Ontario raising minimum wage to $15

[Horatio Parker]

How Ideologues Use Grade-School Economics to Distort Minimum Wage Debates

The United States has the lowest minimum wage, as a proportion of average wages, of any advanced economy—one reason for our wide gap between rich and poor. But according to economism, raising the minimum wage would only backfire and harm poor people. On a simple supply-and-demand diagram, a minimum wage is a price floor in the labor market; like any price floor, it must cause supply to exceed demand. Therefore, raising the minimum wage must increase unemployment, and anyone who disagrees simply doesn’t understand Economics 101.

In real life, however, employment levels are the result of many factors—some businesses can pass cost increases on to customers, better-paid workers are less likely to quit, and so on. Real economists study these relationships in detail, and a significant body of recent research indicates that modestly higher minimum wages have no discernible effect on unemployment.

Despite this empirical evidence, the public relations campaign against a higher minimum wage remains clothed in the rhetoric of economism. What goes unsaid is the campaign is, in significant measure, funded by industries that benefit from low wages for unskilled labor. This is but one example of how economism provides a seemingly neutral perspective on the world that can be deployed in the service of business interests and the wealthy.

* * * *

Economism is the reduction of social reality not just to Economics 101, but to just one Economics 101 lesson: the model of a competitive market driven by supply and demand.

Paul Samuelson bemoaned the fact that a single idea—that free competition is always good and government intervention is always bad—is often “all that some of our leading citizens remember, 30 years later, of their college course in economics.”

http://evonomics.com/ideologues-economics-minimum-wage-kwak/

 

[Crazy Eddie]

It's certainly worth pointing out that even in the deepest pits of the economic recession, Walgreens pharmacies never stooped to paying any of its workers minimum wage and still continued their profit sharing and bonus structure. Walgreens continues to be profitable despite this, and is exactly one of those businesses that would not be negatively affected by a minimum wage increase (although they would be HELLA happy about it since a lot of their customers would be making more money).

CVS, on the other hand, gives its managers a lot more discretion when it comes to pay, and as a result many of its stores pay its cashiers close to minimum wage (at least in the Chicago area). The result is that service at CVS is terrible, the stores are dirty and poorly organized and even their managers and assistant managers are overworked and stressed out all the time. CVS has even started trying to replace its cashiers with self checkout kiosks; in places where those have been installed, I would guess that maybe one machine in four is ever working correctly.

So aside from the fact that CVS' main business model appears to be "place at least one store within 500 feet of every walgreens in America" they are not benefiting from reduced wages at all and are relatively poor competitors in that market.


Assuming a CVS has 15 employees, then at minimum wage for everyone but the managers (about $15,000 a year each) their annual payroll would be around $400,000.

A typical CVS store, however, pulls about $9.6 million per year in sales. If they doubled the pay of their employees to give them all $15 per hour, their payroll would swell to around $700,000.

IOW, a bump in the minimum wage would reduce CVS' income by about 3%.


Assuming a Walgreens has 15 employees, then at $15an hour for everyone but the managers (about $31,000 a year each) their annual payroll would be around $700,000.

A typical Walgreens store, however, pulls about $9.9 million per year in sales. If the minimum wage were to suddenly jump to $15 per hour, their payroll would remain about $700,000.

IOW, a bump in the minimum wage would reduce Walgreens' income by 0%.


If all of the CVS pharmacies in Chicago go out of business (there are about 100 of them) then you have 1500 people no longer employed. That's a total loss of $22.5 million in wages, assuming none of those workers get another job ever again. If those workers were previously spending 5% of their income shopping at Walgreens, then walgreens stores will experience a drop of $1.125 million in sales, or about $11,250 per store per year. Which means that CVS going out of business result in a loss of 0.12% of Walgreens total sales and therefore income.

If, however, even half of those workers manage to find jobs at new companies (which must be above minimum wage now) then Walgreens' loss of sales is actually zero again, because the workers with the new jobs are making more and spending more than they were previously. All that is required, therefore, is for 750 people from 100 stores to be re-hired somewhere else.

