More data that higher minimum wage creates jobs

[swansont]

https://nymag.com/intelligencer/2023/05/new-study-finds-a-high-minimum-wage-creates-jobs.html

The assertion in a 2010 op-ed was that higher minimum wage meant “Say goodbye to entry level jobs and hello to permanent double digit unemployment.”

“Over the next thirteen years, a long list of cities and states enacted minimum wage increases of unprecedented size. Between 2014 and 2022, California increased its minimum wage by 56 percent in inflation-adjusted terms. Over a similar time period, New York raised its wage floor by 72 percent.

Permanent double digit unemployment did not ensue.

In fact, not only did these historically large minimum wage hikes fail to put all fast food workers out of job, but a new study indicates that they actually induced job growth.”

[Sensei]

If wages are raised, the employer must 1) increase productivity or 2) raise the prices of the products. Which means inflation, an increase in the cost of living and reduced competitiveness in the global market. People see higher prices in stores and that their increased salary is not enough anymore, so they demand a raise and the cycle repeats itself.

Meanwhile, another country with lower wages can create the same product at a lower price. In the open global market, the product is imported and sold to people who want a lower product price. That's when populist politicians step in and demand increased import tariffs to "save their hard-working fellow citizens" and "save the domestic market from countries that produce their products below the cost of production"). That is, they want to raise the price of the product for fellow citizens.

Subsidies to farmers are needed to keep farms operating, otherwise they would sink.

Many branches heavily dependent on workers' wages have sunk, unable to deliver product at an acceptable price to their customers.

 

How social welfare spending has evolved over the years? Are welfare recipients counted as unemployed?

How homelessness rates have changed over the years? Are homeless counted as unemployed?

How have crime rates changed over the years? Are criminals counted among the unemployed?

And so on, so on..

Here, if you don't go and register as unemployed, you are not counted as unemployed, but as employed. The only reason people register here is for unemployment benefits, but they are only granted for a few months (depending on how long you were previously employed). Thus, it is easy to bend the unemployment rate, as there is not just one way to calculate it..

It would be easier to count the employment rate, not the unemployment rate, because the employed pay PIT.

"The unemployment rate is, for example, 5%..." What does that even mean? 5% of what? If it were 5% of the country's total population *), it would give a meaningful comparison between countries.

*) in some countries children and teenagers work, in others, mainly Western countries, they do not.

Edited May 13, 2023 by Sensei

[StringJunky]

7 hours ago, Sensei said:

If wages are raised, the employer must 1) increase productivity or 2) raise the prices of the products.

Not necessarrily, if an employee feels valued, they'll feel better about coming into work and could get more done in the same time. If they feel better about that, they'll make less mistakes and they'll probably go the extra mile when needed and their company don't have to hire temp staff. If you pay peanuts, people will act like monkeys... they don't care and probably fool around. Fooling around can be just looking at phones, quiet small-scale vandalism etc. 

As a coincidence, a frigate being fitted out in Scotland had a load of its data/power cables damaged through a pay dispute.

Edited May 14, 2023 by StringJunky

[CharonY]

That sounds like increasing productivity.

[swansont]

15 hours ago, Sensei said:

If wages are raised, the employer must 1) increase productivity or 2) raise the prices of the products. Which means inflation, an increase in the cost of living and reduced competitiveness in the global market. People see higher prices in stores and that their increased salary is not enough anymore, so they demand a raise and the cycle repeats itself.

One might consider that instead of moving on from a job that underpays them, they stay. Then you don’t have to spend time hiring a new employee and training them. A cycle which repeats itself. Not wasting these efforts results in higher productivity.

Do you have any inflation data to share to support scenario #2?

Quote

Meanwhile, another country with lower wages can create the same product at a lower price

Not really an issue for service industry jobs, like fast food workers.

Products that compete in the worldwide market are probably not made by “unskilled” labor being paid minimum-wage 

[MigL]

18 hours ago, StringJunky said:

if an employee feels valued, they'll feel better about coming into work and could get more done in the same time. If they feel better about that, they'll make less mistakes and they'll probably go the extra mile when needed and their company don't have to hire temp staff

Do you really think that applies to the kid working at Burger King, or the single mom working at Tim Horton's ?

