Biden Wants 15/Hour Min Wage

[fredtoast]

(02-11-2021, 07:30 PM)BFritz21 Wrote: Also, you act like the millions and millions of lost jobs from this will be ok because people can just go to the big chains or something but, if they didn't need more employees to push out the small businesses, why would they need them once small businesses are gone?  

Because a higher minimum wage will not reduce "demand" in any way.  That means "supply" will not be reduced.  

No matter what happens the same number of goods and services will have to be provided.  In fact, since more people will have disposable income there will be an increase in "demand".  So the same size labor supply will be required.  Maybe even a larger one.

Where did you go to college Brad?  Did your economics professor explain why increasing minimum wage creates inflation but increasing executive pay does not?  Over the last forty years there has been MASSIVE increase in executive pay.  Why has't that lead to out of control inflation and job losses?

[GMDino]

https://www.npr.org/sections/money/2021/02/16/967333964/what-mcdonalds-shows-about-the-minimum-wage?fbclid=IwAR23gaieqdcZ984pPHVblwP4dnFWq4QRU-Ika-W3Z-l0BhZwpG3XR7hYJH8

Quote:What McDonald's Shows About The Minimum Wage






February 16, 20216:30 AM ET
GREG ROSALSKY
Editor's note: This is an excerpt of Planet Money's newsletter. You can sign up here.


On Nov. 29, 2012, dozens of fast-food workers assembled at a McDonald's in Midtown Manhattan to demand better pay. Their demonstration kicked off a massive wave of protests for a $15 minimum wage. Since then, cities and states around the U.S. have taken action. And now, the federal government, led by President Biden and a Democratic-controlled Congress, has begun to consider making the $15 minimum wage national.

McDonald's is one of the nation's biggest employers of low-wage workers. As such, it was kind of the perfect place to launch what was, in retrospect, the beginning of a historic labor movement. A new study by economists Orley Ashenfelter and Štěpán Jurajda suggests McDonald's is also kind of the perfect place to test the effects of the minimum wage increases that workers have been fighting for.

Ashenfelter is an economist at Princeton University, and he has spent a couple of decades studying McDonald's. Back in 2012, when he was president of the American Economic Association, he even dedicated part of his big presidential address to the company. And it wasn't just because, as he told us, his "favorite meal is fries, a chocolate shake and a Big Mac." He views McDonald's as a kind of natural "laboratory" to compare and contrast different labor markets. I mean, think about it: Each McDonald's restaurant is pretty much the same. The workers have almost identical jobs, regardless of which part of the world they're in; the food they make is generally the same; and McDonald's restaurants are basically everywhere.


Meanwhile, over the last decade, a McFlurry of cities and states has been raising their minimum wages. In their new study, Ashenfelter and Jurajda use McDonald's restaurants as kind of like treatment and control groups to assess the impact of these new minimum wage laws. They obtained data on hourly wage rates of McDonald's "Basic Crew" employees, the prices of Big Macs and other information from about 10,000 McDonald's restaurants between 2016 and 2020. And they crunched the numbers to see what happens when a city or state increases its minimum wage.

One big fear of a higher minimum wage is that it could cause businesses to replace their workers with machines. Ashenfelter and Jurajda found that some McDonald's restaurants have already installed touch screens so customers can input their meal orders without interacting with a human being. But they also found that those touch screens weren't installed in response to higher minimum wages. "We couldn't find any relationship between minimum wage increases and the adoption of touch-screen technology," Ashenfelter says.

Not surprisingly, Ashenfelter and Jurajda found that McDonald's restaurants raise their wages after a city or state raises its minimum wage. More surprisingly, they found that a substantial fraction of restaurants preserve their pay premiums for workers who were previously earning more than the minimum wage. That is, if a worker was making a dollar more than the old minimum wage, many McDonald's will make sure those workers continue to make a dollar more than the new minimum wage. Ashenfelter says they don't have hard evidence for why this is, but he believes it's because certain restaurants want to offer wages slightly higher than the legal minimum as a way to reduce turnover. Paying above the minimum wage creates a kind of magnet for workers. Overall, the economists found that if the minimum wage goes up by 10%, the average McDonald's restaurant will increase worker wages by about 7%.

Finally and perhaps most thought provokingly, the economists looked at the effects of minimum wage hikes on the prices of Big Macs. They found that when the minimum wage goes up, the price of a Big Mac goes up too. Ashenfelter says the evidence from increased food prices suggests that basically all of the "increase of labor costs gets passed right on to the customers." But because low-wage workers are also usually customers at low-wage establishments, this suggests that any pay raise resulting from a minimum wage increase might not be as great in reality as it looks on paper. In econospeak, the increase in their "real wage" — that is, their wage after accounting for the price of the stuff they buy — is not as high, because the cost of some of the stuff they buy, such as fast food, goes up too.

