Author Topic: US CBO: Minimum wage increase $15 by 2025 would result in 1.4 million lost jobs  (Read 1754 times)

rcjordan

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Debbie says that feels about right.

The report also indicates that the minimum wage hike would lift 900,000 workers out of poverty.


https://justthenews.com/nation/economy/minimum-wage-increase-15-2025-would-result-14-million-lost-jobs-says-cbo-report

ergophobe

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The minimum wage question is interesting. Traditionally, we always assumed that higher wages meant fewer jobs. Seemed obvious. But then there are all sorts of harder to measure follow-on effects, like the fact that people have more money to spend and people at the low end of the wage scale tend to spend their money locally.

There have been some "natural experiments" where, say, a region raises the minimum wage and neighboring jurisdiction does not and generally the negative effects on employment are less than is usually projected ahead of time.

And then there's the question of whether or not jobs that don't pay a living wage in the first place should even get counted. In those cases, at the very least, we should roll in the government assistance (Medicaid, food stamps, etc) those people receive to calculate the true cost of that employee. My beef with this is that we effectively subsidize cheap labor for companies rather than making them pay the actual cost of those employees.

Then there is the problem that in  SFO and NYC, $15 is in not even close to a living wage, while in some parts of the country,  a full-time job at  $12/hr might actually pay rent and food. I don't think there's anywhere where $7.25 is a living wage.

And finally... the hourly wage is just one small part of the puzzle. There's also the overtime threshold, schedule insecurity and all that that plagues low-wage workers.

Generally speaking, the US is not a good place to be low wage.

ergophobe

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Here's a couple samples of the progressive view:

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The real impact of the minimum wage, however, is much less clear than these talking points might indicate. Looking at historical experience, there is no obvious relationship between the minimum wage and unemployment: adjusted for inflation, the federal minimum was highest from 1967 through 1969, when the unemployment rate was below 4 percent—a historically low level. When economists try to tackle this question, they come up with all sorts of results. In 1994, David Card and Alan Krueger evaluated an increase in New Jersey’s minimum wage by comparing fast-food restaurants on both sides of the New Jersey-Pennsylvania border. They concluded, “Contrary to the central prediction of the textbook model ... we find no evidence that the rise in New Jersey’s minimum wage reduced employment at fast-food restaurants in the state.”
https://www.theatlantic.com/business/archive/2017/01/economism-and-the-minimum-wage/513155/

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Paul Wolfson and Dale Belman reviewed 15 years of research published since 2001—which comprised 37 studies and 739 estimates—and found that the average estimated employment effect of minimum wage increases was very small. In addition, Wolfson and Belman, as well as Isaiah Andrews and Maximilian Kasy in a new review, found statistical evidence that there is a bias toward publishing findings showing a statistically significant negative employment effect. Finally, Sylvia Allegretto, Arindrajit Dube, Michael Reich, and I found that studies using the most high-quality, credible research designs also found little to no employment effects. These findings taken together suggest that both the average study as well as the best research show that there has been little downside to raising minimum wages.

https://www.epi.org/publication/minimum-wage-testimony-feb-2019/

rcjordan

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We need to do it (probably $11 is politically palatable per Goldman Sachs) but it is going to be catastrophic to the least skilled.

What **WILL ABSOLUTELY** happen is the adaptation of robotics and AI job replacement will kick into overdrive.  The net effect, Debbie thinks, will be more along the lines of 3-4 million lost jobs within 3 years after the new minimum wage is fully in place.

Food service, drivers, & warehouse workers will be decimated.  Some of that is going to come anyway but up-ing the min wage will make it happen much, much faster. (See coal vs now cheap renewables.)

littleman

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I am not sure I completely buy the argument that $15 minimum wage is going to result in less employment.  The quickest way to stimulate the economy is to increase the earnings of the people on the bottom.  When weekly pay goes from $290 to $600 there is going to be a lot more local consumption; this in turn will put pressures on employment hours that will counter pressures to reduce labor costs.   Automation pressures are there either way, I don't think the minimum wage is going to make much difference there.

