# House Dems propose raising minimum wage from $7.25/hr to $10 **URL:** \ **Category:** Great Debates\ **Created:** [June 7, 2012, 4:58pm UTC](https://boards.straightdope.com/t/house-dems-propose-raising-minimum-wage-from-7-25-hr-to-10/624401 "2012-06-07T16:58:50Z")\ **Posts on this page:** 9\ **Page:** 11
**Author:** ![Evil\_Economist](https://avatars.discourse-cdn.com/v4/letter/e/c89c15/32.png) [@Evil\_Economist](https://boards.straightdope.com/u/Evil_Economist)\ **Post date:** [June 14, 2012, 4:44am UTC](https://boards.straightdope.com/t/house-dems-propose-raising-minimum-wage-from-7-25-hr-to-10/624401/201 "2012-06-14T04:44:09Z")
> [@John\_Mace](#): > > Well, the wikipedia article contains plenty of info that disputes that study, which oddly enough you didn’t quote in your response to **XT**. Yeah, you should have reviewed your cite before you posted it; your own quotes say that you’re wrong. \*\*YOU \*\*posted the following: > [@](#): > > “On the other hand, an assessment of data collected and analyzed by David Neumark and William Wascher did not initially contradict the Card/Krueger results,[63] but in a later edited version they found that the same general sample set did increase unemployment. The 18.8% wage hike resulted in “[statistically] insignificant—although almost always negative” employment effects.[64]” Do you know what statistically insignificant means? It means that you should have done a better job of cherry-picking your cites. > [@](#): > > So, rather than Card being the consensus among economists, as you seem to be implying, there are plenty of economists, even some with Nobel Prizes, who disagree with the results. Having actually read the papers, and not just the wiki page (or book abstracts), I’m much more impressed by the quality of the studies that have found no impact of minimum wage increases on unemployment. Also, the wiki page doesn’t mention it, but the studies you quoted in “support” of your position were conducted by economists with controversial ties to lobbyist groups that were opposed to the minimum wage. And they conducted their studies in a controversial manner (it’s late, but tomorrow I’ll find detail of this). But yeah, the data is tricky to analyze, and that leads to controversy. Basically the impact is so small that that after 25 years of detailed studies, no one is precisely sure what the correct answer is…and that should probably cause all honest people to conclude that increasing the minimum wage to $10 probably isn’t going to destroy the economy. ---
**Author:** ![flickster](https://avatars.discourse-cdn.com/v4/letter/f/7bcc69/32.png) [@flickster](https://boards.straightdope.com/u/flickster)\ **Post date:** [June 14, 2012, 4:51am UTC](https://boards.straightdope.com/t/house-dems-propose-raising-minimum-wage-from-7-25-hr-to-10/624401/202 "2012-06-14T04:51:09Z")
> [@Evil\_Economist](#): > > Allow me to demonstrate: suppose there are two islands. On one island the workers negotiate wages individually, and as a result the average wage is, say, $1/hour. On the other island the workers band together into a union and negotiate collectively, and as a result the average wage is, say, $10/hour. The work performed is the same. What bothers me here is no attempt at completing the business cycle of these two competitive islands, producing the same product, but with vastly different overhead labor and payroll tax cost structures. Those differences carry through to the finished product pricing. If both islands produce equal quality goods, but one is charging substantially higher prices for their goods, then gasp, all the orders are placed for the cheaper, but equally good products. The $10 union rate may have been grand, although short lived because that island is now out of business. ---
**Author:** ![Joey\_P](https://avatars.discourse-cdn.com/v4/letter/j/919ad9/32.png) [@Joey\_P](https://boards.straightdope.com/u/Joey_P)\ **Post date:** [June 14, 2012, 5:12am UTC](https://boards.straightdope.com/t/house-dems-propose-raising-minimum-wage-from-7-25-hr-to-10/624401/203 "2012-06-14T05:12:08Z")
> [@tomcar](#): > > So let’s say this out loud - AS A BUSINESS MAN, I DON’T WANT WORKERS MAKING MORE MONEY, SO I CAN HAVE MORE FRUITS OF THEIR LABOR. > Business men can NEVER have any moral authority in any argument because it is an exploitive situation. I’ll agree that’s essentially what it comes down too, but it’s not just what we pay employees, it’s also me spending hours on the phone keeping my insurance rates down, getting my credit card processing rates reduced, negotiating deals with vendors, turning off the lights when we shut down for the day, learning how to fix the walk in coolers and freezers so we don’t have to pay the HVAC company to do it for us. Does that make us selfish business people too? The minimum wage thing, like most political stuff is a balance, some fight to raise it, some fight to keep it where it is and they meet