Most of all, however, is the fact that those $9.8 worth of sales that were happening at CVS are no longer happening there, and those former customers are now shopping somewhere else. Since CVS is so very close to Walgreens all the time, you can assume that a good number of those sales are now taken by walgreens, so their annual sales per store can jump to as high as 12%.

You can factor in other effects that will interact and overlap, but by no means is this going to destroy the labor market or result in mass unemployment all over the city. Some businesses win, some businesses loose. A few enterprising businessmen will suddenly find use for those 100 shut down CVS stores and start new businesses that don't compete with Walgreens, and a few of those businesses will be able to hire more workers. More room for hardware stores, dance studios, liquor stores, auto-parts stores, sporting goods, etc. More diversity in the market means less competition for Walgreens, as well as more diverse and better services for the community.


tl;dr: keeping the minimum wage artificially low gives an advantage to very large but poorly-run companies with very thin margins and very low productivity. Allowing those companies to fail benefits everyone in the long term. The disadvantage if the minimum wage is that if you raise it TOO HIGH you can also make it harder for productive companies to do business and that results in a loss for the community. You want the wage set high enough that workers are gainfully employed; not so high that companies are hemorrhaging money in payroll, but not so low that their only selling point is cheapness.

 

[Loren Pechtel]

FALSE. Automation isn't intended to eliminate the need for labor, it's intended to maximize the OUTPUT of labor. The goal of automation systems is maximum productivity for minimal human effort.

You're missing the point. You're looking at two sides of the same coin and saying they're unrelated. Take my former employer--the automation increased the output 20x. It's not like the market could actually absorb 20x as much product. 2x would be about as far as it could reasonably go and even that's a stretch. That gain came at the expense of less automated competition--more than one of which is now gone. That's where the job loss from automation occurs.

There are still lost jobs, they're just at the companies that don't automate and thus are not competitive with the automated firms.

There is no such thing as an "automated firm." EVERYONE uses some degree of automation, some more or less than others. It's even more interesting when some systems (e.g. voice recognition telephone helplines and menu navigation systems) give some business options they never would have been able to afford manually. Hell, my office just paid $200 for a self-feeding document scanner, thus eliminating 80 man hours of work per year and the need to file/transcribe/archive paper documents on a quarterly basis. We have literally never paid any one person purely to do that job, and our lowest-paid employee could have done that work for about $1300.

$200 is a good deal for a stupid and repetitive task that serves no purpose except to keep us in compliance with record-keeping laws.

And note that said scanner eliminated 1/26th of a job. 26 scanners and someone's unemployed.

- - - Updated - - -

My point has been consistent - whether or not a particular minimum wage increase causes a net benefit or a net harm is an empirical question. You, on the other hand, claim it is always a net harm.

Your point has been consistent--distract and derail. You sound like a politician.

 

[Loren Pechtel]

More than they could AFFORD to, yes.

No. I've spent almost my whole career doing that automation. I've watched the workersroduct ratio drop fivefold due to said automation. While it didn't result in job losses for my employer (over the same interval our output increased 20x) we did destroy some less automated competitors.

You destroyed less EFFICIENT competitors. Not the same thing. And as before, you're implying the jobs lost when those competitors went under were 1) PERMANENT unemployment for those workers (as if they could never get another job afterwards at a more efficient company) and 2) caused by you. Never crossed your mind that they might have gone out of business entirely on their own? That's a thing that happens often enough, automation or not. I see no particular reason why state policy should make it super easy for unprofitable companies to stay in business. Do you?

I see your MO: Deny there is a relationship between any cause and it's unpleasant effect.

Wishful thinking. There's no reason to think the ones that grow pay more than the ones that die.

Who said anything about paying MORE? A growing business hires more workers, and hiring workers means you must PAY them at some point. When a productive business can step into the hole left by an unproductive one, it needs workers to help fill that hole.

Chances are the ones that grow are the ones that figured out how to lower costs.

Indeed. And the businesses that are really good at raising productivity are the ones who understand that the cost of personnel isn't the best way to make those cuts, and that there's actually a certain ideal pay rate for workers in a particular field that is high enough to keep them motivated and feel appreciated but low enough that they will want to try and push harder to earn a raise.

