# Fallout from higher minimum wage **URL:** \ **Category:** Great Debates\ **Created:** [July 25, 2015, 8:42pm UTC](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182 "2015-07-25T20:42:47Z")\ **Posts on this page:** 20\ **Page:** 13
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [August 18, 2015, 12:10pm UTC](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182/241 "2015-08-18T12:10:22Z")
> [@Robert163](#): > > Which debate do you want to have? Hypothetical debates about widgets or real life discussions that involve Facts? I am only interested in the second. As others have mentioned, you need to read and understand your own cites if you want to have a real life discussion. [Here](http://www.nber.org/papers/w20619), for instance, is some commentary on the cite you found. > [@](#): > > In recent research, Dube et al. (2010) and Allegretto et al. (2011) argue that past U.S. research is flawed because it does not restrict comparison areas to those that are geographically proximate and fails to control for changes in low-skill labor markets that are correlated with minimum wage increases. They argue that using “local controls” establishes that higher minimum wages do not reduce employment of less-skilled workers. In Neumark et al. (2014), we present evidence that their methods fail to isolate more reliable identifying information and lead to incorrect conclusions. Moreover, for subsets of treatment groups where the identifying variation they use is supported by the data, the evidence is consistent with past findings of disemployment effects. The Congressional Budget Office is generally considered a bit less partisan than Berkley, and they say - > [@](#): > > Increasing the minimum wage would have two principal effects on low-wage workers. Most of them would receive higher pay that would increase their family’s income, and some of those families would see their income rise above the federal poverty threshold. But some jobs for low-wage workers would probably be eliminated, the income of most workers who became jobless would fall substantially, and the share of low-wage workers who were employed would probably fall slightly. [Cite](https://www.cbo.gov/publication/44995). Most of the research that shows little or no impact on employment is probably affected by the fact that increases in the MW do not happen in a vacuum. > [@](#): > > David Neumark is an economist who has researched the issue and believes raising the minimum wage reduces employment for the lowest skilled workers. He noted, though, that the economy has grown over the long term, resulting in job growth in all wage and skill levels. > > “The causes of growth, and the business cycle as well, completely swamp (increases to) the minimum wage,” said Neumark, director of the Center for Economics and Public Policy at the University of California Irvine. > [@](#): > > The last three federal minimum wage increases (2007, 2008 and 2009) were followed by significant job losses, but that was all taking place amidst the global financial crisis. And the minimum wage increases in the 1990s that preceded job growth happened during an economic boom. [Cite](http://www.politifact.com/truth-o-meter/statements/2014/nov/06/ben-cardin/does-raising-minimum-wage-result-job-growth/). Regards, Shodan ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [August 18, 2015, 1:13pm UTC](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182/242 "2015-08-18T13:13:27Z")
> [@msmith537](#): > > I love it when well off people suggest poor people just work twice as many hours. I do too, because I took the advice and benefited from it. I’m grateful that I had the opportunity. Not everyone does, especially due to recent scheduling trends. You simply can’t put in six 12-hour days when you’ve got scheduled-yesterday split shifts a 50 minute bus-ride apart. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [August 18, 2015, 1:22pm UTC](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182/243 "2015-08-18T13:22:13Z")
> [@msmith537](#): > > I love it when well off people suggest poor people just work twice as many hours. No one suggested that, so you’ll have to love that somewhere else, I guess! ---
**Author:** ![andros](https://avatars.discourse-cdn.com/v4/letter/a/e480ec/32.png) [@andros](https://boards.straightdope.com/u/andros)\ **Post date:** [August 18, 2015, 1:52pm UTC](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182/244 "2015-08-18T13:52:04Z")
> [@John\_Mace](#): > > No one suggested that, so you’ll have to love that somewhere else, I guess! Help me out: it looked to me like that’s precisely what **Ruken** was suggesting. Wha’d I miss? ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [August 18, 2015, 1:59pm UTC](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182/245 "2015-08-18T13:59:36Z")
> [@andros](#): > > Help me out: it looked to me like that’s precisely what **Ruken** was suggesting. Wha’d I miss? I was suggesting that MW workers are not limited to $15k annual income. Again, most MW workers are not living in poverty. If our intention is to help poor people, there are more direct methods. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [August 18, 2015, 2:22pm UTC](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182/246 "2015-08-18T14:22:33Z")