I think Sensei has some valid points, and before asking him for inflation data to support his statement, one should clarify exactly what unemployment rate is ( as Sensei rightly points out ), as that is the whole basis for this thread.

[swansont]

On 5/13/2023 at 2:58 PM, Sensei said:

Here, if you don't go and register as unemployed, you are not counted as unemployed, but as employed

Not in the US. Unemployment means actively looking for work, available to work, but not working.

https://www.bls.gov/cps/definitions.htm#:~:text=Population) x 100.-,Unemployed,week%2C except for temporary illness.

[John Cuthber]

On 5/13/2023 at 7:58 PM, Sensei said:

If wages are raised, the employer must 1) increase productivity or 2) raise the prices of the products. Which means inflation, an increase in the cost of living and reduced competitiveness in the global market. People see higher prices in stores and that their increased salary is not enough anymore, so they demand a raise and the cycle repeats itself.

Meanwhile, another country with lower wages can create the same product at a lower price. In the open global market, the product is imported and sold to people who want a lower product price. That's when populist politicians step in and demand increased import tariffs to "save their hard-working fellow citizens" and "save the domestic market from countries that produce their products below the cost of production"). That is, they want to raise the price of the product for fellow citizens.

Subsidies to farmers are needed to keep farms operating, otherwise they would sink.

Many branches heavily dependent on workers' wages have sunk, unable to deliver product at an acceptable price to their customers.

 

How social welfare spending has evolved over the years? Are welfare recipients counted as unemployed?

How homelessness rates have changed over the years? Are homeless counted as unemployed?

How have crime rates changed over the years? Are criminals counted among the unemployed?

And so on, so on..

Here, if you don't go and register as unemployed, you are not counted as unemployed, but as employed. The only reason people register here is for unemployment benefits, but they are only granted for a few months (depending on how long you were previously employed). Thus, it is easy to bend the unemployment rate, as there is not just one way to calculate it..

It would be easier to count the employment rate, not the unemployment rate, because the employed pay PIT.

"The unemployment rate is, for example, 5%..." What does that even mean? 5% of what? If it were 5% of the country's total population *), it would give a meaningful comparison between countries.

*) in some countries children and teenagers work, in others, mainly Western countries, they do not.

That's more or less what the Conservatives said when the UK was considering introducing a minimum wage in 1999.
They predicted mass unemployment, destruction of the economy, plagues of frogs etc.

None of which actually happened.
It's as if the political Right wing don't tell the truth about things.
 

[swansont]

44 minutes ago, MigL said:

I think Sensei has some valid points, and before asking him for inflation data to support his statement, one should clarify exactly what unemployment rate is ( as Sensei rightly points out ), as that is the whole basis for this thread.

Sensei made the claim, so they can back it up. 

 

[John Cuthber]

19 hours ago, StringJunky said:

As a coincidence, a frigate being fitted out in Scotland had a load of its data/power cables damaged through a pay dispute.

The process of a dispute over pay doesn't damage cables.

What actually happened?
 

1 hour ago, MigL said:

Do you really think that applies to the kid working at Burger King, or the single mom working at Tim Horton's ?

Some of the early research done on the subject was on people doing piece-work in factories.
I don't think burger flipping is very different.

The experiment was actually very instructive.
They got a group of workers and found out how many items they made in a day.
Then they reorganised the workplace and measured productivity again.
It had increased.
The management concluded that the changes had improved productivity.

But the scientists were wiser than that. They waited a while an d then measured productivity yet again- and it had fallen more or less back to where it had been.
So they swapped the workplace back to how it had originally been and, yet again, there was a temporary jump in production.

It turns out that changing things makes people more interested and more productive. Further experiments showed that teh changes didn't have to directly relate to work. Starting a  chess club would have an effect.

Now, imagine the young burger flipper who gets a pay rise.
He's going to make changes- possibly even joining a chess club.

So, I can see a pathway , based on research (in the 1950s I think) by which a pay rise would improve productivity.

The interesting question is can anyone think of evidence for why it would not do so?