You're assuming that paying more is the route to success. Strange that almost nobody tries that.

But it's not one technician replacing one worker.

So what? You said: "destroying low-wage jobs doesn't make good jobs appear."

Yes it does. Technicians have more work to do in support of the automation systems that made those jobs irrelevant.

So now you're revising your complaint and saying "Destroying low-wage jobs doesn't make an equal number of good jobs appear."

You're mixing up two things.

1) Driving a low-wage company out of business doesn't produce replacement jobs, period.

2) Automation produces good jobs in place of the low-wage jobs it destroys but in nowhere near a 1:1 ratio.

 

[Loren Pechtel]

The United States has the lowest minimum wage, as a proportion of average wages, of any advanced economy—one reason for our wide gap between rich and poor. But according to economism, raising the minimum wage would only backfire and harm poor people. On a simple supply-and-demand diagram, a minimum wage is a price floor in the labor market; like any price floor, it must cause supply to exceed demand. Therefore, raising the minimum wage must increase unemployment, and anyone who disagrees simply doesn’t understand Economics 101.

In real life, however, employment levels are the result of many factors—some businesses can pass cost increases on to customers, better-paid workers are less likely to quit, and so on. Real economists study these relationships in detail, and a significant body of recent research indicates that modestly higher minimum wages have no discernible effect on unemployment.

Despite this empirical evidence, the public relations campaign against a higher minimum wage remains clothed in the rhetoric of economism. What goes unsaid is the campaign is, in significant measure, funded by industries that benefit from low wages for unskilled labor. This is but one example of how economism provides a seemingly neutral perspective on the world that can be deployed in the service of business interests and the wealthy.

* * * *

Economism is the reduction of social reality not just to Economics 101, but to just one Economics 101 lesson: the model of a competitive market driven by supply and demand.

Paul Samuelson bemoaned the fact that a single idea—that free competition is always good and government intervention is always bad—is often “all that some of our leading citizens remember, 30 years later, of their college course in economics.”

http://evonomics.com/ideologues-economics-minimum-wage-kwak/

Keyword: "discernible".

Reality: Roughly 1% of workers work for minimum wage. Suppose a change in the minimum wage caused 10% of those to lose their jobs--what's the overall effect? A .1% increase in the unemployment rate. Most months see changes of this size or higher--a .1% change is below the noise floor. You would have to kill 20% of the minimum wage jobs to have any hope of seeing anything and that would still be below significance unless you had many examples of it.

Arguing that it's harmless because we can't see the effect is showing they are interested in pushing their position rather than in the truth.

 

[Loren Pechtel]

A typical CVS store, however, pulls about $9.6 million per year in sales. If they doubled the pay of their employees to give them all $15 per hour, their payroll would swell to around $700,000.

IOW, a bump in the minimum wage would reduce CVS' income by about 3%.

Business 101 fail.

By "income" do you mean gross or net?

Gross income isn't reduced by payroll, period.

Net income is reduced by the cost of the goods and the overhead, but you're taking the 3% off the gross.

Thus your numbers are neither gross nor net. They're bullshit.

Lets look at the actual numbers:

CVS:
Revenue: $177B
Income before tax: $8.6B

Their SEC filings have no line for labor costs so lets use yours. $400k labor on $9.6m in sales. That's 4.1% of sales and you want to raise it to 7.8%, for a increase of 3.7%.

3.7% of $177B = 6.55B. Your 3% change becomes a 75% drop in income.

 

[laughing dog]

Your point has been consistent--distract and derail. You sound like a politician.

And you sound like Trump - accusing requests for substantiation of factual claims as "fake news" to distract from from the fact you cannot make a necessary factual or theoretical connection between an increase in a minimum wage with a necessary drop of the "profit rate" to being "too low".

 

[Canard DuJour]

The United States has the lowest minimum wage, as a proportion of average wages, of any advanced economy—one reason for our wide gap between rich and poor. But according to economism, raising the minimum wage would only backfire and harm poor people. On a simple supply-and-demand diagram, a minimum wage is a price floor in the labor market; like any price floor, it must cause supply to exceed demand. Therefore, raising the minimum wage must increase unemployment, and anyone who disagrees simply doesn’t understand Economics 101.

