the government is a place that can help more.
The opposing study:
( http://www.telegram.com/article/20151129/OPINION/151129162 )
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Minimum wage proponents can’t rebut a University of New Hampshire survey finding that 72 percent of U.S.-based economists oppose a $15 minimum wage, so they’ve desperately tried to change the subject. Sunday’s letter to the editor by Timothy Dada is a good example of this tactic. He falsely states that the Employment Policies Institute (EPI), which commissioned the survey, is a “front group” that “lobbies for restaurant, hotel, alcohol beverage and tobacco companies.”
Dada apparently couldn’t be troubled to check his facts. EPI is a research-focused nonprofit with a board of scholars of nationally renowned economists, as well as a 25-year history of studying how public policy affects employment opportunities. No one at EPI is a registered lobbyist, and EPI receives no support from the hotel, alcohol or tobacco industries
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Wow, a lot of hate for HR Lady on this one.
From wikipedia – In 2013, a diverse group of economics experts was surveyed on their view of the minimum wage’s impact on employment. 34% of respondents agreed with the statement, “Raising the federal minimum wage to $9 per hour would make it noticeably harder for low-skilled workers to find employment.” 32% disagreed and the remaining respondents were uncertain or had no opinion on the question.
Suzanne’s comments that she wouldn’t have a maid clean for her if the minimum wage were to greatly increase make a lot of sense. Therefore a higher minimum wage might result in less money for the maid, if Suzanne was representative of the maid’s typical clients.
If I own a business, especially a small one, I do not have extra money for wages. I cannot increase my revenues just by wishing. (Or at gunpoint – I do not have the power to tax.)
So let’s assume that the budget for wages is fixed. If I have to pay a higher hourly rate, that means I can employ fewer people or I have to reduce the hours I give to my existing employees. This is not a difficult concept.
You really should get the power to tax. You’re slacking off.
🙂
Here’s the thing: You’re not *supposed* to be supporting a family on a minimum wage job. If someone is trying to do that, this is a red flag that something is wrong. They will not be helped by raising the minimum wage. Exactly the opposite will occur.
The people who work at Mickey D’s and deliver pizzas are: 1) Teenagers. They don’t have a family to support, as a rule, 2) College students age 18-early twenties. They don’t have a family to support, as a rule, and 3) Retirees supplementing their retirement or just keeping busy. They already raised their families. Those were the vast bulk of my colleagues when I bussed tables.
The small minority of my colleagues? Adults not in school. Half of this tiny group wanted out of debt, or to save for something, or had some other issue, and this was their second job. The other half: Had to work because the governor signed a law saying it was the only way to get welfare benefits. They didn’t know how to work, and had to learn.
It is that final group that who get hurt the most by this notion of paying $15 an hour for labor that could literally be done by a teenager**. If an adult who is not in school, has a family to support and the only job he can get is a minimum wage job, it’s because he doesn’t have any skills or education. Remember that for decades kids have been told to go to college so they don’t have to flip burgers? So what happens to the adults who didn’t go to school? Who didn’t get any vocational education? Right.
Wouldn’t it be nice if they could have a second chance to get back on the ladder? Wouldn’t it be terrible to price them out of the employment market? Being unskilled or uneducated doesn’t make these people bad. It’s not a character flaw. It just means they don’t bring as much to the table as employees.
I suspect those of you screaming to raise the minimum wage would pay a CPA more money to help you with your taxes than you’d pay your neighbor’s 13-year-old to mow your lawn. Think about why. Just think about it.
Now, suppose the kid’s 35-year-old’s father wanted to mow your lawn, are you going to pay him more money than you’d pay his kid? If he asked for more money on the grounds that he’s 35, wouldn’t you just look to another 13-year-old? Everyone else would. And if you couldn’t find another teenager on your street, you could 1) get some other kid another street over (outsourcing!) or, 2) forego hiring anyone at all.
But suppose the father offered to not only mow your lawn, but also fertilize and regrade it? And also pave your driveway and plant hedge rows and trimmed your trees? That’s a higher skillset, right? He’d be worth more in that case, right? The son can’t do all of that, and certainly not nearly as well as the father. It would be common sense to pay the father more in that instance.
But you’re insisting that we should pay the boy for mowing the lawn the same amount you’d pay the father for landscaping. You’re also insisting that we should pay his father landscaping money even if he doesn’t know how to landscape and can only mow the lawn. You’re ignoring that those terms make both the father and his kid unemployable.
If you wouldn’t pay a teenager landscaping money for simple lawn mowing, why would you insist a company should do so? Because they’re “greedy” or “mean” for making exactly the same choice you would make? Are there other spheres of life where you would demand paying top dollar for a task that a kid could do?
