There is good theory, and some empirical data, to show the harm caused by minimum wage.
But there is no empirical data to show a net benefit from minimum wage increase. Most arguments, on both sides, are based on theory only, with insufficient evidence.
There isn't any evidence that is what is happening. What may happen is people jettisoning bad paying jobs for better opportunities, a well known problem among low payed minimum wage jobs with bad management policies such as no guarantee of full employment week from week and erratic scheduling often at the last minute. So when people ditch an unpleasant job, management looks for new hires. When that sort of bad system is undermined, things change.
The point of the study that this thread was based on was that the right winged think tanks that predicted economic doom and gloom if Seattle made $15 the minimum wage turned out to be so much nonsense. And as the study seems to find out, many of those think tank goofballs seem resistant to admitting they were wrong. Who needs facts when you have a hide bound ideology?
If they were getting better jobs the data would show it.
The good workers benefited. The not-so-good ones basically stayed the same. The not-employed found it harder to get a job.
You keep saying this. It's OBVIOUS to you, because you are taking a VERY narrow view of employment. But it's not, apparently TRUE, despite being OBVIOUS, so it's probably time for you to expand your simple model of how it is so OBVIOUSLY true, so that the model no longer collides with reality.
The fact is that the pool of potential workers (workers plus unemployed people who want a job) is fairly static. So increasing minimum wage can ONLY lead to job losses if it leads to fewer people with jobs. Which it OBVIOUSLY must, IF the increase in wages of those paid the new higher amount has little impact on economic activity. But minimum wage earners spend their money quickly and locally. They don't hoard it, save it, or invest it in multinational corporations. The increase in income for the people at the lowest end of the income range leads to an increase in demand for workers.
No it doesn't. This increase in income is a very tiny teeny teeny phenomenon which cannot be measured or identified as the cause of anything empirical. So it's just your THEORY that it leads to this increase in demand for workers.
But your theory is incorrect. You're assuming the increase in income to low-income workers leads to an increase in demand and thus an increase in employment to meet that demand.
But that's wrong because this increase in demand (from those low-income workers) leads in turn to an
increase in prices -- inflation -- which in turn reduces the real income of every consumer, which in turn leads to a DECREASE in demand, which in turn cancels the initial increase in demand, and thus there is no net increase in demand requiring companies to hire more workers.
As to the EMPIRICAL FACTS, there is nothing to prove anyone's theory one way or the other, because the MW increases are always too small to measure and identify as causing any increase or decrease in demand. So there are no facts to base your theory on, or anyone else's theory. (Except the case of Samoa's MW increase in 2007-09 --
https://www.businessinsider.com/the...wage-hike-destroyed-the-samoan-economy-2010-1 .)
But your theory is wrong by ignoring the increase in prices which must result from any increase in consumer demand, and there would be such an initial increase in demand when minimum wage goes up, and this would be quickly offset by the new higher prices.
The increase in prices precedes any increase in demand for additional workers, so that increase in prices will drive the demand back down to where it was before.
And that demand can only be met by hiring unemployed people. At the higher rate mandated.
No, that demand is met first by increasing the prices. This then drives the demand back down.
You can theorize that new hiring would precede the price increases, but raising prices is always easier and sooner than new hiring. The new hiring is only based on a prospect of meeting FUTURE demand you think will be higher. But the new higher prices are an immediate reaction to a higher EXISTING demand, so raising prices is more of a sure thing for the business trying to cash in on new demand.
The result of increased minimum wage, in an environment where the balance between profits and wages has skewed towards profits, is to redress some of that skew. ONLY when the balance becomes skewed so far the other way that profits become difficult to achieve, will you see the effect that is so OBVIOUS to you.
So, are profits at risk? Are margins razor thin amongst businesses that employ large numbers of minimum wage staff in Seattle? If not, then the OBVIOUS loss of jobs for those at the bottom of the ladder is in fact UNTRUE; And instead of cutting the bottom off the ladder, you allow the unemployed to leap the first $15/hr in a single bound.
Of course, if your OBVIOUS objection was in fact also TRUE, you would have EVIDENCE for it.
There is no empirical evidence for anyone's theories, including yours above, about the effect of the minimum wage increase.
And your theory above is incoherent as theory, let alone devoid of any empirical facts.
If the EVIDENCE is too weak to measure, then that is a clear indication that the supposed harm is too minor to be noticed by anyone.