In real life, however, employment levels are the result of many factors—some businesses can pass cost increases on to customers, better-paid workers are less likely to quit, and so on. Real economists study these relationships in detail, and a significant body of recent research indicates that modestly higher minimum wages have no discernible effect on unemployment.

Despite this empirical evidence, the public relations campaign against a higher minimum wage remains clothed in the rhetoric of economism. What goes unsaid is the campaign is, in significant measure, funded by industries that benefit from low wages for unskilled labor. This is but one example of how economism provides a seemingly neutral perspective on the world that can be deployed in the service of business interests and the wealthy.

* * * *

Economism is the reduction of social reality not just to Economics 101, but to just one Economics 101 lesson: the model of a competitive market driven by supply and demand.

Paul Samuelson bemoaned the fact that a single idea—that free competition is always good and government intervention is always bad—is often “all that some of our leading citizens remember, 30 years later, of their college course in economics.”

http://evonomics.com/ideologues-economics-minimum-wage-kwak/

Keyword: "discernible".

Reality: Roughly 1% of workers work for minimum wage. Suppose a change in the minimum wage caused 10% of those to lose their jobs--what's the overall effect? A .1% increase in the unemployment rate. Most months see changes of this size or higher--a .1% change is below the noise floor. You would have to kill 20% of the minimum wage jobs to have any hope of seeing anything and that would still be below significance unless you had many examples of it.

Then countervailing effects (income effect, increased velocity of money, reduced welfare bill, improved productivity) would equally be lost in the noise.

Arguing that it's harmless because we can't see the effect is showing they are interested in pushing their position rather than in the truth.

Arguing that it's harmful because we can't see the effect, even more so.

 

[DBT]

Many, if not most, successful firms are quite able to pay their workers substantially more. But, apparently for reasons other than being able to afford to raise wages and living standards for their workers, they don't.


Quote;
''A look at Fortune 500 data suggests that the largest U.S. corporations could improve the economy, their bottom lines, and the lot of millions of workers by increasing the wages they pay their employees.

Fortune 500 companies employ nearly 27 million workers. And all but 37 of the Fortune 500 earned a profit last year. What would happen if those firms that ended up with extra change at the close of the year gave their lowest paid workers a healthy raise?

Of the Fortune 500 companies with positive net income last year, all but 14 could have paid one quarter of their workforce $10,400 more annually and still had millions to spare. (See the results for all Fortune 500 companies.)

This calculation assumes that the tax deductions for the raises would offset any incremental benefits costs and that no other revenue boosts or cost savings would accrue from happier, more stable employees. The $10,400 bump equates to a $5 per hour raise for a full-time worker.

Nearly 85% of Fortune 500 companies with positive income could have paid every single worker $10,400 more and still finished 2013 in the black.''


''Wal-Mart, No. 1 on the Fortune 500 and the nation’s largest private employer, could have given a $10,400 raise to its bottom quartile of wage earners and still have finished the year with net income of over $10 billion. In fact, it could have paid 70% of its 2.2 million workers $10,400 more annually and still had millions to spare. Wouldn’t that be more humane than hosting a Thanksgiving canned food drive for its Canton, Ohio employees?

In April, Time magazine reported that some Disney workers were homeless due to low pay. Yet according to the Fortune 500 data, Disney (No. 61 on the Fortune 500) could have paid half of its employees $20,800 more annually or all of its employees $10, 400 more and still booked profits of over $4 billion.''

 

[Loren Pechtel]

Keyword: "discernible".

Reality: Roughly 1% of workers work for minimum wage. Suppose a change in the minimum wage caused 10% of those to lose their jobs--what's the overall effect? A .1% increase in the unemployment rate. Most months see changes of this size or higher--a .1% change is below the noise floor. You would have to kill 20% of the minimum wage jobs to have any hope of seeing anything and that would still be below significance unless you had many examples of it.

Then countervailing effects (income effect, increased velocity of money, reduced welfare bill, improved productivity) would equally be lost in the noise.

