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Thread: $15 minimum wage

  1. #1
    All Worship Ragnarök Loki's Avatar
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    Default $15 minimum wage

    LOS ANGELES — The nation’s second-largest city voted Tuesday to increase its minimum wage from $9 an hour to $15 an hour by 2020, in what is perhaps the most significant victory so far for labor groups and their allies who are engaged in a national push to raise the minimum wage.

    The increase, which the City Council passed in a 14-to-1 vote, comes as workers across the country are rallying for higher wages and several large companies, including Facebook and Walmart, have moved to raise their lowest wages. Several other cities, including San Francisco, Chicago, Seattle and Oakland, Calif., have already approved increases, and dozens more are considering doing the same. In 2014, a number of Republican-leaning states like Alaska and South Dakota also raised their state-level minimum wages by ballot initiative.

    The effect is likely to be particularly strong in Los Angeles, where, according to some estimates, almost 50 percent of the city’s work force earns less than $15 an hour. Under the plan approved Tuesday, the minimum wage will rise over five years...
    http://www.nytimes.com/2015/05/20/us...5-an-hour.html

    It looks like the GGTs of the world got their wish, at least in LA. If the goal of this bill is to discourage people from getting a college education (after all, an entry-level white collar job will now pay as much as a job in McDonald's), mission accomplished. If the goal is to double the unemployment rate amongst the unskilled, this will be a great success. If the goal is massive capital flight, LA is going to be an American trailblazer. I really hope that this gets implemented as is (instead of being watered down) just so we can see how far a city can fall from stupidity.
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  2. #2
    Senior Member GGT's Avatar
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    What is the goal?

    It's bullshit to pose this as anti-education, anti-employment, or even capital flight.

    Tsk, you could have started a better discussion by addressing the TPP....
    Last edited by GGT; 05-20-2015 at 04:09 AM.

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    Well since its a phased approach you won't see too many bad things right away. But yes minimum wage increases leads to job losses. I also anticipate a lot more trashy parking lots.

  4. #4
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    Quote Originally Posted by Lewkowski View Post
    ... But yes minimum wage increases leads to job losses.
    Prove it.
    .

  5. #5
    All Worship Ragnarök Loki's Avatar
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    Quote Originally Posted by Lewkowski View Post
    Well since its a phased approach you won't see too many bad things right away. But yes minimum wage increases leads to job losses. I also anticipate a lot more trashy parking lots.
    It should have an immediate effect on the willingness of businesses to expand/invest new capital.
    Hope is the denial of reality

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    Nah I don't think so Loki.. businesses don't think that far ahead.

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    Quote Originally Posted by Being View Post
    Prove it.
    http://www.usatoday.com/story/news/p...-jobs/5582779/

    "WASHINGTON — President Obama's call to raise the federal minimum wage could help lift 900,000 workers out of poverty, but at a cost of as many as 500,000 jobs, according to an analysis released today by the non-partisan Congressional Budget Office."

    Or you could also look at something as simple as LOGIC. Just think about it for a bit on why jobs might decrease if minimum wage is increased - just think about it, don't look anything up just consider the impact of labor costs going up for unskilled work.

  8. #8
    Quote Originally Posted by Loki View Post
    It looks like the GGTs of the world got their wish, at least in LA. If the goal of this bill is to discourage people from getting a college education (after all, an entry-level white collar job will now pay as much as a job in McDonald's), mission accomplished. If the goal is to double the unemployment rate amongst the unskilled, this will be a great success. If the goal is massive capital flight, LA is going to be an American trailblazer. I really hope that this gets implemented as is (instead of being watered down) just so we can see how far a city can fall from stupidity.
    Curious how many LA white collar jobs pay $15 an hour, seeing how not a single part of LA is affordable to a full time worker making $15 (lets not forget how rare a full time minimum wage worker is).
    http://la.curbed.com/archives/2015/0...15_an_hour.php

    This is $15 an hour by 2020, how badly is inflation going to dampen its actual effect?
    "In a field where an overlooked bug could cost millions, you want people who will speak their minds, even if they’re sometimes obnoxious about it."