However, Ashenfelter says, the fast-food workers they studied were still, on the net, much better off. "They still get a raise. They just don't get as big a raise as it may seem," he says. In effect, a minimum wage increase appears to be a redistribution of wealth from customers to low-wage workers. Ashenfelter says he thinks of it like a kind of sales tax. And for whatever reason, unlike with many other types of taxes, the minimum wage tax seems to be more popular with voters — even in many red states, like Florida, where they're voting to increase the minimum wage.

The one big disappointment from Ashenfelter and Jurajda's study is they're unable to tell us much about the effects of minimum wages on employment, which is at the center of the debate about the policy. They couldn't obtain data on hiring and firing from McDonald's restaurants around the nation.

It's worth remembering that McDonald's was also at the center of the famous study by David Card and Alan Krueger that revolutionized economic thinking about the minimum wage. Card and Krueger found no evidence that New Jersey's hike of the minimum wage from $4.25 to $5.05 an hour reduced employment at fast-food restaurants there. Would the same happen in the entire nation if the federal government raised it from $7.25 to $15? Last week, the Congressional Budget Office, while saying a $15 minimum wage would reduce poverty, cast doubt on the idea that there would be no substantial job losses.

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[TheUberHuber]

(01-16-2021, 02:32 AM)BFritz21 Wrote: Just another way the Dems way of thinking that everything should be handed out will end up hurting the country.

One major thing that I took away from the economics classes I have took in college was that raising the minimum wage to $15 leads to 2 things:

(1) The elimination of jobs: companies will deem some jobs not worthy of a $15 per hour salary & simply realize they do not need them. (Say goodbye to grocery store bag boys!)

(2) Inflation: to compensate for the lowest wage being paid being nearly doubled, jobs that currently pay $15 per hour will have to up their pay for employees as well. This simply just leads to the dollar being worth less. (Say hello to $10 for a gallon of milk & $12 for a McDonald’s cheeseburger combo!)

(3) The loss of small businesses... some small businesses who rely on teenage or other minimum wage employee help won’t be able to afford to hire employees that keep their lights on, ultimately leading to more reliance on big box companies who will be able to afford to pay workers these wages.

To increase one’s pay, one must learn to acquire the skills necessary to get a job that pays more than minimum wage. That is the beauty of capitalism- you can grow as far as you wish by increasing your skill level!

Does anyone think small businesses and our economy overall will be able to survive this?

This is all subjective nonsense.  

[BFritz21]

(02-18-2021, 01:21 PM)TheUberHuber Wrote: This is all subjective nonsense.  

Quality response 

[Forever Spinning Vinyl]

(02-18-2021, 01:26 PM)BFritz21 Wrote: Quality response 

Pretty much. Looks like he covered everything.

[*Nately120*]

Who the hell cares if the price of goods and services go up? I mean, other than lazy people who don't want to work harder and make the extra money they'll need, of course.

If this wage hike ruins your life then you didn't work hard enough. Sorry not sorry to all the snowflakes who don't wanna hear it.

[Benton]

(02-18-2021, 12:25 PM)fredtoast Wrote: Because a higher minimum wage will not reduce "demand" in any way.  That means "supply" will not be reduced.  

I'm curious what impact it will have on demand.

My assumption is demand goes up (more people with more money means more potential customers).

But deeper than that, are we going to see the end of the 'dollar menu'? Not because it's no longer profitable, but because customers are spending their money on higher priced items?

One of the basic economic principles is that customers respond to incentives. That's, essentially, the foundation for super low cost options to businesses that are seeing dipping profits. It's about volume, since they've already got the market established. A customer looks at a $5 chicken sandwich and says "I've got $16 dollars in my bank account, I guess I'll eat ramen." Or they look at a $1 chicken sandwich and says "I've got $16 and I'm hungry. Go for it."

Incentives have always been there, and likely always will. But customers having more money means businesses can have a higher profit margin on incentives. Like, instead of having the dollar menu, maybe they sell the higher profit margin $5 chicken sandwich, but offer free fries (which have very little cost). 

Businesses are already going to raise prices to offset the cost of higher wages. But, honestly, I think they'll see higher profits.

[TheUberHuber]

(02-18-2021, 04:34 PM)Benton Wrote: I'm curious what impact it will have on demand.