[Sensei]

On 5/14/2023 at 11:31 PM, swansont said:

Not in the US. Unemployment means actively looking for work, available to work, but not working.

Sorry. I don't understand. How government knows (and can count, and share online) who is "actively seeking for work" if people don't register at their office.. ? Didn't read about US officials ability to mind reading.. so..

ps. In the North Korea, I guess, there is very little unemployment rate.. Let's see:

https://www.google.com/search?q=north+korea+unemployment+rate

"Unemployment refers to the share of the labor force that is without work but available for and seeking employment. North Korea unemployment rate for 2021 was 2.59%, a 0.33% decline from 2020. North Korea unemployment rate for 2020 was 2.92%, a 0.33% increase from 2019."

 

Do you believe these data? How come they have issues with foods? Or it's US propaganda against NK (and they are full of happiness) ?

 

In Western countries during the medieval period, it was customary to place homeless people in prisons..

 

I said it pretty clear - it is easier to measure employment rate of the country.. i.e. how many people pay PIT every year..

..all these unemployment rates are bull-shit worth trashes..

 

 

You start to sound like pro-politician propaganda.. regardless of the wing.. please be more objective/open to the world (i.e. your country != entire world)..

 

 

 

On 5/14/2023 at 4:31 AM, StringJunky said:

Not necessarrily, if an employee feels valued, they'll feel better about coming into work and could get more done in the same time.

Do you really believe so? Let's give them $1 mln on the lottery and see what happens..

I joked about it with my neighborhood saleswoman at store, that if she will get millions on the lottery she will continue work at her store (she claimed so)..

 

Edited May 16, 2023 by Sensei

[StringJunky]

37 minutes ago, Sensei said:

Sorry. I don't understand. How government knows (and can count, and share online) who is "actively seeking for work" if people don't register at their office.. ? Didn't read about US officials ability to mind reading.. so..

ps. In the North Korea, I guess, there is very little unemployment rate.. Let's see:

https://www.google.com/search?q=north+korea+unemployment+rate

"Unemployment refers to the share of the labor force that is without work but available for and seeking employment. North Korea unemployment rate for 2021 was 2.59%, a 0.33% decline from 2020. North Korea unemployment rate for 2020 was 2.92%, a 0.33% increase from 2019."

 

Do you believe these data? How come they have issues with foods? Or it's US propaganda against NK (and they are full of happiness) ?

 

In Western countries during the medieval period, it was customary to place homeless people in prisons..

 

I said it pretty clear - it is easier to measure employment rate of the country.. i.e. how many people pay PIT every year..

..all these unemployment rates are bull-shit worth trashes..

 

 

You start to sound like pro-politician propaganda.. regardless of the wing.. please be more objective/open to the world (i.e. your country != entire world)..

 

 

 

Do you really believe so? Let's give them $1 mln on the lottery and see what happens..

I joked about it with my neighborhood saleswoman at store, that if she will get millions on the lottery she will continue work at her store (she claimed so)..

 

Irrelevant. I'm surprised you even brought that up. Getting something for a dollar - a lottery ticket - and working for it are hardly comparable.

Edited May 16, 2023 by StringJunky

[Sensei]

21 minutes ago, StringJunky said:

Irrelevant. I'm surprised you even brought that up. Getting something for a dollar - a lottery ticket - and working for it are hardly comparable.

..I used translator and still have no idea what you said to me..

Google Translator did not know how to convert from "Tamarian Language".. yet..

 

The thing with my neighborhood saleswoman is that she claims that even if she gets many millions in the lottery, she will still work in a grocery store.. which I highly doubt..

Edited May 16, 2023 by Sensei

[StringJunky]

18 minutes ago, Sensei said:

18 minutes ago, Sensei said:

..I used translator and still have no idea what you said to me..

Google Translator did not know how to convert from "Tamarian Language".. yet..

 

The thing with my neighborhood saleswoman is that she claims that even if she gets many millions in the lottery, she will still work in a grocery store.. which I highly doubt..

.I used translator and still have no idea what you said to me..

Google Translator did not know how to convert from "Tamarian Language".. yet..