  9. #9
    Resiste et Mords! Steely Glint's Avatar
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    What's the cost of living like in LA?
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  10. #10
    Senior Member RandBlade's Avatar
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    Quote Originally Posted by Ominous Gamer View Post
    Curious how many LA white collar jobs pay $15 an hour, seeing how not a single part of LA is affordable to a full time worker making $15 (lets not forget how rare a full time minimum wage worker is).
    http://la.curbed.com/archives/2015/0...15_an_hour.php

    This is $15 an hour by 2020, how badly is inflation going to dampen its actual effect?
    How ridiculous to assume that the only way to live is by everyone paying a mortgage based on one income alone. You don't mean its not affordable for a full time worker, you mean its not affordable to BUY a property on just one income on that wage. I'd be shocked if it was.

    What ever is wrong with the idea of sharing accommodation? Until my daughter was born and my wife quit working I never paid for accommodation based on just my own income. When I was a young adult after leaving university I lived with my parents and paid rent to them, then my wife (then-girlfriend) moved in together and we rented together. Only then did we buy and that was off two incomes. We've now made the decision to work off one income but that's because we can, she would go back to work if we had to.

    I have a number of friends who have rented not just with parents or romantic partners but simply with friends. The idea of a housemate to share bills with is not alien. In the Californian sitcom Big Bang Theory Leonard and Sheldon rent a property together to save on bills, is that something that you think simply never actually happens in real life?

    Many of those who rent a room off others are young, the same people who are likely to get a first job on minimum wage. The same people who are more likely to be unemployed if the minimum wage goes too high - as has happened in real life across continental Europe. In Spain the Youth Unemployment Rate is 53.5% - is that your idea of a model of success?
    Quote Originally Posted by Ominous Gamer View Post
    Being upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  11. #11
    I was referring to the suggestion that white collar workers aren't making enough to not live with their parents. Part time minimum wage workers are a different story and shouldn't expect the same return.
    "In a field where an overlooked bug could cost millions, you want people who will speak their minds, even if they’re sometimes obnoxious about it."

  12. #12
    Senior Member RandBlade's Avatar
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    That link refers to buying a property though, not renting one. Be more compelling if you can demonstrate people can't rent in LA. Most people could never afford to buy in London either but rental, especially rental on two incomes is different.

    Minimum wage changes won't affect housing prices in expensive capital cities considerably as its not minimum wage earners who are buying properties in expensive capital cities. That's like linking the price of apples to an article about orange juice. What significant minimum wage changes will do in the long term is make some on the minimum wage more comfortable than they would have been but others will be unemployed.
    Quote Originally Posted by Ominous Gamer View Post
    Being upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  13. #13
    The map descriptions mention renting several times, even comparing to when one could move from renting to buying.
    "In a field where an overlooked bug could cost millions, you want people who will speak their minds, even if they’re sometimes obnoxious about it."

  14. #14
    All Worship Ragnarök Loki's Avatar
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    Quote Originally Posted by Ominous Gamer View Post
    Curious how many LA white collar jobs pay $15 an hour, seeing how not a single part of LA is affordable to a full time worker making $15 (lets not forget how rare a full time minimum wage worker is).
    http://la.curbed.com/archives/2015/0...15_an_hour.php

    This is $15 an hour by 2020, how badly is inflation going to dampen its actual effect?
    Lots of people who work in LA live just outside of it. Also, East LA is pretty cheap.

    Also, inflation? The one that's about 2% a year?
    Hope is the denial of reality

  15. #15
    So you see no issue with your suggestion that a LA minimum wage worker will be on par with a LA white collar worker (in 2020)? Do we have numbers for a claim like that? I'm not even worried about the usual effect that minimum wage laws have on the salaries of white collar workers yet.

    Quote Originally Posted by Loki View Post
    Also, inflation? The one that's about 2% a year?
    So we're looking at a pay increase that, today, would be comparable to a wage of a little under $14/hr.
    "In a field where an overlooked bug could cost millions, you want people who will speak their minds, even if they’re sometimes obnoxious about it."