Arguing that it's harmless because we can't see the effect is showing they are interested in pushing their position rather than in the truth.

Arguing that it's harmful because we can't see the effect, even more so.

The effects in either direction are generally lost in the noise. An inability to measure them doesn't mean they don't exist, though.

We can only measure them when something increases the signal to noise ratio. The cases I'm aware of:

1) American Samoa. There was a sudden, sharp increase in the minimum wage and a lot of minimum wage workers. Major unemployment and an economic slump resulted.

2) Teenage unemployment, especially black teenage unemployment. These groups have a far disproportionate number of minimum wage workers and thus feel the bite much harder. And have a much higher unemployment rate.

3) Now, the Seattle study. They tracked workers rather than unemployment.

 

[Don2 (Don1 Revised)]

An inability to measure them doesn't mean they don't exist, though.

WOW!! You argue for your economic religion just like a fundamentalist argues for God.

...[listing some anecdotes]...

There are literally anecdotes of so many different kinds of things that could conceivably support all kinds of irrational ideas.

 

[Crazy Eddie]

You're missing the point. You're looking at two sides of the same coin and saying they're unrelated. Take my former employer--the automation increased the output 20x. It's not like the market could actually absorb 20x as much product. 2x would be about as far as it could reasonably go and even that's a stretch. That gain came at the expense of less automated competition--more than one of which is now gone. That's where the job loss from automation occurs.

FROM OTHER COMPANIES, not the company that uses automation.

More to the point, the loss of jobs due to certain skills becoming obsolete is basically inevitable. There are not, after all, a great many blacksmiths still in business in the American midwest.

Job losses due to economic progress is not something one should be concerned about when analyzing the rate of the minimum wage.

And note that said scanner eliminated 1/26th of a job. 26 scanners and someone's unemployed.

False. 26 scanners means the person who used to transcribe those documents by hand can do the same job 26x faster. He can now do in 30 minutes what used to take him 13 hours.

So what does he do with the rest of that time saved by those scanners? He finds other work to do, other work he wouldn't have been able to do when he was too busy hand-transcribing documents. He's a more productive worker than he ever could have been.

Your objection -- that the company he works for will put out of business everyone who DOESN'T use scanners -- is noted, and irrelevant. It's not what we're talking about and is not even germane to this discussion.

Your point has been consistent--distract and derail.

You were the one who complained that the "other side" didn't care whether the numbers made sense.

He's LD telling you "My point is that sometimes the numbers make sense and sometimes they don't" and you dismiss that as a derail.

You've now moved the goalposts so much that you're actually arguing against yourself now.

 

[ksen]

Then countervailing effects (income effect, increased velocity of money, reduced welfare bill, improved productivity) would equally be lost in the noise.

Arguing that it's harmless because we can't see the effect is showing they are interested in pushing their position rather than in the truth.

Arguing that it's harmful because we can't see the effect, even more so.

The effects in either direction are generally lost in the noise. An inability to measure them doesn't mean they don't exist, though.

We can only measure them when something increases the signal to noise ratio. The cases I'm aware of:

1) American Samoa. There was a sudden, sharp increase in the minimum wage and a lot of minimum wage workers. Major unemployment and an economic slump resulted.

2) Teenage unemployment, especially black teenage unemployment. These groups have a far disproportionate number of minimum wage workers and thus feel the bite much harder. And have a much higher unemployment rate.

3) Now, the Seattle study. They tracked workers rather than unemployment.

About those teens, we want them in school and concentrating on their studies.

That said, I'd be open to a two tier mw with a lower rate for teens in school.

 

[Crazy Eddie]

You're assuming that paying more is the route to success.

Paying ENOUGH is the route to success. People who understand business know this. It is not surprising that you do not.

Strange that almost nobody tries that.

McDonalds tried it.

Turns out paying people a higher wage and giving them more benefits makes them work motivated.

McDonald's (mcd, -0.19%) on Friday reported its third straight increase in quarterly comparable sales, helped by moves such as bringing back All-Day breakfast and offering new menu options.

But another move by McDonald's is behind this reversal of fortune for the hamburger chain, which had posted two years of declines through last fall: higher wages and tuition help for employees.