in the middle somewhere. Don’t forget (as was alluded to earlier) without people pushing for wage laws we’d still have 12 year olds getting pulled out of school working for almost nothing and 30 year old that don’t know better working for a few dollars a day. I really don’t have a problem with minimum wage laws. Also, let’s not forget, there’s nothing stopping people from opening their own business. My father finished high school, bought some property and opened his store. Worked 80 hours a week for the first 10 years or so, dumped a lot of his own money, time, sweat and life (until I was 9 or 10 I only saw him once a week when he made a point of coming home for dinner, then it was right back to work) into it and got lucky that the place didn’t go under. Now it’s doing ok, hardly rags to riches, but he’s not struggling to eat either. Anyways, as the owner, he should have every right to make money and yes, part of saving/making money gets into payroll. I should mention that I think we pay our employees very fairly and what employees get paid is sort of self competitive since an employee (especially at a grocery store type place) can, at any time, just walk out and go find another job that pays more if they can get it. If you hear that the store down the block pays $0.50 more then you’re getting paid, take it. If we start losing employees to that store and can’t find help, we’ll start people at that wage also. But just to get back to the quoted thing for a second, how is saying “AS A BUSINESS MAN, I DON’T WANT WORKERS MAKING MORE MONEY, SO I CAN HAVE MORE FRUITS OF THEIR LABOR.” any different from saying, for example “as a business man, I don’t want to pay for your lawn mowing service anymore, I the business owner, am going to do it myself from now on” Would that make the business owner a terrible person. He’s trying to save money by taking care of his own landscaping around the store to keep some money in the store (and keep prices down for the consumer) but at the same time he just made life harder for the landscaping company. Do the same thing for anything else the business owner tries to save money on. Fixing their own HVAC equipment? We do that, but it means the HVAC company is paying an employee to sit around the shop doing nothing. We turn off the lights at night, but the electric company still has spinning generators and a maintenance staff to pay for, we call our credit card/insurance/[misc other] company to get our rates reduced but they still provide the same service to us and still have the same overhead. We do these things to save YOU the consumer money. Yes, it saves us money and fattens the bottom line as well, but keeping prices down really and truly is the first priority for us…(lower prices will increase volume and bring in customers blah blah blah). Do these things make us horrible people? Should we just continue to pay high prices for everything in the name of being nice guys because that’s just not how it works. Keep in mind, all these services…they all have employees that have to get paid as well. If it’s an exploitative situation then you really shouldn’t ever step foot in a business again because the customer and their money is the driving force behind _everything_ that a business does. What you want is a business that does everything normally, but pays their employees more, right? But how much more, how much is fair? Who decides that? Is ‘fair’ more then the other employers? Is ‘fair’ more then minimum wage? Is ‘fair’ more then they’re worth as an employee? How can an employer do this and stay in business? Where will this extra money come from and how will it work, in order to pay them more I’ll _really_ have to scale back on other things or raise my prices a ton. If I raise my prices people won’t shop at my store, if I scale back on other things, other people in other industries will have lay off their workers and then you’ll be mad at me. After COGS, payroll is far and away our biggest expense. It’s the single biggest thing (again, after COGS) that we can take active control over to make a dent in our bottom line. This is the case for most businesses and why hiking minimum wage is such a big deal. ---
**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:** [June 14, 2012, 5:55am UTC](https://boards.straightdope.com/t/house-dems-propose-raising-minimum-wage-from-7-25-hr-to-10/624401/204 "2012-06-14T05:55:42Z")
> [@Evil\_Economist](#): > > Yeah, you should have reviewed your cite before you posted it; your own quotes say that you’re wrong. \*\*YOU \*\*posted the following: > > Do you know what statistically insignificant means? It means that you should have done a better job of cherry-picking your cites. Yes, I do, Do you? I’m not cherry picking any cites. I’m just quoting the parts of your cites that you accidentally left out. > [@](#): > > Having actually read the papers, and not just the wiki page (or book abstracts), I’m much