  16. #16
    Senior Member RandBlade's Avatar
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    I think the issue is the number of minimum wage earners who'll be unemployed instead.
    Quote Originally Posted by Ominous Gamer View Post
    Being upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  17. #17
    OG, the poverty line in the US works out to about $24k pa for a family of four (IIRC). $14/hr at full time works out to about $28k pa. That means that a single wage earner at minimum wage would blow the poverty line out of the water for a family of four. I'm not saying that's a bad thing, but it does suggest that either the poverty line is unreasonably low (possible) or a mandatory $14 minimum wage is unreasonably high. That would mean that two full time workers at minimum wage would approach $60k pa, which is substantially more than the current median household income.

    I disagree with the contention that such a high minimum wage will significantly disincentivize substantial education like going to college - the wage premium for most college degrees would still likely be substantially above minimum wage. But a wide range of occupations that currently experience wage discrimination on the basis of skills would no longer have that benefit, disincentivizing other skill acquisition such as associate's degrees and training programs. The issue is never going to be a real issue for white collar workers (though the cost of services they pay for are likely to increase), but it will be a big issue for somewhat skilled blue collar and grey collar workers.

    I think the data is somewhat complex wrt the effects of higher minimum wages on employment levels among the poor. Some studies indicate that modest minimum wages do not appear to significantly impact employment levels among low skilled workers, but certainly punitively high minimum wages do (and likely lead to other subtle effects). I don't know whether $14 or $15/hr is considered too high, but it certainly seems possible. We have a number of experiments currently going on to test this, mostly on the West Coast, so we shall see.

    All in all, though, it seems to stretch credulity that a two-earner family earning minimum wage should beat median household income. Something will have to give, and the most likely outcome is replacement of minimum wage workers with automation whenever possible.

    I sympathize with the plight of the minimum wage worker - it is indeed difficult to make a living so close (or below) the poverty line. I myself earned rather less than $14/hr during six years of graduate school (when I could have been earning well above median household income in the private sector), and it was a significant challenge to make ends meet. Yet careful budgeting and frugal living (roommates, a limited food/entertainment budget, etc.) were sufficient. Obviously, I was single at the time and had some flexibility - it indeed would have been much more difficult were I to try supporting a family of four on the same income. That, however, is the central conceit of advocates for a minimum wage - that minimum wage jobs are in any way intended for a sole breadwinner of a family. They aren't - either you need two wage earners or a single wage earner with significantly higher earnings. Minimum wage jobs are generally intended for the very young or the utterly lacking in skills, not for a middle aged breadwinner. To equate the two is silly. Even a modest amount of education, experience, or skill acquisition should be enough to easily clear that low bar.

    I currently continue to be paid far less than my worth on the open market (by choice), though our household income has far exceeded median for the US. Even so, we have challenges making ends meet, but it's a matter of choices - our choice for a higher quality day care, for living in a much more expensive neighborhood (you think those LA prices were high? Hah!), for saving a high and unchanging amount for retirement/college/downpayment, and for having some moderately expensive lifestyle choices. The point is that given our family situation, current income, and career prospects, we have made choices that influence affordability and whether our income is a 'living wage'. These choices can make $250k pa seem inadequate, just like one can live relatively comfortably on $25k pa. It's the height of silliness to suggest that people earning minimum wage are in any way representative of a typical American worker, and that we should construct our concept of a 'living wage' around that archetype - any more than my cash-poor current lifestyle is in any way related to 'affordability'.

  18. #18
    Quote Originally Posted by wiggin View Post
    That would mean that two full time workers at minimum wage would approach $60k pa, which is substantially more than the current median household income.
    $15/hr is a rather large bump from the 10/hr the rest of the state will be sitting at if that doesn't change by 2020 (without bothering with inflation atm). But I think I a lot of it is going to come down to the cost of living in the area, general googling brings up claims for the cost of living in LA being 40-50% more than the american average. Does anyone have the figures for how many LA workers currently earn full time minimum wage?
    This site shows how the 15/hr minimum comes out to being worth $9.75

