A testable hypothesis! The minimum wage was last increased in 2007 (from $5.15 to $7.25). I couldn’t find a good cite for burrito prices, but in 2007 a beef taco was 77 cents (easy to find because they gave a bunch away in the World Series that year). On the current menu a beef taco costs 89 cents (may vary in different markets).
According to inflation calculators I can find 77 cents in 2007 dollars is 85 cents today. So the minimum wage increase added 4 cents to the price of a crunchy taco. About a 5% increase in price in exchange for a 40% increase in the minimum wage.
In my business (I’m not the owner), we’d have to raise prices pretty significantly I would think. Such a huge hike would result in an immediate shock to consumers across the board as companies passed along the cost. I can’t see how that would be good for the economy.
But I fully support gradual increases and I agree the current minimum in most states is too low.
Because he isn’t planning on his workers becoming more efficient. If somebody only generates $9 of value per hour (after payroll taxes and other expenses), you cannot simply declare by fiat that people should only employ him if they’re willing to pay him $10 per hour. That just makes him unemployable.
So, wait, let me see if I understand you correctly. If the minimum wage were to go from 7.25 to 10/hour, you would fire one or two employees and increase your own hours by 10 a week to cover the loss.
That implies those extra 10 manhours are the deciding factor. But the suggested increase is $2.75. So in total, we’re talking about an extra $27.50 in wages a week. Are your margins that thin that that’s unacceptable?
That still doesn’t sound right to me, so I assume that you’re claiming 10 of your hours each week are equal to, what, 40-50 of your employees’ hours (assuming they’re part time)? Really? You’re that much better at the job than they are? I’ve been doing my job for so many years I can do it in my sleep, but even new hires who haven’t been here a week can keep up pretty well.
I dunno, maybe the way your business is set up it makes sense. But I do find it puzzling when the claimed immediate response to a potential rise in wages is instant layoffs. Hell, I know business owners who are making money hand over fist and in fact have too much business that their current staff is unable to support, yet tell me they don’t have room in the budget to hire someone new. At that point I have to wonder about their business management abilities or temperament regarding money.
Mind, I don’t think a jump that large in one go is wise, myself, although I would like to see a consistent COL increase in wages. I just think that immediately laying off people, or threatening to, is cutting off your nose to spite your face.
I guess I’d say I’m half-joking. But feel free to go down the list if you’d like - my feelings won’t be hurt and I might learn something. The last line (the 5% vs. 40%) was a joke, but the rest seems pretty straightforward.
But I do remember warnings of terrible inflation if we raised the minimum wage from $5 to $7. Since then inflation has been extremely low. So while I don’t really support a minimum wage hike I also don’t buy the “it’ll cause inflation” argument.
So the claim is that kayaker’s workers are worth somewhere between $7.25 and $10 an hour? I guess that’s possible. But what I don’t understand about his argument is that he’s not saying he’ll go out of business - merely that he’ll staff less. To me that implies that he can make money paying folks $10 an hour. In order to do that he’s going to work more himself (which basically means paying himself less per hour) and cut staffing (which means either his staff produces less or they become more productive).
Bosstone said it better than me, actually. I just don’t see many business making the minimum wage their primary staffing decision.
Basically my position on the minimum wage is that it has negligible effect. It gives a slightly bigger paycheck to a handful of low-wage workers, causes a minor amount of inflation, and leads to a small decrease in profits (possibly). Since the vast majority of minimum wage jobs are local (i.e. can’t be outsourced) it has almost no effect on trade. It’s a political issue, not an economic one.
A MW increase is a tax increase, thinly disguised. The one thing it has going for it is low (really low) administration costs. Not going to happen in an election year during bad economic times, but the Dems might be smart to be able to say Republicans voted against it, at least in some districts. That is, if it gets out of committee, which I doubt.
