[QUOTE=rogerbox]
I’m not saying Seatac on its own will be a slam dunk, but I find it interesting before it’s even enacted, conservatives making excuses for why their gloom and doom predictions wont come to pass…almost as if they didn’t believe them in the first place, and only promote those views because they are pro business profits above all else.
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Tell you what. When they enact it for the whole state (even a state that itself is a place people are willing to pay a premium to live and work in) and the unemployment rate stays the same or goes down (I assume that’s your prediction) and businesses either remain or perhaps flock to the new Mecca of the country since no skill workers make $15/hour, THEN you will have something to discuss. It’s not excuses to point out that this is a limited area with a captive audience who probably are willing to pay a premium for goods and services in that limited area, and thus can justify paying workers with no skills $15/hour. Hell, I wouldn’t be surprised if you’d have to pay more than the Federal minimum wage to get workers there, since I’ve lived in Seattle and it’s an extremely expensive place to live in.
If the MW in my town was raised and merchants responded by bumping up prices, customers would just suck it up and deal for the most part. No one comparison shops their McDonald’s hamburgers. Few people are willing to get on the interstate and travel to a grocery store just to save $3.00 when they have a perfectly good grocery store right in their neighborhood.
The city of Richmond has an annoying meals tax that the surrounding counties don’t have. Everyone complains about it yet that doesn’t stop people from packing their favorite diner, sushi bar, and sports grille. Every day there’s a new restaurant springing up to an adoring crowd. People will pay whatever you tell them to pay if they don’t want to be inconvenienced.
Up to a point, anyway. And, actually, that’s an interesting followup - at what MW level does it get to be a significant burden? Where do people on either side of the debate estimate that point based on their math (if they’re basing their arguments on economics and not on philosophical grounds)?
[QUOTE=monstro]
Isn’t any city a “captive market” then?
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No. Can’t see how that would be. Some cities are definitely premium markets. People are willing to pay a premium (in the cost of living, services, goods, etc) to live there. But not all cities are the same or are premium markets. And it’s not a one time good deal…take Detroit as a prime example. At one time it was a premium market. But it’s not exactly the same today.
It’s all about the every day price for goods and services verse what you get out of living and working there. Again, some cities or even states are premium markets. People are willing to pay out the nose to live in, say, Washington state because, well, it’s a beautiful place to live and work in, with great location, good infrastructure and all the perks. Idaho…not so much. And this isn’t even an entire large city, but basically the environs in and around an airport (right? I’m going from memory here), where you have basically a captive audience. If you are traveling to and from that area (or just making a connecting flight) you haven’t got much of a choice. And if everything is really expensive, well, it’s only a trip and you are hungry, or thirsty, or need a rental car…and there aren’t any alternatives. Sort of like going to the movie and being willing, for that event, to pay freaking $25 for popcorn, some sodas and maybe a hot dog. Normally you’d (at least I’d) go somewhere else for them, but since you are at the movie already and all…
And Virginia itself has high taxes (lived in Northern Virginia as well). However, again, it’s a premium location, with high paying jobs, location and great scenery. Try doing that same thing in other cities or states that are less of a premium location and see how that works out with folks willing to pay through the nose to stay there.
There are many factors that need to be considered in a special case like this. For example:
**
What’s the current prevailing wage? What percentage of workers are currently under the new minimum, and by how much?**
If the vast majority of workers already earn more than $15/hr, the impact of the law will be minimal, and may just be an example of cost-free political grandstanding. If not, then…
Of the jobs that are currently under minimum wage, how elastic is the demand for their services, and what are the replacement costs of the workers?
For example, if the people we’re talking about are baggage handlers at the airport, and they aren’t easily replaced or reduced in number, then their higher wages could be paid through a new airport tax. The costs then get transferred to passengers in a very non-transparent way so we can’t easily disentangle its effects from other economic effects. For example, if the number of flights goes down next year, how do we tell what was responsible?
If the wages are those of people who work in retail establishments inside the airport, we could see either a price increase for products, or the airport could respond by subsidizing the stores through a rent decrease, and again pass along the cost in an airport tax.