 

The thing with my neighborhood saleswoman is that she claims that even if she gets many millions in the lottery, she will still work in a grocery store.. which I highly doubt..

Sorry Sensei, understrood.. The scenario you put forward is not the same equivalence. The woman who wins the lottery is not the same as someone who wants a payrise.

[swansont]

7 hours ago, Sensei said:

Sorry. I don't understand. How government knows (and can count, and share online) who is "actively seeking for work" if people don't register at their office.. ? Didn't read about US officials ability to mind reading.. so..

They do surveys.

 

7 hours ago, Sensei said:

ps. In the North Korea, I guess, there is very little unemployment rate.. Let's see:

We weren’t discussing North Korea.

7 hours ago, Sensei said:

 

You start to sound like pro-politician propaganda.. regardless of the wing.. please be more objective/open to the world (i.e. your country != entire world)..

I didn’t make claims about the entire world. The context was the US.

Is this just a distraction from the fact that you made a claim about inflation, but have not presented any data to back it up?

 

 

[Sensei]

What claims? I just wrote indisputable facts..

If I write that 2+2 = 4 does it need dispute?

 

1 hour ago, swansont said:

We weren’t discussing North Korea.

In the OP nobody stated we are constrained and limited to the US..

If you are interested to the talk only about US, then voice of John Cuthber, String Junky, MigL, Genady, me, etc. etc. are meaningless, as we are not citizens of the U.S. ....

Basically entire discussion in this thread would be wiped out, if you constrain just to the U.S.. ..

 

 

1 hour ago, swansont said:

I didn’t make claims about the entire world. The context was the US.

Frankly, I have no idea about the United States. It's only 332/8000 = 4% of the world's population..

If I make some claim, it is universal, worldwide..

1 hour ago, swansont said:

They do surveys.

Seriously? Seriously seriously?

That's how in the US you probe the amount of of unemployment rate?

 

How do you in the US measure rate of homelessness? Do you make survey? By text message? By sending e-mail?

How do you in the US measure rate addiction from narcotics.. ? Do you make survey? By text message? By sending e-mail?

 

Edited May 16, 2023 by Sensei

[MigL]

Over the past ftwo years, shortages and increased transportation costs have increased  the cost of food, which has increased the costs of services up to and including the lending rate, in an effort to control rising inflation.
Is any of this in dispute ?

Correct me if I'm wrong, but most costs incurred by producers are passed on to customers, as they will either make money or go out of business.
This cost escalation has a domino effect, abd if not an isolated case, can, and will, lead to inflation.
Is any of that in dispute ?

Now we just need to establish if labor costs are different, or the same, for a producer as other costs.
Obviously if they are the same, they will lead to similar forcings to cause inflation; if they are different ( as in purchasing new equipment which adds costs, but increases production ) then they may not cause inflation.
And also obvious is the fact that some producers/services will be affected differently than others, and some might be forced to raise prices while others may not.

Edited May 16, 2023 by MigL

[Sensei]

@MigL Of course, everything is passed on to end customers, hence the inflation / cost of living increase, etc. Some industries, such as farmers, are affected, other industries, such as IT, are not affected.

Edited May 16, 2023 by Sensei

[TheVat]

As several have noted, how much inflation depends on what proportion of a business overhead is labor.  And how much is inflation from a MW increase offset by increased disposable income of workers.  If inflation raises all goods and services ten percent, but average wages increase fifteen percent, then workers gain.  It also matters how other pay grades, above minimum, are stepwise affected by the MW increase at a business.  And it also matters where the inflation hits hardest.  If it's nonessential goods and services (non-rent/food/utilities/transit), then people can scale back to meet their budget.  Essentials, OTOH, are harder to scale back - it's hard to negotiate paying 80 percent of your rent and utlities, or skip meals, or walk to a job that's 20 miles away.  

So maybe MW should be set at state and municipal levels, and calculated to meet the cost of living in that area, with the standard being:  can afford essential goods and services.  I think most people at the bottom wage level would gladly endure a pricier burrito at Chipotle, if it meant they could pay rent and groceries every month.  You can make a burrito at home.  You can't chop 200 square feet off your apartment and ask the landlord for a rent discount.  Chipotle would not likely have to lay off burrito assemblers for the simple reason that, for every MW worker who skips lunch there due to a rise in prices, another one who got the pay bump (and happens to have a good rent deal, with roommates, or lives with extended family, say) would start eating there more often.  