    The issue is never going to be a real issue for white collar workers (though the cost of services they pay for are likely to increase)
    This was all I was saying. It is possible to have a legitimate discussion about minimum wage laws without the little bit one does contribute being bullshit. Your post is a perfect example of that, showing the issue isn't black and white.
    Last edited by Ominous Gamer; 05-21-2015 at 10:33 PM.
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  19. #19
    All Worship Ragnarök Loki's Avatar
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    Quote Originally Posted by wiggin View Post
    I disagree with the contention that such a high minimum wage will significantly disincentivize substantial education like going to college - the wage premium for most college degrees would still likely be substantially above minimum wage. But a wide range of occupations that currently experience wage discrimination on the basis of skills would no longer have that benefit, disincentivizing other skill acquisition such as associate's degrees and training programs. The issue is never going to be a real issue for white collar workers (though the cost of services they pay for are likely to increase), but it will be a big issue for somewhat skilled blue collar and grey collar workers.
    That only works if you have a very, very long time horizon, something that teens are known for, right? Once you add up foregone earnings and the cost of college tuition (even at a state college), you're down about $160k even before you graduate college. After that, you're probably not earning much more in your first few years than a person who has 4 years of work experience. At a conservative estimate, you're going to start making a dent on that $160k about 6 years after graduating high school (incidentally, why graduate high school?). Let's say that at this point, you make $10k more per year, a number that increases by a thousand or two each year. It would take another decade before you catch up. So either you invest 4 years into a college degree and not see a real return for 16 years or you simply try to make a career flipping burgers. Sure, for the motivated amongst us or those with educated parents, that's not going to be a real choice. But for everyone else, particularly the poor? All this will do is worsen existing education disparities, which will cause even more inequality down the line.

    In fact, the main reason for getting a college degree once this minimum wage hike comes into effect is to increase one's chances of getting a job, not to increase one's salary. Given that employers will make the same profit from workers who earn above $15 as they do now, the employment situation for those people will remain stable (in fact, it might improve a little bit to offset sharp decreases of employment for the unskilled). But who in their right mind will continue to hire people at $15 an hour when those workers only justify a wage of $9? Does anyone seriously believe that your average minimum wage business (i.e. retail store or fast food joint) actually make a 66% profit on the wages of every employee (after accounting for profits that are necessary to offset the risk of owning a store)? Who do you think will be the first to get fired? It's going to be ethnic minorities and the disabled.

    Furthermore, on what basis are you going to hire $15 workers when the supply of those workers ends up far higher than demand? We're going to start seeing bribes just to get jobs, just like the shitty parts of the world. Can't wait to see that.
    Hope is the denial of reality

  20. #20
    Senior Member RandBlade's Avatar
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    Quote Originally Posted by Ominous Gamer View Post
    This was all I was saying. It is possible to have a legitimate discussion about minimum wage laws without the little bit one does contribute being bullshit. Your post is a perfect example of that, showing the issue isn't black and white.
    The problem is that when you're proposing extreme changes either you'll have extreme over-simplifications or extreme risks. The greater the change, the greater the risk that must be taken into account.

    The effect of minimum wage depends upon where the minimum is set. Set it at a very low level and it will fall below what people are paying anyway. Set it at a very high level and it will destroy job creation and lead to both high inflation and unemployment. Set it at a moderate level and you might help those who are on low wages without causing too much distortion or inflation.

    A sensible way to increase minimum wages would set an escalator of a moderate annual increase above inflation. If you were to set it at say 20 cents annual increase then you'll have a one dollar increase in five years which is quite significant proportional increase. In the long term even that will likely become inflationary but it would risk seriously damaging the system in one hit. However instead what's being proposed is a very dramatic increase over a short period of time. Five years is a short time. With a dramatic change you're right its not black or white, its grey - with considerable risk amongst that grey. So what we're saying is that its not white, and you're responding by saying its not black or white. Yes that's our point!

