Posted by silentpadna on 5/1/2014 5:38:00 PM (view original):
Posted by bad_luck on 5/1/2014 5:25:00 PM (view original):
Posted by silentpadna on 5/1/2014 5:21:00 PM (view original):
Posted by bad_luck on 5/1/2014 4:18:00 PM (view original):
Please stop trying to explain economics. You think the federal government can reduce its deficit by selling more treasury bonds.
That's hardly a response. Mike's post is entirely reasonable.
Any regulation, tax, fee, act of God, etc. has consequences. Forcing employers to pay more for labor puts pressure on profit. Those who go into business do so in the hopes that their profit exceeds the amount they would make if they invested - risked - their money elsewhere. Absorbing the cost is not a realistic option if there is an opportunity to do better by taking another action. A company can:
1. Raise prices of its product or service to maintain the required return on their investment
2. Reduce the cost of providing the product or service to maintain the required return on their investment. (through fewer jobs)
3. Some combination thereof.
4. Choose the opportunity of eliminating their investment in the affected enterprise and investing in something different.
Every one of these options ultimately doesn't squeeze the big guy, as minimum wage advocates intend, but instead end up indirectly hurting the very people they are "trying to help". Increased prices, job losses (check the CBO February 2014 estimate of job loss related to minimum wage hike), or companies moving out (more job losses) all affect those who work these positions.
If you don't consider context and ramifications of change, you'll never see how this stuff works.
By the way raising taxes on "the rich" or "corporations" exerts the same type of pressure, which is why targeted tax hikes on whoever makes more than me don't accomplish what their advocates publicly claim (but most privately don't believe).
By that logic we should lower or eliminate the minimum wage, right? I mean, allowing employers to pay employees $3.15 would create way more jobs.
I'm not advocating the elimination of minimum wage, but wages would settle out somewhere just based on supply and demand. The fact is that there are jobs that are not worth people's time if the pay is not enough. But reversing that for a minute, if you simply raised minimum wage, something has to happen in response. Why not just raise minimum wage to $50/hour? That way everyone would make six figures. Would that work? The question still remains: who is helped and who is hurt by raising the minimum wage and what is that action intended to accomplish? Does it accomplish what it's supposed to? If it doesn't, do we raise more? And then more again?
Businesses are going to profit or they are going to go away. You cannot legislate that part out or businesses would never start. If there is a demand for the product or service, they will profit as long as they can supply it at a price people are willing to pay. If you put upward price pressure enough people won't demand the product.
"The first major empirical paper taking issue with the simple supply-demand account arrived back in 1993, when two top labor economists, David Card and Alan Krueger, decided to do a case study of what happened to employment in fast-food restaurants along the New Jersey-Pennsylvania border when New Jersey hiked the minimum wage but Pennsylvania did not.
The short answer: Nothing happened. Despite the higher minimum wage in New Jersey, New Jersey's fast-food restaurants did not lay off workers."
Study
"2010 paper by economists Arindrajit Dube, T. William Lester, and Michael Reich took counties that abutted each other but were in different states and looked at employment when one state chose to raise minimum wage while another did not. Dube, Lester, and Reich also found no employment effect."
Paper
One useful meta-analysis of all these studies comes from economist Hristos Doucouliagos, who showed that precise studies cluster close to zero impact on employment with a majority showing a very small decline.
Study on studies