On the other hand, if the jobs are in a sector that is considered a non-essential service that is already struggling to find a profitable market share, I would expect that sector to shrink and for job losses to occur. If there are jobs that are easily replaced through automation or alternative services, we would eventually see job losses but it would take a fairly long time, and again it would be hard to disambiguate those losses from other economic factors.
The most insidious negative effect could be that high minimum wages reduce the number of new start-up businesses because the initial costs are too high, and this type of effect can be very damaging but impossible to know, since we don’t have a control group. Or maybe we do - maybe someone will do a study on the dynamism of markets around large airports and correlate things like startup activity with prevailing wages.
What other specific measure in the bill are likely to have an effect?
I love this: Unions are exempted from the provisions of the new bill. Hey, I thought unions were supposed to be about higher wages and better benefits? So why did they demand a carve-out here? Gee, you’d almost think this bill was drafted to protect the unions from labor competition. You can read this almost like a protection racket: “Aww, High minimum wages killing your business? Guess you need your people to join our union…”
And what do you know? This bill was heavily funded by unions, and they’re exempt from it. Now why would they spend so much money on a bill that doesn’t affect them? Oh, I know!
Tony Soprano would be proud.
Anyway, so how does that affect the jobs situation? If all it does is turn a whole bunch of non-union shops into union shops so they can avoid the new regulations, it won’t have much effect other than to keep the union bosses farting through silk for a few more years.
Apparently this is an old trick, and there are similar union exemptions to minimum wage laws at LAX, in San Fransisco and Washington DC.
I’m surprised this hasn’t been challenged in court on equal protection grounds.
In any event, none of this will tell us much about the effect of minimum wage laws in general as airports are already heavily regulated, subsidized, have a relatively captive market and the power to raise bonds and levy taxes. These means they have a lot of power to shape the market and offload the costs to others in relatively obscure ways.
What we might see is the ‘donut hole’ effect that occurs when taxpayers fund large stadiums by raising taxes on businesses in the area around the stadium. It winds up being a wealth transfer to the stadium owners from everyone else and business activity declines and jobs are lost in the immediate surroundings. But that depends on a whole bunch of factors we don’t yet know.
That’s interesting, Sam. I’m wondering if one of our resident lawyers could translate this into English (the actual part of the bill that gives the waiver):
As has been pointed out, Seatac is an island unto itself and has the distinction of a captive audience. It’s not a realistic option to open up another airport nearby.
Now given that airport rents are usually pretty high then changes to labor costs can have a negative effect on the number of businesses that can afford to operate there. I use to be in the air transport business and we did route aircraft to cheaper locations if they were available. Those costs differences could be landing fees, fuel, labor or whatever fuck-you tax the city owning the airport wanted to charge.
Basically, baggage handlers and the like are being regulated by the Railway Labor Act of 1926. Under it, they can’t unionise in just one city; they have to do it across the country. While this ‘makes sense for pilots or flight attendants’, it doesn’t work so well for city-specific support workers.
The Service Employees International Union (SEIU) contends that the Federal law doesn’t apply because a strike by baggage handlers and airplane cleaners isn’t going to significantly disrupt the entire airline system. Menzies Aviation says that since these workers are part of the airline system – even though they are local and not national employees – they are subject to the Railway Labor Act of 1926.
Since it’s virtually impossible for the workers to form a collective bargaining unit, and since companies are not, out of the goodness of their hearts, going to pay them a reasonable wage for the area, the only option left was to put the issue to a vote to mandate a minimum wage for them.
How convenient for “conservatives”. If it works well, it’s only due to “countless other economic factors”. If it doesn’t work, they can gleefully yell “I told ya so”.
In re the above question, I have rarely, if ever known a true conservative to rethink anything, or to admit they may have been wrong. Even in the face of massive evidence to the contrary.
Quote: rogerbox
But it* is *the the basic “reasoning” behind most conservative talking points.
SS
Hey, how did that stimulus work out? How come the Obama administration’s promises of its effects were so far off the markl? I sure hope you’re not going to blame ‘other economic factors’.