    At a dramatic change you can't possibly say there aren't real risks this will backfire.
    Quote Originally Posted by Ominous Gamer View Post
    Being upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  21. #21
    Quote Originally Posted by RandBlade View Post
    The effect of minimum wage depends upon where the minimum is set. Set it at a very low level and it will fall below what people are paying anyway. Set it at a very high level and it will destroy job creation and lead to both high inflation and unemployment. Set it at a moderate level and you might help those who are on low wages without causing too much distortion or inflation.
    Or maybe the minimum has been to low for to long and this bump returns it to a moderate level? According the info in the OP the buying power of an LA worker has dropped 30% in 30 years. Maybe this move is LA finally adjusting itself to were it needs to be? As FiveThirtyEight pointed out this increase works out to about $9.75. Does anyone know how many minimum wage workers there are in LA? How many of them are full time? Is the city setting an unreasonable high bar, or is the city catching up to moves the major retailers have already made and simply protecting the workers that are being most exploited?


    It must be fun to immediately scream doom and gloom for a $15 an hour minimum wage, but to do so is ignoring the context of this situation.
    "In a field where an overlooked bug could cost millions, you want people who will speak their minds, even if they’re sometimes obnoxious about it."

  22. #22
    Senior Member RandBlade's Avatar
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    What you're saying is the equivalent of saying you've stayed still too long before departing on a journey so you now will drive at over 100 miles per hour through busy residential roads because you should have set off ages ago. Other cars and pedestrians may be on the road but you're still going to go at 100 miles per hour because you should have departed a long time ago. Its not just direction of travel that matters, nor the destination, its also the speed you go at.

    Doing any dramatic change in one go (and five years is one go) is going to cause extreme reactions. Many businesses operate within a timescale of 10-20 years for investment and depreciation in plant and machinery. A potentially close to 100% increase in the wage bill in that window will throw many business models out the window. Do you seriously think that means it isn't going to have any negative reaction?

    The context of the situation is what the starting wage is. Just because mistakes were made (over 30 years) doesn't mean you can eliminate that in one go.
    Quote Originally Posted by Ominous Gamer View Post
    Being upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  23. #23
    Quote Originally Posted by RandBlade View Post
    The context of the situation is what the starting wage is.
    Which again, all depends on what people in LA are actually getting paid at the moment.

    Quote Originally Posted by RandBlade View Post
    A potentially close to 100% increase in the wage bill in that window will throw many business models out the window.
    California minimum is $9, and was approved to move up to $10 next year back in 2013. This is no were near a 100% increase.
    "In a field where an overlooked bug could cost millions, you want people who will speak their minds, even if they’re sometimes obnoxious about it."

  24. #24
    Senior Member RandBlade's Avatar
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    Some international context. UK national minimum wage is £6.50 ($10.17) and it forecast to reach £8 by 2020 ($12.51). A rise to $15 from our own current rate would definitely be beyond what I'd think is safe in five years, that'd be a 50% rise.
    Quote Originally Posted by Ominous Gamer View Post
    Being upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  25. #25
    Senior Member RandBlade's Avatar
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    Quote Originally Posted by Ominous Gamer View Post
    California minimum is $9, and was approved to move up to $10 next year back in 2013. This is no were near a 100% increase.
    I wasn't certain what California's rates were. It's still a 66.67% increase in five years.

    Do you seriously think that a 66.67% increase in wage costs carries no risks at all?
    Quote Originally Posted by Ominous Gamer View Post
    Being upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  26. #26
    Quote Originally Posted by RandBlade View Post
    Do you seriously think that a 66.67% increase in wage costs carries no risks at all?
    At what point did I make the suggestion that this was my position?

    I'm asking, repeatedly, that if people want to make claims like yours concerning LA, context is needed. How do we know that this will result in such an increase in wage costs for the city businesses? How many LA workers make minimum wage? Whats that demographic look like for full and part time workers?
    "In a field where an overlooked bug could cost millions, you want people who will speak their minds, even if they’re sometimes obnoxious about it."

  27. #27
    Senior Member RandBlade's Avatar
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    The proposed change is a 67% rise in the space of five years, we're saying that carries immense risk.

    Most businesses won't necessarily see such a change as most don't pay minimum wage. But then their employees won't see such a pay rise either (and if everyone does, its going to cause rampant inflation). I suspect the demographic that is most likely to be paid minimum wage are the young unskilled and/or students. Which are also the demographic most likely to be left unemployed like in Spain which has more 53% youth unemployment. A young adult in Spain is more likely to be unemployed than in work. There is no guarantee or natural state of full employment.