more impressed by the quality of the studies that have found no impact of minimum wage increases on unemployment. Also, the wiki page doesn’t mention it, but the studies you quoted in “support” of your position were conducted by economists with controversial ties to lobbyist groups that were opposed to the minimum wage. And they conducted their studies in a controversial manner (it’s late, but tomorrow I’ll find detail of this). > > But yeah, the data is tricky to analyze, and that leads to controversy. Basically the impact is so small that that after 25 years of detailed studies, no one is precisely sure what the correct answer is…and that should probably cause all honest people to conclude that increasing the minimum wage to $10 probably isn’t going to destroy the economy. Just wait a cotton pichin minute here. You are the one who cited Card as a definitive study. If you want to retract that, then go ahead. But don’t pretend that now you’ve suddenly had some qualms about whether that study is definitive or not. ---
**Author:** ![Mosier](https://avatars.discourse-cdn.com/v4/letter/m/7ea924/32.png) [@Mosier](https://boards.straightdope.com/u/Mosier)\ **Post date:** [June 14, 2012, 8:08am UTC](https://boards.straightdope.com/t/house-dems-propose-raising-minimum-wage-from-7-25-hr-to-10/624401/205 "2012-06-14T08:08:06Z")
> [@XT](#): > > Let’s assume that’s true for a moment. Why don’t companies do this themselves if it’s this cut and dried? I mean, why wait for the government to impose higher minimum wage rates on them, when they could just raise their rates themselves and profit. Right? Do you have any cites that companies believe that raising their wages for their lower level employees (hell, for all ranges, since it should work across the board, right?) will profit them? > > Who said anything about supply side economics? 😕 And who said rich people don’t spend (and more importantly invest) money?? I can see the correlation you are putting forth here (i.e. only poor people spend money, while rich people don’t and, presumably, middle class people do…something in between I guess), but no one has mentioned supply side economics in this thread that I know of. > > -XT No, I don’t have cites that companies believe paying higher wages increases their profits. The reason is that for individual companies, it’s not true. When consumers _in general_ have more money, demand is stimulated and employment increases. This requires either a cooperative effort by all employers of minimum-wage workers, or government intervention. I’m sure you can see why one is more likely than the other. If just one company raises their wages, it does not give consumers in general more money, just a few individuals. I mentioned supply side economics to contrast with the above reasoning, as it’s pretty much coming from the opposite school of thought. Supply siders think giving business owners more money stimulates job growth, but the amount of money a business owner has has nothing to do with whether he’s hiring or not. Smart business owners will not hire unless there is unmet demand for their product or service. Giving business owners money does not create demand, but giving consumers money does. ---
**Author:** ![Mijin](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mijin/32/9369_2.png) [@Mijin](https://boards.straightdope.com/u/Mijin)\ **Post date:** [June 14, 2012, 10:50am UTC](https://boards.straightdope.com/t/house-dems-propose-raising-minimum-wage-from-7-25-hr-to-10/624401/206 "2012-06-14T10:50:41Z")
This is going right back to page 1, but sorry I got here late… > [@AndyLee](#): > > The problem I see is the fact that it will only serve to condense all jobs and make some look less valuable. > > For instance, I worked part time at a store, where I made $10.25 an hour. That’s $2.00 more than the current Illinois minimum wage of $8.25. > > No suppose they up the minimum wage to $10.00. That mens the people doing $8.25 an hour jobs, such as sweeping and cleaning will now make almost as much as the office people or check out people. > > If that went in effect, when I had that job I would’ve said, “I don’t want to do the clerical stuff and deal with customer, I’d rather vacuum and sweep.” It actually is less bother. I doubt that many people would do this. The reason that cleaning jobs and the like pay less isn’t because they are perceived as easier (or desirable). It is because there is a reasonable proportion of people out there with no qualifications and/or a criminal record that have difficulty finding any other kind of job. Most people would prefer the higher-status job even if it paid the same as the cleaner. ---