All the harms are noticed. The harm is there and is felt, by millions of consumers, even if it's not measurable. That it's not measurable does not mean it isn't felt.
E.g., suppose a truck delivering oranges goes over a cliff and a couple tons of oranges are lost. Somewhere in that region there will be a small increase in the price of oranges, or at least a shortage, because of this accident. That will be felt by some consumers. If you multiply that damage by several hundred, it does matter and is noticeable. But still there is no way to measure this to calculate how much higher the price increased and who felt this harm, or tracing the slightly higher price somewhere to that particular accident. But the harm is felt and is noticed. Just because it could not be measured does not mean there is no harm experienced by someone, however minor.
It would be ludicrous to suggest that one load of oranges lost has no negative impact because it's too small to be noticed. There is harm from it, and each additional increment of such harm, in the economy, makes us a little worse off. Those making decisions which would drive up costs have to take into consideration each increment of harm their decision could cause. They cannot reason that this or that policy would cause too little harm to be measured and so doesn't matter.
So, making the roads a little safer, or a precaution to prevent such an accident to one truck delivering product, etc., does matter, even though the possible damage would be too small to measure. Not having particular data to connect this or that harm to the cause of it does not mean the theory is wrong and no decision should be made.
Why are you worried about immeasurably small effects?
Each small effect matters and has to be taken into consideration. If we can see that supply-and-demand is impacted so that costs would be increased, then the decision-makers must take that into account, even though each negative effect would be immeasurably small.
The exception, Samoa, where there is real evidence.
https://www.businessinsider.com/the...wage-hike-destroyed-the-samoan-economy-2010-1
Where is the data that shows higher levels of unemployment after the change?
There is one case, and only one, where there is sufficient data to show the impact on unemployment. This is the case in Samoa, where the impact of the minimum-wage increase actually was enough to be measurable.
All the studies of minimum wage are unreliable to give any real evidence on this, other than the case of Samoa, where everyone had to recognize the bad results.
In order to see the consequences of the MW increase, this increase has to be great enough, and have wide-enough impact, so that the results can really be recognized. In the case of Samoa, those who passed the MW increase, Congress, had to rescind it, when they recognized the harmful consequences. This is the proof which is lacking in all the other cases, where the opposing sides of the debate can keep interpreting the limited and dubious data as they wish to promote their respective theory.
If you don't have that data, then all you have is an empty appeal to the obviousness of an overly simplistic hypothetical that has no connection to reality.
There is reliable data in the one case of Samoa only. For other cases there is insufficient evidence to show the overall impact.
In Seattle and other recent cases there obviously is insufficient evidence. All the popular MW increases we hear of are cases where the increase is done just prior to an economic upturn, when the employment numbers will predictably increase. And even then the MW increase is done conditionally, so that it can be rescinded or postponed if there's any unexpected downturn. So this creates the illusion that MW increase is part of the economic upturn, since it's passed only when an upturn is about to happen anyway.
Also, these MW increases are always phased in gradually to soften the negative consequences, so there's no sudden strong impact. Most of the reported $15-per-hour increases have still not kicked in, because they are delayed over a few years.
If the MW increase is small, then we can assume that the negative results also are small. There is no basis to believe the net results are positive just because a few identifiable workers now are paid more. For virtually all cases the results are too small to be measurable, and there's no way to calculate the NET result vs. the obvious benefit to a few high-profile workers who receive much publicity.
Good theory when sufficient data is lacking
But there is good theory, even when the data are not available. Like the theory that a truckload of oranges getting lost has a negative effect on consumers somewhere. This is good theory to base decisions on.
To show that minimum wage causes net good results, you have to show a flaw in the
theory of supply-and-demand, which says all prices should be set by the competitive market. Also you have to refute the rule that competition is good for the economy.
If minimum wage is good, then
wage competition between workers is bad, meaning that you think competition between producers (e.g., workers) is not always good for the economy and that price-fixing is OK in some cases.
So, even though empirical data is lacking in most cases, at least there is this contradiction among those promoting minimum wage: Their ideology requires rejecting these two basic principles -- the law of supply-and-demand and the rule that competition is good and price-fixing bad.
If your ideology contains contradictions, then something is wrong somewhere.
Whereas the anti-minimum-wage ideology is based on the law of supply-and-demand as a premise, and also on the benefits of competition vs. price-fixing, which mainline economic schools accept as basic principles.
The pro-minimum-wage ideologues never address these 2 contradictions.