**You’re also harming the teenagers, as people won’t be so willing to hire a 15-year-old if she has to be paid $15 an hour. But people don’t seem to care that it’s better to have kids learn a work ethic before they have to pay rent and support a family.
Also, we have this crazy notion that it’s okay to charge someone tuition to learn a skill and put together a whole student loan thing to support this, but it’s not okay to pay someone a small amount to learn a skill.
It’s completely illogical.
That was my number one frustration when I left college to get more tuition money. I first went to a private college that didn’t offer scholarships, and I used loans, work study, and internships to pay for tuition and expenses. Since I knew reporters have low starting salaries I refused to let my loans get within shouting distance of my expected salary.
I left school for a bit to work full time. I wanted to do more internships, but you had to be a current student to get them, which meant I couldn’t get more reporting experience while I was only working. For journalism that made no sense at all; it’s one of those fields where everything you need to know is best learned on the job.
But those were the rules, so I just transferred to a cheaper school where they threw scholarship money at me left and right. Annoying, but at least I’m not drowning in student loans.
I once watched “Dragon: The Bruce Lee Story,” and I was deeply envious that he could go to college for $400. That’s one trend I wish would come back. That, and an end to credentialism. If we stop making everyone get a degree to do jobs that don’t truly need a degree I bet unemployment would go down real quick.
The $15 minimum wage is for New York City, I believe, where the cost of living is much higher than where I live in Missouri. Sure, we could probably use a raise here too, but it won’t be $15 across the whole country.
What I’d like to see come to an end is payday loan sharks and those awful rent-to-own shops. Those are a total scam, and the latter prey on people who have a hard time saving or don’t understand the terms.
Economist Robert Murphy below discusses minimum wages in detail. It is worth a careful read.
The people employed at the old and minimum wage mostly will not be the same people. If an employer must hire at a minimum of $10.10/hr, he will hire more productive people. A later review may show that “the number of jobs at the minimum wage” has changed little, but the prior people are now unemployed, forgotten, and economically injured.
http://www.econlib dot org/library/Columns/y2014/Murphyminimumwage.html
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[edited] There is a second, and independent, problem: Raising the minimum wage might represent a drastic harm to the most vulnerable and desperate workers if the specific employees who would be working for $10.10 an hour are different from those who would be working for $7.25 an hour.
What could happen is that the higher wage would attract new workers into the labor pool, allowing firms to become pickier and, thus, to overlook the least-productive workers, who would remain unemployed or lose their jobs to more highly skilled workers.
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The increase from $7.25 to $10.10 per hour is 39%. An employer would need 39% more productivity to profitably employ the more expensive worker. But, say the employer can only get 25% more productivity at that higher wage. The employer will immediately fire the previous low-wage workers and hire the high-productivity workers available at the higher wage. The employer suffers 39% higher wages at only 25% higher productivity, but it is the best he can do. His product price will go up and he will sell less. He will go out of business if he can’t sell enough at the higher price.
A politically biased study could report in all truth: The results are in. Employment has changed little, employee efficiency has gone up, and the average store has been able to raise prices for their work. Employers should thank the new law for pushing them to a better mode of operation.
Here is a way for anyone to thiink about the minimum wage. Say the government decided that your profession is underpaid. A new law requires that you receive 30% more in pay from your current employer or any other employer who hires you within your area of expertise.
Would you be happy with this help? People around you would congratulate you about your good luck. Actually, you would be rationally worried about being fired and not hired again in your profession. Employers would work hard to replace your skills with a combination of other jobs, and there would be immediate competition from people with more experience or higher degrees.
That is effectively what a low-wage worker would face. Ironically, they only think about what they would make if their wage went up in their current job. They don’t think about being replaced.
Wow. Ok. In places where minimum wage has been enforced, employment has not dropped. That is a verifiable fact. Also, when I was sixteen I once worked a 13 hour shift at a major burger chain and came away with £40 for my trouble. It’s irrelevant that I didn’t have a family to support. It was still wrong – and justifying that by saying that I could have looked for something better is ridiculous. I was sixteen. I was supporting myself through my a-levels. I still had to wash my uniform and study and oh – be on my feet for 13 hours with minimal breaks because the other option was unemployment. Supporting that situation is immoral.
And it is vile, absolutely vile, to suggest that low skilled people should have to work long hours for below survival wages. People who hold this view are essentially saying it’s ok for people to starve if they lack advantages.
Adults who hold jobs in retail / food service contribute to the economy and perform an important job. They are human beings. Judging what you perceive to be the ‘bad choices’ that have led them there is ignorant. I’m lucky enough to be in a better job because I was able to get a-levels, then go to university. Of course I had familial support, no serious illnesses and had the expectation that I would do well. Not everyone has that. I am sick to death of people who grew u with every advantage judging, belittling and condemning to poverty people who didn’t.