My assumption is demand goes up (more people with more money means more potential customers).

But deeper than that, are we going to see the end of the 'dollar menu'? Not because it's no longer profitable, but because customers are spending their money on higher priced items?

One of the basic economic principles is that customers respond to incentives. That's, essentially, the foundation for super low cost options to businesses that are seeing dipping profits. It's about volume, since they've already got the market established. A customer looks at a $5 chicken sandwich and says "I've got $16 dollars in my bank account, I guess I'll eat ramen." Or they look at a $1 chicken sandwich and says "I've got $16 and I'm hungry. Go for it."

Incentives have always been there, and likely always will. But customers having more money means businesses can have a higher profit margin on incentives. Like, instead of having the dollar menu, maybe they sell the higher profit margin $5 chicken sandwich, but offer free fries (which have very little cost). 

Businesses are already going to raise prices to offset the cost of higher wages. But, honestly, I think they'll see higher profits.

Burger King pays 15 dollars an hour in my city and there is litterally no change to the menu lol. Also, 600 dollars a week before taxes is still barely scraping by in most major cities in this country.

[BigPapaKain]

(02-18-2021, 06:25 PM)TheUberHuber Wrote: Burger King pays 15 dollars an hour in my city and there is litterally no change to the menu lol. Also, 600 dollars a week before taxes is still barely scraping by in most major cities in this country.

It's almost as if these companies use the cheapest ingredients to maximize profits and raising wages would cut into their bottom lines a lot less than serving better food.

[Wes Mantooth]

Let me say that I'm FAR from an expert on stuff like this (I took two Econ classes in college 20 years ago), but I just wanted to share my thought process on a drastic mimimum wage hike.

Am I totally off-base in thinking that eventually the person making $15 an hour at minimum wage will end having similar spending power as the person who currently is at $8 bucks an hour?

Won't all salaries correct themselves in this new market? If the person making 8 bucks an hour now is making 15 won't the plumber's apprentice making $12 now make like $20? Won't the warehouse worker making $15 now make like $25. Won't this correction occur throughout every level of employment?

If my thoughts above are correct then you still have many of the same problems you have now do you not?

If a person who is currently making, say, 17k a year is now making 30k a year, what are the chances their rent stays, say, at $800 a month? That will follow suit too, right?

Fwiw, I know it's WAY more complicated than how I'm describing it but I don't simply changing the minimum wage is some perfect fix. Inflation will occur for a number of reasons outside cost of labor.

Am I wrong? I'm honestly curious if someone can help be better understand what it is I may be missing.

[GMDino]

(02-18-2021, 12:28 PM)GMDino Wrote: https://www.npr.org/sections/money/2021/02/16/967333964/what-mcdonalds-shows-about-the-minimum-wage?fbclid=IwAR23gaieqdcZ984pPHVblwP4dnFWq4QRU-Ika-W3Z-l0BhZwpG3XR7hYJH8

Someone studied some this and answered a few questions.

[fredtoast]

(02-19-2021, 04:46 PM)Wes Mantooth Wrote: Let me say that I'm FAR from an expert on stuff like this (I took two Econ classes in college 20 years ago), but I just wanted to share my thought process on a drastic mimimum wage hike.

Am I totally off-base in thinking that eventually the person making $15 an hour at minimum wage will end having similar spending power as the person who currently is at $8 bucks an hour?

Won't all salaries correct themselves in this new market?  If the person making 8 bucks an hour now is making 15 won't the plumber's apprentice making $12 now make like $20?  Won't the warehouse worker making $15 now make like $25.  Won't this correction occur throughout every level of employment?

If my thoughts above are correct then you still have many of the same problems you have now do you not?

If a person who is currently making, say, 17k a year is now making 30k a year, what are the chances their rent stays, say, at $800 a month?  That will follow suit too, right?  

Fwiw, I know it's WAY more complicated than how I'm describing it but I don't simply changing the minimum wage is some perfect fix.  Inflation will occur for a number of reasons outside cost of labor.

Am I wrong?  I'm honestly curious if someone can help be better understand what it is I may be missing.

Wages at the top of the scale have been going up dramatically for years without forcing all other wages up. 

I believe forcing wages up at the bottom will have some effect into the middle, but not all the way to the top.  Just because the person at the bottom sees his wages go from $10 to $15 that does not mean a person in the upper middle will see his wages go from $100K to $150K.

[Belsnickel]

FWIW, prices have been increasing and inflation has been going on for years without any increase in wages. So either we do nothing and the prices go up or we raise wages and the prices go up.