    For many if not virtually all companies paying minimum wage the labour bill is either the highest or one of the highest costs in the business. Higher than rent normally. Where is the money to pay for that going to come from? Have you ever ran a business? If your bills were to increase by two thirds how are you going to react?

    If you've no experience of making ends meet in a business then instead imagine in place of a companies budget your own families budget and think of the most expensive bill you have - your rent or mortgage perhaps. Now imagine that you're suddenly faced with the knowledge that bill is going to be increased by two thirds in a five year window. What would you do? Where will the money come from?
    Quote Originally Posted by Ominous Gamer View Post
    Being upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  28. #28
    Volleyball is a cult ImAnOgre's Avatar
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    And I thought raising the minimum wage was just to appease the unions, as their contracts stipulate that pay is based on the minimum wage, and increasing the minimum wage increases the amount their union members are paid.
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  29. #29
    Quote Originally Posted by Ominous Gamer View Post
    $15/hr is a rather large bump from the 10/hr the rest of the state will be sitting at if that doesn't change by 2020 (without bothering with inflation atm). But I think I a lot of it is going to come down to the cost of living in the area, general googling brings up claims for the cost of living in LA being 40-50% more than the american average. Does anyone have the figures for how many LA workers currently earn full time minimum wage?
    This site shows how the 15/hr minimum comes out to being worth $9.75
    I think that's quite disingenuous (the link, that is). Just because it's more expensive to live in LA than elsewhere doesn't mean that a given wage level is reasonable or not. There are perks available in LA that aren't available elsewhere with cheaper living costs, including the likelihood of a deeper employment market. Furthermore, a place as large as the Greater LA metropolitan area has a great deal of heterogeneity in living costs, making that kind of broad analysis pretty ridiculous.

    That being said, I believe I saw in a new article the claim that nearly half of jobs in LA currently make less than $15/hr, which would suggest that the new minimum wage law will indeed affect the city in profound ways.

    Quote Originally Posted by Loki View Post
    That only works if you have a very, very long time horizon, something that teens are known for, right? Once you add up foregone earnings and the cost of college tuition (even at a state college), you're down about $160k even before you graduate college. After that, you're probably not earning much more in your first few years than a person who has 4 years of work experience. At a conservative estimate, you're going to start making a dent on that $160k about 6 years after graduating high school (incidentally, why graduate high school?). Let's say that at this point, you make $10k more per year, a number that increases by a thousand or two each year. It would take another decade before you catch up. So either you invest 4 years into a college degree and not see a real return for 16 years or you simply try to make a career flipping burgers. Sure, for the motivated amongst us or those with educated parents, that's not going to be a real choice. But for everyone else, particularly the poor? All this will do is worsen existing education disparities, which will cause even more inequality down the line.
    Your numbers are hinky, Loki. $160k out of pocket for college? No way, not for the population we're talking about (who are seriously choosing between minimum wage employment and some sort of post-secondary education). Financial aid and work study will dramatically reduce that number. I went to a school that is most definitely not cheap but walked out with $10k in cheap loans and maybe $50k out of pocket costs. Someone from a less advantaged demographic is likely to be even better off, with moderately higher subsidized loans but very little out of pocket. For a large proportion of majors, a net present value analysis indicates it pays off quite rapidly. The wage premium for uni is far larger than you estimate, as is the rate of increase in the wage premium - and I suspect with a higher minimum wage, feed-through inflation would maintain much of the wage premium in a few years (if it was implemented more broadly). College pays off dramatically. I'm much more worried about incentives for associate's degrees, vocational training, etc. We already have a dearth of people acquiring these sorts of 'medium skilled' jobs, and I suspect it will decrease further in the absence of a significant wage premium.