How many people do you employ, Helen? I’m happy to hear that they are all being paid high wages.
None. I work for a small business. In my experience, small businesses pay as much as they can afford – which is fine. As I suspect you know, I was specifically talking about national and multinational corporations who can afford to pay a living wage and choose not to. Interestingly though, whenever a wealthy, privileged person is trying to defend treating less privileged people badly, they do tend to make an emotional appeal; suggesting we want to bankrupt small businesses, (who in the UK at least, are exempt from most living wage / pension / benefit laws) rather than the real targets. Asda (Walmart), McDonald’s and Burger King are all compelled to pay minimum wage in the UK. Shockingly, it didn’t bankrupt them.
Many large companies support things like high minimum wages precisely because they know they can afford them and they know that their competitors cannot. So, they use gov’t regulation as a means to destroy competitors. It’s not at all about helping the low income people. It’s about maintaining their own power.
You got paid 40 pounds to flip burgers for 13 hours? So? When I was 12 I once spent all day picking string beans in the hot sun. This is a task kids have been doing ever since humans walked upright. The farm paid me five dollars for it. I was annoyed. My parents laughed. “You’ll be sure to go to college, won’t you?”
Can you spot the point in there? If you know more you get paid more. If you can do complex tasks you get paid more. The more difficult it is to do the task, and the more specialized the knowledge required … the more you get paid.
Do you know why you were able to get a job flipping burgers when you were 16? Because it would have been illegal to hire you to do it when you were eight, give or take the age you attained the height to stand over the stove. Yes, that’s right, an eight year-old can cook. That’s the age kids in my generation could be trusted to cook light meals. I am 37.
Did you notice that a lot of small businesses are family businesses? Did you notice that, particularly if the owners are immigrants, their children are stocking the shelves and running the cash registers and taking the orders and bringing the food out? What does that tell you? When their kids get older and leave, how much do you think you can convince the owner to pay an adult to do something they know their ten-year-old did? Right. Exactly.
That’s why the janitor or the busser doesn’t get paid that highly: Literally any able-bodied person could do the job. If you had studied economics in high school — or ever went shopping in your life — you’d know that something that’s common costs less than something that’s rare. It’s not a conspiracy of The Man to keep you down. It’s a rule all humans instinctively agree with. All humans — including you, if you’d calm down and think about it.
You aren’t being evil when you don’t pay for the Mini Cooper the same money you’d pay for the Rolls Royce. You have correctly judged the value difference of the products being sold. You’re not saying that the Mini Cooper salesman is an unworthy human compared to the Rolls salesman. He’s just not offering you a product of equal value. You know that. Even if you had Rolls Royce money — like a multinational company — you wouldn’t pay it for Cooper. That would be dumb. You know that. Now apply this same bit of common sense to employment.
How much would you pay a 10-year-old to compose a business letter for you? Nothing? Is it because you’re evil? Or is it because you need someone who has acquired a vocabulary, grammar and composition skill that you don’t have at 10 but should have by the time you graduate high school? Hey, that knowledge, we call that education, right? Do you think that’s why as an 18-year-old secretary I got paid more than I did as a 17-year-old busser?
You interpret the pay difference as evil because you’re actively refusing to understand the value of work or money. Salaries are not a referendum on the value of a life, they’re an observation of the value of the task at hand and the knowledge and skill required to do them.
You want to know what is immoral? Consigning poor people to permanent unemployment just because you have an emotional belief that everyone should get paid a lot, regardless of what they can do. You know very well that at 16 you weren’t bringing anything to the table but a warm body. That’s why you stayed in school. If someone didn’t stay in school, or didn’t learn a trade, they’re not able to bring anything more to the table at 30 than you did at 16. It is not moral to “help” them by making sure they’re too expensive to hire.
By the way — do you think after the burger place it helped you with your next employer that you could demonstrate that you showed up on time, got along with customers***, and did as you were told? That’s the true value of minimum wage jobs. Do you think it might be especially vital for an adult high school drop out to demonstrate those very qualities? Wouldn’t it be terrible if they never got the chance because you ‘helped’ them by locking them out of a minimum wage job?
***Based on the manners you’ve displayed here I seriously doubt your interpersonal skills, but I’ll pretend its possible you possess them.
I used to babysit for a family with 6 kids (they later went on to have 14!). I’d make $10 on a Saturday, watching 6 kids for 12 hours. The oldest kid was 7. I thought I was rich, because $10!
I’m so happy about this lively discussion! I better find some more controversial topics to write about.
Make another one about obesity and working life. No more contentious topics than that!
I lost a lot of respect for you with this ridiculousness, HR Lady. Sorry, I’m unsubscribing.