Edit: a US minimum wage map

rcjordan

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Kroger Closes 2 California Stores After City Required Them To Increase Staff Pay ($4/hr increase) : NPR
https://www.npr.org/2021/02/04/964172299/kroger-closes-2-california-stores-after-city-required-them-to-increase-staff-pay

ergophobe

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How a Minimum-Wage Increase Is Being Felt in a Low-Wage City
Is $15 an hour too much, or not enough? Fresno, Calif., may be a laboratory for a debate over the minimum wage that is heating up on the national level.

https://www.nytimes.com/2021/02/14/business/economy/minimum-wage-fresno-california.html

ergophobe

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This guy is suggesting $12 with a COLA provision built in. That seems like a good compromise
https://ritholtz.com/2021/02/minwage-solution

rcjordan

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Here's the rub with a wage mandate; Profitability.

"Unfortunately, Seattle City Council didn't consider that grocery stores—even in a pandemic—operate on razor-thin profit margins in a very competitive landscape," the statement says. Hazard pay would make it "impossible to operate a financially sustainable business."

Kroger Is Closing More Stores Over Hazard Pay Issue
https://www.newser.com/story/302683/kroger-is-closing-more-stores-over-hazard-pay-issue.html

ergophobe

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The problem with that when looking at a national wage is that you have an identical Kroger store over in Tacoma or whereever.

So if the minimum wage rises across the nation, then Kroger raises prices. People at the low end are still doing a lot better, but people who are above minimum wage (or retired on a pension and not earning wages) do worse. But the store itself doesn't necessarily go out of business. People have to buy groceries.

But when I can live in Seattle and earn $15/hr and then drive 30 minutes and shop in a district where people earn $10/hr, of course I do that.

This is one fo the reasons why Wal-Mart was long been on record as being in favor of increasing the minimum wage, but refused to do it unilaterally. Though I guess they have said they will implement a $13 minimum wage starting March 13
https://www.cnn.com/2021/02/18/investing/walmart-minimum-wage-retail/index.html

Though they oppose a $15 min wage
https://www.businessinsider.com/walmart-pay-minimum-wage-ceo-why-not-15-per-hour-2021-2

rcjordan

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>Though I guess they have said they will implement a $13 minimum wage starting March 13

Articles also say part of the impetus is to retain employees that Amz and Target have been poaching.

Wal-mart has said the pay increases will 'tailored for the region'  --lower pay for LCOL areas.


rcjordan

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>poaching

Costco raises its minimum wage above rivals like Amazon, Target and Best Buy - CNN
https://www.cnn.com/2021/02/25/business/costco-minimum-wage-workers/index.html

rcjordan

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"McKinsey finds that while the total number of jobs will increase, “nearly all net job growth over the next decade is projected to be in high-wage occupations" — which is not good news for workers with low job skills.

And there are a lot of them — a 2016 OECD report found 14% of the U.S. working-age population had low literacy skills, 23% had low numeracy skills and 62% had low digital problem-solving skills."

How the automation economy can turn human workers into robots - Axios
https://www.axios.com/ecommerce-warehouses-human-workers-automation-115783fa-49df-4129-8699-4d2d17be04c7.html

ergophobe

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Not to mention the large number of Americans who are incapable of doing physical labor either.

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In 2018, the group Mission: Readiness said in a report that 71 percent of Americans between the ages of 17 and 24 cannot meet all the basic requirements for military service. Mission: Readiness is a group of 750 retired military members that makes policy recommendations to the government.

The biggest problem is obesity. About 31 percent of young American would be rejected because they are overweight. Other problems are lack of education, criminal history and drug use.
https://learningenglish.voanews.com/a/us-military-officials-worried-are-young-americans-too-fat-/5002588.html