Last year, McDonald's announced it would raise the average hourly rate for workers at the U.S. restaurants it owned to $9.90 from $9.01 starting July 2015, with average wages climbing above $10 per hour by the end of 2016. The company also said it would allow those employees to earn up to five days of paid vacation every year following one year of employment. The goal was to galvanize restaurant staff at a time of major and frequent changes.

And taking a page out of Starbucks' (sbux, -0.09%) book, McDonald's last year also launched its "Archways to Opportunity" set of programs to provide assistance to restaurant employees pursuing their educational goals, whether finishing high school diploma or going to college. Some 5,000 McDonald's workers are currently tapping the program.

Such moves are reducing the loss of good workers, and helping McDonald's improve order accuracy, speed of service and the overall impression customers have of service, McDonald's CEO Steve Easterbrook told Wall Street analysts on Friday on a call to discuss the company's quarterly results. (McDonald's sales at U.S. restaurants open at least a year rose 5.4%.)

Also:

The third group brought the most provocative results. Its members were initially offered $3 per hour, but then received a surprise $1 increase to match the higher-pay group. The pay increase was not related to performance. It was offered immediately after employees had agreed to work for $3 because, they were told, "we have a bigger budget than expected." So the additional dollar was perceived as a gift, Malhotra said.

"Those who were promised $3 but then later were given an additional $1 worked significantly harder than the other two groups," he said. "We attribute this to the salience of the gift: It was obvious to them that we didn't have to give this additional compensation, but that we had chosen to." The gift "signaled that we had done something nice for them which they may want to reciprocate." And they did reciprocate, with higher productivity.

Indeed, the "gift" group of workers performed with "roughly 20 percent higher productivity than both" the other groups, the study said. And for some employees who had more experience, the boost in productivity was much higher. Moreover, the gift group maintained better focus throughout the work, and performed especially well late into the assigned task.

What do these findings, which Malhotra described as "$3 + $1 is more than $4," mean for real-world companies? He suggested that companies should "think carefully not just about what to pay employees, but also how to pay them. The same amount of compensation can be structured in ways that will be more or less appreciated and reciprocated."

Also:

The Ford Motor Company was in the business of building an expensive durable good. The first cars he had built in number, the 1903 Model N, cost about $3,000, and so were accessible only to that era’s one percent. Henry Ford recognized that the automobile would be more successful as a volume business than as a niche product. “I would build a motorcar for the great multitudes,” he proclaimed. Through relentless innovation, vertical integration, and the obsessive development of an assembly line, Ford had already managed to bring the cost of the Model T, the first democratic car, down to about $500. And the company was moving about 250,000 cars a year. But per capita income was only $354 in 1913. The U.S. didn’t have a developed consumer credit industry. People paid for things with the wages they earned and their savings.

So this was Ford’s theory: Companies had an interest in ensuring that their employees could afford the products they produced. Put another way, employers had a role to play in boosting consumption. While paying higher wages than you absolutely needed to might lower profits temporarily, it would lead to a more sustainable business and economy over time. If the motorcar was going to be a mass-produced product for typical Americans, not a plaything for the rich, Ford would strive to pay his workers enough so they could afford the products they worked on all day.

Ford, of course, was right. And the rest is industrial history. The $5 day didn’t kill Ford, or American capitalism, as many capitalists had warned. By 1916, profits doubled and sales continued to boom. “The payment of $5 a day for an eight-hour day was one of the finest cost-cutting moves we ever made,” he said. By 1921, Ford had half the U.S. car market and, thanks to falling costs and rising wages, the price of a Model T stood at about half the level of per-capita income. Ford pioneered a massive new industry whose wages set the tone for the country and turned Detroit into a high-wage metropolis.

^ That's Henry Fucking Ford, LP, the Grand Master of American Capitalism, paying his workers a living wage and raking in ridiculous profits as a result.

So tell me again why "almost no one thinks of that?"

 

[Loren Pechtel]

WOW!! You argue for your economic religion just like a fundamentalist argues for God.

No--the effects are logically expected and do show up in the few cases we can see better.

...[listing some anecdotes]...