Not a practitioner of the Dismal Science, so take all that with a grain of salt.  

[swansont]

2 hours ago, Sensei said:

What claims? I just wrote indisputable facts..

Then it should be no trouble to find the inflation data.

 

2 hours ago, Sensei said:

 

In the OP nobody stated we are constrained and limited to the US..

Gosh, If only I had quoted the parts about California and New York. And if only the article’s context was clear.

Data about the US may not carry over to another country with different details of their economic approach. Do other countries have the same kind of minimum wage structure as the US? (a wage that wouldn’t let you rent an apartment unless you work multiple jobs)

https://www.cnbc.com/2023/02/09/what-it-takes-to-afford-rent-on-minimum-wage.html#:~:text=Rent is typically cheaper in,2.5 salaries to make rent.

(And the presence or absence of social assistance programs play a role here, too)

 

2 hours ago, Sensei said:

If you are interested to the talk only about US, then voice of John Cuthber, String Junky, MigL, Genady, me, etc. etc. are meaningless, as we are not citizens of the U.S. ....

Basically entire discussion in this thread would be wiped out, if you constrain just to the U.S.. ..

And I would have no contribution in a thread about UK economics, which was active not to long ago. Or in much of chemistry, biology and advanced math.

 

2 hours ago, Sensei said:

 

Frankly, I have no idea about the United States. It's only 332/8000 = 4% of the world's population..

But more than 4% of people posting here, which would seem to be the more relevant number.

 

2 hours ago, Sensei said:

Seriously? Seriously seriously?

That's how in the US you probe the amount of of unemployment rate?

Yes. 

 

 

2 hours ago, MigL said:

Correct me if I'm wrong, but most costs incurred by producers are passed on to customers, as they will either make money or go out of business.

As was discussed earlier, this assumes there is an additional net cost. What is the cost of employee turnover? What is the lost efficiency of a worker who is sleep-deprived from working another job?

[MigL]

1 hour ago, swansont said:

What is the cost of employee turnover? What is the lost efficiency of a worker who is sleep-deprived from working another job?

You can classify costs any way you want.
In the end what matters is that the producer must earn money; if he doesn't he goes out of business.

[swansont]

3 hours ago, MigL said:

You can classify costs any way you want.

No, you can’t.

3 hours ago, MigL said:

In the end what matters is that the producer must earn money; if he doesn't he goes out of business.

Yes. And what I’m asking for is evidence that the producer’s net costs are increasing, which multiple people are claiming. The argument that one cost goes up therefore the product must cost more is too simplistic. 

[MigL]

3 hours ago, swansont said:

The argument that one cost goes up therefore the product must cost more is too simplistic. 

I acknowledged that ...

10 hours ago, MigL said:

Now we just need to establish if labor costs are different, or the same, for a producer as other costs.
Obviously if they are the same, they will lead to similar forcings to cause inflation; if they are different ( as in purchasing new equipment which adds costs, but increases production ) then they may not cause inflation.
And also obvious is the fact that some producers/services will be affected differently than others, and some might be forced to raise prices while others may not.

 

[npts2020]

13 hours ago, Sensei said:

How do you in the US measure rate addiction from narcotics.. ? Do you make survey? By text message? By sending e-mail?

 

Not exactly. It is done by testing sewage effluence. Drug usage can be inferred from the percentages of certain chemicals contained therein.

[Sensei]

On 5/17/2023 at 7:12 AM, npts2020 said:

Not exactly. It is done by testing sewage effluence. Drug usage can be inferred from the percentages of certain chemicals contained therein.

..seriously.. ? The amount of inaccuracies must be counted in hundreds of percents..

..except the significant amount of drug addicted people don't live in apartments and don't use toilets at all, as they are homeless etc. from which you can take their piss and analyze it, but on the streets and piss wherever they want ("under a cloud")..

Such a method would only work reliable for prisoners etc.

 

Edited May 20, 2023 by Sensei