[*Nately120*]

(02-19-2021, 08:23 PM)Belsnickel Wrote: FWIW, prices have been increasing and inflation has been going on for years without any increase in wages. So either we do nothing and the prices go up or we raise wages and the prices go up.

That reminds me, when I was working in Chicago my family came out to visit and we were in the city and my ol man and I were just killing time and there was a retro candy store and he noticed they sold SKY BARS and he mentioned getting those with paper route money when he was a kid because you got multiple pieces and it seemed like a great value.  I bought one, and it was like $3 total and I used my debit card for it and my ol' man said "I can't believe I lived long enough to see someone buy a candy bar with a credit card."

[Benton]

(02-19-2021, 04:46 PM)Wes Mantooth Wrote: Let me say that I'm FAR from an expert on stuff like this (I took two Econ classes in college 20 years ago), but I just wanted to share my thought process on a drastic mimimum wage hike.

Am I totally off-base in thinking that eventually the person making $15 an hour at minimum wage will end having similar spending power as the person who currently is at $8 bucks an hour?

Won't all salaries correct themselves in this new market?  If the person making 8 bucks an hour now is making 15 won't the plumber's apprentice making $12 now make like $20?  Won't the warehouse worker making $15 now make like $25.  Won't this correction occur throughout every level of employment?

If my thoughts above are correct then you still have many of the same problems you have now do you not?

If a person who is currently making, say, 17k a year is now making 30k a year, what are the chances their rent stays, say, at $800 a month?  That will follow suit too, right?  

Fwiw, I know it's WAY more complicated than how I'm describing it but I don't simply changing the minimum wage is some perfect fix.  Inflation will occur for a number of reasons outside cost of labor.

Am I wrong?  I'm honestly curious if someone can help be better understand what it is I may be missing.

Basically, yes.

The issue is multi faceted though.

For starters, there's the income gap. It's been growing for decades. Top earners (not the 1 percent, just those making above six figures) have their wages increase for various reasons. High demand skills sets, whatever. Low wage earners haven't seen much of an increase in the same time span because there's less competition for those jobs.

That has an impact because companies don't (generally) look at expanding their quantity of sales as much as their profit per sale. If you can sell, say, a car for $50k (at a price of $20k to build) or two cars for $20k (but each costs $10k to build), the company is maximizing profits by making one high priced car.

Then there's the issue of prices going up regardless. The last federal minimum wage hike was, what, 2-3 decades ago? Prices have kept going up since then, even though many companies haven't increased low wage worker pay during that time.

50 years ago this wasn't as big of an issue. There's several reasons for that, but part of it was labor unions. Unions forced companies to split profits with Labor. Now? If you go to your boss and tell him the company had a 35 percent increase in profit because, in part, of your hard work so you deserve a 10 percent raise, he's probably going to laugh at you.

[*Nately120*]

(02-20-2021, 05:07 AM)Benton Wrote: Basically, yes.

The issue is multi faceted though.

For starters, there's the income gap. It's been growing for decades. Top earners (not the 1 percent, just those making above six figures) have their wages increase for various reasons. High demand skills sets, whatever. Low wage earners haven't seen much of an increase in the same time span because there's less competition for those jobs.

That has an impact because companies don't (generally) look at expanding their quantity of sales as much as their profit per sale. If you can sell, say, a car for $50k (at a price of $20k to build) or two cars for $20k (but each costs $10k to build), the company is maximizing profits by making one high priced car.

Then there's the issue of prices going up regardless. The last federal minimum wage hike was, what, 2-3 decades ago? Prices have kept going up since then, even though many companies haven't increased low wage worker pay during that time.

50 years ago this wasn't as big of an issue. There's several reasons for that, but part of it was labor unions. Unions forced companies to split profits with Labor. Now? If you go to your boss and tell him the company had a 35 percent increase in profit because, in part, of your hard work so you deserve a 10 percent raise, he's probably going to laugh at you.

The best indicator of the wealth gap is to watch Roseanne or The Simpsons and realize in the 90s those families and their houses represented low income schlubs...an edgy alternative to the ultra-rich Huxtables and Brady Bunch tropes.

[Au165]

The Costco CEO did eventually end up hitting a billion in net worth. It was interesting though as he was only taking about 300k in salary which was pretty low for a company of that size.

[BigPapaKain]

https://www.businessinsider.com/15-minimum-wage-lift-millions-out-of-poverty-morgan-stanley-2021-3

I hate resurrecting dead topics, but when Wall Street is behind something that helps the little guy, it might actually be a good thing for everyone.

It's almost like subsidizing poverty is terrible for everyone.