Republicans in the House will vote it down, Republicans in the Senate will filibuster. Business as usual. I doubt the Democrats even care if it passes. It’s just something for them to campaign on. Nobody in Congress gives a shit about poor or middle class people, they’re all freaking millionaires. Democracy is dead.
Now we’re getting somewhere. It’s a very focused redistributive tax. It’s a surtax on employers of large numbers of minimum wage workers and redistributes it directly to those workers. Whether you think that’s a good idea or not is largely down to your feelings about redistributive taxes as whole. Like you said, it has a few nice features - no overhead and low avoidance rates.
Only 5% of hourly workers made minimum wage or lower in 2011 (and only 60% of workers are hourly). Half of those are 25 or younger. We might also note that the percentage of hourly workers making minimum wage has fallen from 13.4% in 1979 to the quoted 5.2% in 2011. So I’m not sure I buy the argument that large numbers of workers are being crowded out by the minimum wage either.
I agree, but I support this kind of legislation. Democrats for too long have refused to propose progressive legislation, concluding it can’t be passed, so why bother. Now that they have finally realized Republicans won’t pass anything except tax cuts and spending cuts, Democrats are free to propose any kind of populist legislation they can dream up, and force the Republicans to vote against it. Then they can use it against them in the fall. Since it will never pass, there really is no downside for Democrats, and it makes Republicans look like the Grinch who killed Santa. If Republicans are going to use politics to manipulate the voters, Democrats would be damn fools no too as well. I am all for it.
Calling Minimum Wage a tax is silly. It’s a price control. Price controls are always loved by the sellers and hated by the buyers. In this case, the sellers are unskilled workers, who have little or no ability to influence Congress.
The proof is in this thread. Any attempt to quantify the effect of minimum wage on the economy is silly. It’s a minor factor that can’t be seperated from factors that have far more effect.
Not really. It can generally be passed along to consumers, since everyone is affected the same by it. McDonalds and Burger King probably have very similar labor costs.
It’s a tax paid for by consumers, mostly.
I don’t know about that. Economists have models they can use for this sort of thing. If the increase is large enough, it can be estimated.
And I hope no one is advocating doing something for which we don’t know the cost, or at least that we can’t take a stab at…
yep. Thin margins, plus certain specifics create a situation where my time is worth about 5 times that of a minimum wage employee. Don’t wanna get into specifics, but for my situation an increase in minimum wage of 2.75 tomorrow would have those effects. I currently employee 3 minimum wage employees and 5 at a higher wage/salary. I’d lay off 2 minimum wage folks. A big part of this has to do with location specific factors.
It’s a cost, not a tax. It’s paid to the business not the government. We have plenty of price controls and anti-competitive regulations in effect, and those aren’t taxes. You could extend the concept of costs as taxes to say that all costs are taxes and only pure economic socialism is the solution.
I’m no fan of price controls, so I’m only disagreeing with the use of the term ‘tax’ for a ‘price control’. I think it’s a generally bad idea, but necessarily in this case. Especially since it’s all hypothetical and won’t happen. I’d certainly disagree with the idea of a minimum wage increase during the current low growth economic state.
I’m not aware of economic models of that sort that are very accurate. Of course an estimate could be made, but what happens is that several conflicting estimates will be made. If enough of them are made, one of them may hit the mark, but we have no way of knowing which one that will be.
You have to count all the workers who earn less than $10/hour. Of my company’s approximately 93,000 employees, about 68,000 make less than $10/hour. The average is $7.99. So the proposed hike would cost us an average of $2.01 per hour for each of those employees.
If the average workweek for those employees is 20 hours, thats 20 * $2.01 * 68,000 = $2.7 million per week. And that’s not even taking into consideration all the other hourly workers making $10-$12/hour who will also want a commensurate raise.
Yes, we could. And we could also not make statements like that in the first place.
No, it’s paid to the workers. How do you get that minimum wage increases are a payment to business? It functions as a tax which is paid directly to the workers, and like any tax it suppresses demand for the thing that that has been taxed. In this case, low skill work.