And let me guess how you define a “true conservative”. It’s one who fits that description. If someone rethinks anything, then they’re not a “true conservative”, right? Aye, laddie.
The problem is that you can’t do a controlled experiment. There is no way to know what would have happened to employment if the wage increase had not passed. So there is no way to know how precisely employment has been affected. Moreover, since the number of jobs affected is only 6,000 it could effect 50% of those jobs and there would be no way to measure that at the state level. Furthermore the effects of the minimum wage are usually felt most by the reduction in job growth(pdf). Unfortunately, there is no way to measure jobs not created.
I can confidently predict that job growth at Seatac will now be lowered than it would be otherwise had this not passed. This is because demand responds to price. In almost every market, the more something is priced the less of it is sold. This is why ford sells over twice as many cars every year as mercedes even though their cars are not as good. This is why McDonalds sells billions of crappy hamburgers even though Kobe beef tastes alot better.
If you raise the price of labor, people will buy less of it. This is basic economics.
If 15 dollars is a good wage, why not 30 dollars, and if 30 dollars is better, why not 100 dollars? Yet, no one would support a 100 dollar minimum wage law. That is because even though they say that price does matter, they know at certain margins it does. But why is 15$ the magic number where the marginal price of labor no longer matters? Is there any evidence of this?
The truth is that there are always marginal buyers of labor. There may be more of them at certain prices.
To show your wisdom and open mindedness to supporters of minimum wage, here are a couple of questions.
Name other markets where prices do not affect quantity demanded.
What is the magic number where a minimum wage would start to affect employment?
I predict that those with a marginal labor product below $15 an hour will be unable to find jobs on the books. This will cause unemployment to increase for lower skilled workers, mostly represented by younger workers. Businesses will not hire for a position that produces less than the wage paid and stay in business in the long run.
I’d agree that anyone who predicts gloom and doom from modest increases in the minimum wage is being silly. The truth is that very few people earn minimum wage in this country, so the issue doesn’t affect very many people. For the great majority of workers, the free market leads to a wage higher than minimum regardless of the law.
As a side note, the page I just linked to has a graph of inflation-adjusted federal minimum wage data. The all-time high is just above $8 per hour, so the current rate is not far below that.
There’s a bit of a selection bias there. I am ex-conservative/libertarian, and fully believed that Clinton’s tax increases would ruin the economy (in fairness to me, I was a teenager.) Continually mis-predicting based on ideology turned me into something more like a moderate/liberal.
When people have money to spend, they spend it and increase profits to the sellers. This is also basic economics.
Because $15/hour is good and $30 or $100 per hour aren’t. Your argument is like saying ‘It has been shown that one alcoholic drink per day is beneficial. So why isn’t five bottles of alcohol per day better?’
You don’t think part of the reason for current sustained high unemployment is due to minimum wage laws and other government-related employment costs? Now, I added that last part, but you can’t ignore it when talking about employment and unemployment. If you own a small business and consider hiring someone, you not only consider the base wage, you also consider unemployment insurance, FICA, payroll administration, benefits, etc. The true cost of hiring an employee is far higher than the base pay.
Frankly, I can’t believe anyone would seriously ask such a question as the OP. If MW laws are beneficial or desirable, then why not have a $30 MW, or a $60 MW? If you take the argument to that extreme, it is perfectly obvious why a MW law is a distortion of the free market, and why it results in employment losses. Setting the MW at $10 is largely irrelevant in most markets, as most entry level jobs already pay about that or more (at least after a brief introductory period). If a business pays less than $10, they are consciously deciding that frequent employee turnover, retraining and accepting the weakest of all employees is adequate for the tasks at hand.
Yes, it has; in an earlier thread. People need a minimum income to simply live. In the Seattle area, that has been shown to be more than $12/hour. In that other thread I suggested that $15/hour might be too generous. However, it’s close enough to the minimum living wage that a reasonable person would conclude that it is ‘good’. Certainly, anyone making $15/hour in such a job will contribute more to the economy than someone making less than the minimum rate required to stay alive.