> [@andros](#): > > Help me out: it looked to me like that’s precisely what **Ruken** was suggesting. Wha’d I miss? Since when does “healthy, young” = “poor”? Alternatively, point to the part of “Working two jobs will boost this. Any healthy young person can put in 70 hours. Finding the work with compatible schedules is challenging.” where the poster mentions “poor”? ---
**Author:** ![andros](https://avatars.discourse-cdn.com/v4/letter/a/e480ec/32.png) [@andros](https://boards.straightdope.com/u/andros)\ **Post date:** [August 18, 2015, 3:17pm UTC](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182/247 "2015-08-18T15:17:25Z")
Gotcha. Thanks, gents. With respect, **Ruken** , it did sound a bit cavalier. Given that half of minimum wage employees are over 25 per the BLS, we’re not really just talking about young people. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [August 18, 2015, 3:36pm UTC](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182/248 "2015-08-18T15:36:34Z")
Hey now, I’m still young ☹ But yes, they’re not all kids; and they’re getting older. ---
**Author:** ![Robert163](https://avatars.discourse-cdn.com/v4/letter/r/4af34b/32.png) [@Robert163](https://boards.straightdope.com/u/Robert163)\ **Post date:** [August 18, 2015, 3:37pm UTC](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182/249 "2015-08-18T15:37:42Z")
> [@Shodan](#): > > As others have mentioned, you need to read and understand your own cites if you want to have a real life discussion. > > [Here](http://www.nber.org/papers/w20619), for instance, is some commentary on the cite you found. > > The Congressional Budget Office is generally considered a bit less partisan than Berkley, and they say - > [Cite](https://www.cbo.gov/publication/44995). > > Most of the research that shows little or no impact on employment is probably affected by the fact that increases in the MW do not happen in a vacuum. > > [Cite](http://www.politifact.com/truth-o-meter/statements/2014/nov/06/ben-cardin/does-raising-minimum-wage-result-job-growth/). > > Regards, > Shodan I’m not going to pretend nor attempt to read a bunch of financial journals I am not going to comprehend. If you want to try and put it in layman’s terms, somewhere between a widget and _Ed \< 0_ or _linearity of elasticity_ I will be glad to respond with my opinion or reaction. As it stands now it seems to be nothing more than Journal A says 1234 and Journal B strongly disagrees with some of the findings. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [August 18, 2015, 3:40pm UTC](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182/250 "2015-08-18T15:40:54Z")
If we were starting from scratch, I’d be agains the MW. As it is, it’s not going away so let’s just deal with it. As I’ve said before, one thing it has going for it is very low administrative costs. So, let’s set it and index it to inflation and be done with it. I don’t think a Federal MW is of much use, since it really has to be set at the lowest level. Works OK for Mississippi but not so much for Massachusetts or California. But states can set it higher. ---
**Author:** ![andros](https://avatars.discourse-cdn.com/v4/letter/a/e480ec/32.png) [@andros](https://boards.straightdope.com/u/andros)\ **Post date:** [August 18, 2015, 3:46pm UTC](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182/251 "2015-08-18T15:46:53Z")
> [@Ruken](#): > > Hey now, I’m still young ☹ Of course you are, Gramps. 😃 ---
**Author:** ![Bone](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bone/32/407_2.png) [@Bone](https://boards.straightdope.com/u/Bone)\ **Post date:** [August 18, 2015, 3:52pm UTC](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182/252 "2015-08-18T15:52:58Z")
> [@Robert163](#): > > I’m not going to pretend nor attempt to read a bunch of financial journals I am not going to comprehend. If you want to try and put it in layman’s terms, somewhere between a widget and _Ed \< 0_ or _linearity of elasticity_ I will be glad to respond with my opinion or reaction. As it stands now it seems to be nothing more than Journal A says 1234 and Journal B strongly disagrees with some of the findings. Are you saying you only want to engage at a level that doesn’t reduce your ignorance? Surprise, the world behaves differently than can be explained in layman’s terms! ---
**Author:** ![pbbth](https://avatars.discourse-cdn.com/v4/letter/p/f9ae1b/32.png) [@pbbth](https://boards.straightdope.com/u/pbbth)\ **Post date:** [August 18, 2015, 4:10pm UTC](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182/253 "2015-08-18T16:10:23Z")
> [@Shodan](#): > > I have a business, and I want to hire someone to make widgets. The average worker can produce 11 widgets an hour, and widgets cost $1 apiece. So I can hire someone at $10 an hour and make a profit. > > Now a law is passed that minimum wage is $12 an hour. Guess how many people I will hire? > > Regards, > Shodan Really, your first thought as an entrepreneur is that you can hire no one and will have to go out of business? I see multiple options here: 1.) You raise the cost of widgets to $1.15. 2.) You innovate and change the process of assembling widgets so that the average worker can now assemble 30 widgets an hour. You employ half the number of people but those people all make 15 an hour. 3.) You find a cheaper supply for the production of widgets, lowering the cost per unit to .90. 