{"id":852,"date":"2013-09-10T19:00:00","date_gmt":"2013-09-10T19:00:00","guid":{"rendered":"http:\/\/admin.patheos.com\/blogs\/janetheactuary\/2013\/09\/a-15-minimum-wage-thinking-through-the-consequences.html"},"modified":"2013-09-10T19:00:00","modified_gmt":"2013-09-10T19:00:00","slug":"a-15-minimum-wage-thinking-through-the-consequences","status":"publish","type":"post","link":"https:\/\/www.patheos.com\/blogs\/janetheactuary\/2013\/09\/a-15-minimum-wage-thinking-through-the-consequences.html","title":{"rendered":"A $15 minimum wage? Thinking through the consequences"},"content":{"rendered":"\n<\/head>

Look, I\u2019m not an economist.\u00a0 I don\u2019t even play one on TV.\u00a0 But I wanted to set down my 2 cents on the whole \u201craise the minimum wage\u201d project, to try to work a few things out in my head, as a sort of rough draft.<\/p>\n

Near as I can figure, the pro-minimum wage hike contingent has two main arguments:<\/p>\n

1)\u00a0 a minimum wage hike won\u2019t do any harm because increases in the wage will increase worker productivity, and<\/p>\n

2)\u00a0to the extent that a\u00a0minimum wage hike may threaten to be inflationary or impact a company\u2019s bottom line, they can always fund it by taking pay away from the CEO and the other overpaid top executives.<\/p>\n

As to the first, they cite\u00a0a couple cherry-picked\u00a0studies indicating that, when a state raised its minimum wage, it didn\u2019t affect unemployment.\u00a0 Now, I\u2019ll readily admit that I don\u2019t have the time to read through the studies in depth, figure out whether these are legitimate or whether there are other issues that mask an unemployment effect, and lay out my analysis.\u00a0 It seems likely that, if unemployment in a given time period and labor market was low, and the market wage for unskilled labor was already above the minimum wage, so that relatively few people received the minimum wage, it would have a modest impact.\u00a0 <\/p>\n

In a \u201ctypical\u201d economic environment, the argument that higher minimum wages produce greater unemployment goes like this:\u00a0 a certain number of employees are doing manual tasks that could be automated, and if the minimum wage rises too much, then the employer will invest in automation equipment.\u00a0 Another contingent are doing tasks which are somewhat optional \u2014 tasks which provide a higher level of service to the customer but aren\u2019t so valued as to be worth a higher cost.\u00a0 And another group of workers are doing work which, at a higher pay rate, the customer will decline entirely \u2014 a maid or lawn-mowing service, for instance.<\/p>\n

So I suppose here, too, if many of these low-value, labor-intensive services had already been pared down in a given area, there might not be that much to give.\u00a0 Consider the disappearance of the full-service gas station.\u00a0 (Well, nearly so \u2014 New Jersey and Oregon still require gas stations to have attendants to pump gas; funnily enough, these are two of the states that pop up in these minimum wage studies.\u00a0 Interestingly enough, in my google search to find which states do still require attendants, I came across an article reporting that some congressional candidate in Delaware wanted to mandate this nationwide, as a jobs-creation device<\/a>.)\u00a0 Or the fact that, nearly everywhere, pop in fast food restaurants has become self-serve.\u00a0 <\/p>\n

But one thing I haven\u2019t seen in these studies is an analysis of whether minimum wage hikes have an inflationary effect on the local economy.\u00a0 <\/p>\n

In any case, the pro-minimum wage hike rationale claims that, with a higher minimum wage comes less turnover and more employee stability \u2014 cited here, for instance,<\/a> at raisetheminimumwage.com, but their examples are increases in the minimum wage for a given industry or specific employers or a specific city \u2014 not for an entire metro area, that is \u2014 so that it would seem most reasonable to assume that the higher wage is attracting a better class of employee.\u00a0 <\/p>\n

In order to argue that a higher minimum wage across the board improves worker productivity, you\u2019d really have to argue that the low wage produces stresses in the workers\u2019 lives which are alleviated by the higher wage.<\/p>\n

But one thing that\u2019s not been discussed in the articles I\u2019ve read is what I\u2019ll call \u201cwage compression\u201d \u2014 even though, based on a quick search, the term actually means something else (though what it does mean isn\u2019t entirely clear).\u00a0 What I mean is that if the minimum wage were indeed raised to $15 per hour, all those people who scraped their way to $15 \/ hour wages by learning new skills or taking on additional responsibilities or proving themselves to be trustworthy and reliable at their job, would feel pretty disgruntled at only being paid \u201cminimum wage\u201d and the same as the guy next to them who drags his feet and is one more\u00a0unauthorized smoking break\u00a0away from being fired.\u00a0 <\/p>\n

If we assume that these folks\u2019 pay goes up as well, then we\u2019ve got inflation, prices go up, and we\u2019re back where we started (or we\u2019ve got a never-ending cycle if the wage is indexed to inflation).\u00a0 And there\u2019s a limit to the automation that\u2019d be available to an employer.<\/p>\n

It\u2019s not credible to assume a Lake Wobegone effect, that all the new $15 an hour workers will be above-average.<\/p>\n

Imagine this situation persists.\u00a0 It seems to me that a system in which a worker can get by with minimal effort, and sees no reward for additional effort, isn\u2019t viable.<\/p>\n

(Thanks to anyone who\u2019s stayed with me through the whole post \u2014 I\u2019ll try to shape this into something more coherent another day.)<\/p>\n<\/body><\/html>\n","protected":false},"excerpt":{"rendered":"

Look, I\u2019m not an economist.\u00a0 I don\u2019t even play one on TV.\u00a0 But I wanted to set down my 2 cents on the whole \u201craise the minimum wage\u201d project, to try to work a few things out in my head, as a sort of rough draft. Near as I can figure, the pro-minimum wage hike […]<\/p>\n","protected":false},"author":2209,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-852","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"\nA $15 minimum wage? 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