    In fact, the main reason for getting a college degree once this minimum wage hike comes into effect is to increase one's chances of getting a job, not to increase one's salary. Given that employers will make the same profit from workers who earn above $15 as they do now, the employment situation for those people will remain stable (in fact, it might improve a little bit to offset sharp decreases of employment for the unskilled). But who in their right mind will continue to hire people at $15 an hour when those workers only justify a wage of $9? Does anyone seriously believe that your average minimum wage business (i.e. retail store or fast food joint) actually make a 66% profit on the wages of every employee (after accounting for profits that are necessary to offset the risk of owning a store)? Who do you think will be the first to get fired? It's going to be ethnic minorities and the disabled.
    I agree that employment is likely to be hit in some menial jobs, especially those that can be automated or streamlined. The extent of that hit is disputed in the literature, and it seems like there are some thresholding effects. I don't know if $15/hr is above that threshold or not, but it's definitely a reasonable concern.

    Quote Originally Posted by Ominous Gamer View Post
    I'm asking, repeatedly, that if people want to make claims like yours concerning LA, context is needed. How do we know that this will result in such an increase in wage costs for the city businesses? How many LA workers make minimum wage? Whats that demographic look like for full and part time workers?
    As I said above, something like half of LA workers make less than $15/hr right now, and I suspect a large proportion of them work full time. This has real, profound effects. Whether they will be positive or not is up for discussion, but I think the incentive argument Loki mentions for medium skilled work is a strong one.

    Quote Originally Posted by RandBlade View Post
    Most businesses won't necessarily see such a change as most don't pay minimum wage. But then their employees won't see such a pay rise either (and if everyone does, its going to cause rampant inflation). I suspect the demographic that is most likely to be paid minimum wage are the young unskilled and/or students. Which are also the demographic most likely to be left unemployed like in Spain which has more 53% youth unemployment. A young adult in Spain is more likely to be unemployed than in work. There is no guarantee or natural state of full employment.

    For many if not virtually all companies paying minimum wage the labour bill is either the highest or one of the highest costs in the business. Higher than rent normally. Where is the money to pay for that going to come from? Have you ever ran a business? If your bills were to increase by two thirds how are you going to react?

    If you've no experience of making ends meet in a business then instead imagine in place of a companies budget your own families budget and think of the most expensive bill you have - your rent or mortgage perhaps. Now imagine that you're suddenly faced with the knowledge that bill is going to be increased by two thirds in a five year window. What would you do? Where will the money come from?
    RB, I think it's reasonable to assume that the move will be inflationary, but I doubt it would be 'rampant'. The proportion of a typical worker's wages that is spent on paying for cheap labor in the US is quite small (even if the effects on some businesses will be quite large). You'll get modest increases in wages for higher skilled workers, and significant increases in prices (and reductions in employment) for products and services that rely heavily on domestic low wage labor. But we're not talking about double digit inflation by any stretch of the imagination.

    I suspect you'll also get a lot of low skilled jobs moving just outside the law's remit, if possible. Some jobs aren't portable (e.g. services), but others most certainly are. As a new $15/hr wage will include a large proportion of jobs, it's likely we'll see jobs migrating to the outskirts of the city.

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    All Worship Ragnarök Loki's Avatar
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    Quote Originally Posted by wiggin View Post
    Your numbers are hinky, Loki. $160k out of pocket for college? No way, not for the population we're talking about (who are seriously choosing between minimum wage employment and some sort of post-secondary education). Financial aid and work study will dramatically reduce that number. I went to a school that is most definitely not cheap but walked out with $10k in cheap loans and maybe $50k out of pocket costs. Someone from a less advantaged demographic is likely to be even better off, with moderately higher subsidized loans but very little out of pocket. For a large proportion of majors, a net present value analysis indicates it pays off quite rapidly. The wage premium for uni is far larger than you estimate, as is the rate of increase in the wage premium - and I suspect with a higher minimum wage, feed-through inflation would maintain much of the wage premium in a few years (if it was implemented more broadly). College pays off dramatically. I'm much more worried about incentives for associate's degrees, vocational training, etc. We already have a dearth of people acquiring these sorts of 'medium skilled' jobs, and I suspect it will decrease further in the absence of a significant wage premium.
    You missed the foregone earnings part. If you're in college for 4 years (which is less than what it takes most people to graduate), you're not working for 4 years. That's $120k you're not making relative to working for $15 an hour during those 4 years.
    Hope is the denial of reality

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