4.) You find a way to address some wasteful spending elsewhere in the company - you switch to a different brand of office supplies, you change phone or internet providers to lower that bill, you change the thermostat setting up or down a degree and install automatic lights so you aren’t paying for wasted electricity, etc. to make up the difference. 5.) You design a “luxury widget” (you add stripes to your normal, stripeless widget) and sell them for $1.75. It isn’t really any different than the others so it costs no more to make but increases your profit margin significantly. That is just off the top of my head. Any of these options, or a combination of them, would more than make up for the extra cost of labor and they don’t even begin to mention the potential of a reduced tax rate (both as a business and an individual) because the government now has reduced food stamp, TANF, welfare, section 8, and other need based expenditures because some of the people receiving them are now making enough to come off of those programs. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [August 18, 2015, 4:12pm UTC](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182/254 "2015-08-18T16:12:51Z")
> [@Robert163](#): > > I’m not going to pretend nor attempt to read a bunch of financial journals I am not going to comprehend. If you want to try and put it in layman’s terms, somewhere between a widget and _Ed \< 0_ or _linearity of elasticity_ I will be glad to respond with my opinion or reaction. If you don’t read your cites, and you won’t read my cites, and you don’t like my simplified example, then it’s hard to see how your opinion or reaction is something that we can debate. All other things being equal, raising the MW will increase income for those who are already working, providing their employer can or will accept increased labor costs. The people who get hurt are the ones who get fired, or who don’t get hired, because their employer cannot or will not accept the increased cost of their labor. Do you understand that? Regards, Shodan ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [August 18, 2015, 4:15pm UTC](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182/255 "2015-08-18T16:15:39Z")
> [@John\_Mace](#): > > So, let’s set it and index it to inflation and be done with it. Seconded. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [August 18, 2015, 4:27pm UTC](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182/256 "2015-08-18T16:27:48Z")
> [@pbbth](#): > > Really, your first thought as an entrepreneur is that you can hire no one and will have to go out of business? I see multiple options here: > > 1.) You raise the cost of widgets to $1.15. > 2.) You innovate and change the process of assembling widgets so that the average worker can now assemble 30 widgets an hour. You employ half the number of people but those people all make 15 an hour. 3.) You find a cheaper supply for the production of widgets, lowering the cost per unit to .90. > 4.) You find a way to address some wasteful spending elsewhere in the company - you switch to a different brand of office supplies, you change phone or internet providers to lower that bill, you change the thermostat setting up or down a degree and install automatic lights so you aren’t paying for wasted electricity, etc. to make up the difference. > 5.) You design a “luxury widget” (you add stripes to your normal, stripeless widget) and sell them for $1.75. It isn’t really any different than the others so it costs no more to make but increases your profit margin significantly. As has been pointed out, I would have done all those things already, in order to maximize profit - no sense in waiting for the government to put on the squeeze. Of course, there is another option - move the business to China or Mexico. Kind of sucks for my US workers, but after we cut expenses to the bone, and nobody bought our striped widgets, what choice was there? > [@](#): > > That is just off the top of my head. Any of these options, or a combination of them, would more than make up for the extra cost of labor and they don’t even begin to mention the potential of a reduced tax rate (both as a business and an individual) because the government now has reduced food stamp, TANF, welfare, section 8, and other need based expenditures because some of the people receiving them are now making enough to come off of those programs. Didn’t read the OP, did you? They mentioned people who wanted reduced hours so they would not come off these programs. Also, could you please run the figures and show how many people need to come off welfare before the government can cut taxes due to the reduced welfare rolls? Thanks in advance. Regards, Shodan ---
**Author:** ![running\_coach](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/running_coach/32/15836_2.png) [@running\_coach](https://boards.straightdope.com/u/running_coach)\ **Post date:** [August 18, 2015, 4:31pm UTC](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182/257 "2015-08-18T16:31:57Z")
> [@pbbth](#): > > That is just off the top of my head. Any of these options, or a combination of them, would more than make up for the extra cost of labor and they don’t even begin to mention the potential of a reduced tax rate (both as a business and an individual) because the government now has reduced food stamp, TANF, welfare, section 8, and other need based expenditures because some of the people receiving them are now making enough to come off of those programs. Actually, the whole problem with the scenario is that labor costs take every penny made. There’s no money for rent/mortgage, office supplies, utilities and so on. Not very realistic. ---