**Author:** ![Evil\_Economist](https://avatars.discourse-cdn.com/v4/letter/e/c89c15/32.png) [@Evil\_Economist](https://boards.straightdope.com/u/Evil_Economist)\ **Post date:** [June 14, 2012, 2:55pm UTC](https://boards.straightdope.com/t/house-dems-propose-raising-minimum-wage-from-7-25-hr-to-10/624401/207 "2012-06-14T14:55:04Z")
> [@John\_Mace](#): > > Yes, I do, Do you? I’m not cherry picking any cites. I’m just quoting the parts of your cites that you accidentally left out. Yeah, I also accidently forgot about 10,000 other words from the wiki page that also supported my argument. Luckily, it’s right there for anyone who wants to read it. > [@](#): > > Just wait a cotton pichin minute here. You are the one who cited Card as a definitive study. If you want to retract that, then go ahead. But don’t pretend that now you’ve suddenly had some qualms about whether that study is definitive or not. You mean, the Card study that found no statistical increase in unemployment from increases in minimum wage? Yeah, that’s my position; here’s my quote: > [@Evil\_Economist](#): > > I can think of a couple of full-blown peer-reviewed economics studies that showed either a positive increase in employment or no negative impact in employment from increases in minimum wages. > . . . > Anyway, my point is, when you say “Unemployment is very high right now. Do you really want to do something that will likely make it higher?” you should probably come up with some sort of cite for your claim that it will make unemployment higher. and what I said about the Card study: > [@](#): > > Krueger and Card did a half-dozen of these studies. They later amended their results to show no impact on unemployment from the increases in minimum wage (down from the decreases in unemployment shown in the initial study), but this is still a classic. Seems to me that the debate I thought we were having was me saying that increasing the minimum wage wouldn’t increase unemployment, and you saying the opposite. If you are if fact agreeing that increasing the minimum wage will result in: > [@](#): > > [statistically] insignificant … employment effects Then we have reached a consesus, and no further debate is necessary. ---
**Author:** ![Fiddle\_Peghead](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fiddle_peghead/32/3506_2.png) [@Fiddle\_Peghead](https://boards.straightdope.com/u/Fiddle_Peghead)\ **Post date:** [June 14, 2012, 6:18pm UTC](https://boards.straightdope.com/t/house-dems-propose-raising-minimum-wage-from-7-25-hr-to-10/624401/208 "2012-06-14T18:18:54Z")
> [@Joey\_P](#): > > I haven’t read the whole thread yet (which I will when I have a few minutes) but just to toss some real numbers in here. I just went though this weeks payroll for my business. Bringing all my employees who are currently under $10 up to $10 an hour would have added about $290. Without taking taxes into consideration, I would need to bring in an extra (about) $880 each week to recover that working on the average grocery store profit margin (about 33%). > > With a small business and only about 10-12 employees, suddenly needing to bring in an extra $125 a day just to maintain status quo is a big deal. This also (as I said above) doesn’t cover taxes, it doesn’t cover higher workers comp and it doesn’t cover the raises that we give to our employees that have been with us for a few years that suddenly turn into minimum wage workers. > > Raising it a smaller amount over the next few years would make more sense. Otherwise small business that can’t absorb it or spread the price increases out over a larger product base and make them less noticible end up haveing to get rid of an employee. In order for a me to make up that $290 I could either bring in an extra $880 a week (which may mean longer or harder hours and more wages) or I could axe an employee and spread everyone a bit thinner (or not axe an employee but just reduce everyone’s hours to save money). If an increase in the minimum wage were to lead directly to some businesses having to close up shop, I would be sympathetic, but it would not necessarily mean I think such an increase would be the wrong thing to do. I believe a minimum wage is a good thing and of course there is no constitutional right to a successful business in this country. As for incremental changes in the MW, I could go along with that, assuming the current rate isn’t so low that people are being greatly exploited. I suspect however that they are. ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [June 16, 2012, 12:45pm UTC](https://boards.straightdope.com/t/house-dems-propose-raising-minimum-wage-from-7-25-hr-to-10/624401/209 "2012-06-16T12:45:29Z")
Ball State University did a 2008 study regarding the effects of higher wages and unemployment. The result was a decrease in employment. [PDF file](http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CHAQFjAA&url=http%3A%2F%2Fcms.bsu.edu%2FAcademics%2FCentersandInstitutes%2FBBR%2F~%2Fmedia%2FC3FEAB4B5EBE4F29AFE004F9BE88A773.ashx&ei=G3_cT_i5PObW2gX30tnXDQ&usg=AFQjCNGH59oriXyc7wHlcf2UlOzGgkySQw) [Previous page](https://boards.straightdope.com/t/house-dems-propose-raising-minimum-wage-from-7-25-hr-to-10/624401.md?page=10)