**Author:** ![Robert163](https://avatars.discourse-cdn.com/v4/letter/r/4af34b/32.png) [@Robert163](https://boards.straightdope.com/u/Robert163)\ **Post date:** [August 18, 2015, 5:39pm UTC](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182/258 "2015-08-18T17:39:49Z")
> [@Bone](#): > > Are you saying you only want to engage at a level that doesn’t reduce your ignorance? Surprise, the world behaves differently than can be explained in layman’s terms! No, I’m saying I’m not going to pretend to understand complex terms that I don’t actually understand. ---
**Author:** ![pbbth](https://avatars.discourse-cdn.com/v4/letter/p/f9ae1b/32.png) [@pbbth](https://boards.straightdope.com/u/pbbth)\ **Post date:** [August 18, 2015, 6:14pm UTC](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182/259 "2015-08-18T18:14:18Z")
> [@Shodan](#): > > As has been pointed out, I would have done all those things already, in order to maximize profit - no sense in waiting for the government to put on the squeeze. > > Of course, there is another option - move the business to China or Mexico. Kind of sucks for my US workers, but after we cut expenses to the bone, and nobody bought our striped widgets, what choice was there? > Didn’t read the OP, did you? They mentioned people who wanted reduced hours so they would not come off these programs. Also, could you please run the figures and show how many people need to come off welfare before the government can cut taxes due to the reduced welfare rolls? Thanks in advance. > > Regards, > Shodan You’ve already done all of these things to maximize profit. No other way for you to make so much as one thin dime of additional money? Then you have nowhere to go as a business but down as inflation eats up your profit and you will go out of business. And sure, you can move facilities to another country, but if you have already done everything to maximize your profit surely you’ve done that long ago too, right? Why would you leave the jobs here if there is so much more profit in moving them? This sort of thing reads like blackmail. “Let me pay my workers the lowest possible amount even if it isn’t a livable wage or I’ll take my ball and go elsewhere!” And as other companies are finding moving all the jobs overseas now means huge swaths of the country don’t have enough money to buy widgets the way they used to and the ones that do are pissed off because any time they have a problem with their widget they can’t understand the widget support person trying to help them on the other line. [A quick google search](http://www.bing.com/news/search?q=companies+bringing+back+jobs+from+overseas&FORM=HDRSC6) will show you that there are lots of companies bringing jobs back from overseas because they’ve found that the quality of work is lower, the customers making use of the services are unsatisfied, etc. And I did read the OP. I understand the problem they are having with people not wanting to come off of welfare rolls, but I’m not talking about the people who have most of their household income coming from government assistance. That will require a staggered approach to reducing benefits so earning 28k a year doesn’t cost you 34k in benefits. What I am talking about is people who are on only food stamps, or only food stamps and TANF, those people who have two working adults in a household who each go from 30 hours a week at $9 to 30 hours a week at $12 no longer require those benefits. I am talking about the people on the waiting list for section 8 housing no longer needing to wait for that benefit so taking that future expenditure off of the books. I don’t have any numbers handy, but I just felt like your example of your business that is going to be utterly destroyed was the most nonsensical thing I’ve seen posted in a long time and that you might need to see some alternative options to offshoring or sobbing into your hands while the bank hangs a big cartoon “bankrupt” sign outside of your widget factory. I would bet good money that if someone posted a thread about how their rent is going up $100 a month and they can’t afford it so they will obviously be homeless soon you would respond with perhaps finding a different apartment or getting rid of cable TV or other things that might help them meet their needs so they can continue having a place to live instead of sleeping on a park bench so why is a business any different? ---
**Author:** ![inscrutable](https://avatars.discourse-cdn.com/v4/letter/i/a88e4f/32.png) [@inscrutable](https://boards.straightdope.com/u/inscrutable)\ **Post date:** [August 18, 2015, 7:01pm UTC](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182/260 "2015-08-18T19:01:02Z")
People earning 28K get benefits? Damn, the “poor” must be living better than I ever have, and 100% of their income is disposable! Sucks to be a responsible tax-payer saving for retirement… [Previous page](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182.md?page=12) [Next page](https://boards.straightdope.com/t/fallout-from-higher-minimum-wage/726182.md?page=14)