There are literally anecdotes of so many different kinds of things that could conceivably support all kinds of irrational ideas.

In other words, pay no attention to the evidence you don't like.

 

[Loren Pechtel]

FROM OTHER COMPANIES, not the company that uses automation.

And that's supposed to matter? The question is job loss, not what company lost the jobs.

More to the point, the loss of jobs due to certain skills becoming obsolete is basically inevitable. There are not, after all, a great many blacksmiths still in business in the American midwest.

We didn't expect any particular skills at hiring for most jobs. This wasn't a matter of skills becoming obsolete. The jobs that did have skill requirements (building/maintaining automation) weren't the ones being lost.

Job losses due to economic progress is not something one should be concerned about when analyzing the rate of the minimum wage.

The higher the minimum wage the more automation and thus the more job loss due to automation.

And note that said scanner eliminated 1/26th of a job. 26 scanners and someone's unemployed.

False. 26 scanners means the person who used to transcribe those documents by hand can do the same job 26x faster. He can now do in 30 minutes what used to take him 13 hours.

Try again. You said the scanner saved 80 hours (2 weeks) of work. Apply that across 26 similar offices and you have a year's worth of labor saved. One year of saved labor = one job eliminated.

So what does he do with the rest of that time saved by those scanners? He finds other work to do, other work he wouldn't have been able to do when he was too busy hand-transcribing documents. He's a more productive worker than he ever could have been.

The problem is that you are assuming there's a job out there.

Your objection -- that the company he works for will put out of business everyone who DOESN'T use scanners -- is noted, and irrelevant. It's not what we're talking about and is not even germane to this discussion.

Strawman.

Your point has been consistent--distract and derail.

You were the one who complained that the "other side" didn't care whether the numbers made sense.

He's LD telling you "My point is that sometimes the numbers make sense and sometimes they don't" and you dismiss that as a derail.

You've now moved the goalposts so much that you're actually arguing against yourself now.

No, you're missing the point.

 

[Loren Pechtel]

Paying ENOUGH is the route to success. People who understand business know this. It is not surprising that you do not.

Strange that almost nobody tries that.

McDonalds tried it.

Many companies are finding they need to pay $10/hr to get decent workers. That's not evidence that paying more gets better workers, but rather that paying more allows you to be more selective in who you hire.

 

[Crazy Eddie]

And that's supposed to matter? The question is job loss, not what company lost the jobs.

It wasn't question. YOU claimed that increasing the minimum wage causes rising unemployment and you've been casting around through 50 different highly varied explanations trying to justify that claim. Your latest claim is now that very efficient companies that don't depend on low wages will drive inefficient companies out of business or force them to rely on automation, which will force companies that remain inefficient out of business.

As fine a theory as this is, we're now down to talking about shifts in the balance of the labor market ITSELF, of which the minimum wage is no longer even the most significant factor. We're back to the "lost in the noise" effect you mentioned since you have now whittled your argument down to statistical anomalies.

We didn't expect any particular skills at hiring for most jobs.

That's because you suck at business.

Try again. You said the scanner saved 80 hours (2 weeks) of work. Apply that across 26 similar offices and you have a year's worth of labor saved.

I don't have a years' worth of labor that I need to do. I have an amount of work that can be reduced from 80 hours to, say, 8 hours. Adding more scanners reduces that even further. The copying of documents now takes less time.

The only way it eliminates jobs is if we have someone on the staff whose ONLY JOB is to scan documents and record them. If that IS an entire job position anywhere, it probably shouldn't be. And any smart manager will immediately say "Well, it only takes you 30 minutes to scan a whole year's worth of documents into the system, so once that's done I have some training courses I want you to take so you can help our sales manager raise our profile in our market!" Instead of a highly inefficient scan clerk, you now get the same amount of work PLUS an extra member of the sales team.

Unless, of course, you only hire the guy for the thirty minutes it takes to scan the documents because you suck at business and can't plan ahead.

So what does he do with the rest of that time saved by those scanners? He finds other work to do, other work he wouldn't have been able to do when he was too busy hand-transcribing documents. He's a more productive worker than he ever could have been.

The problem is that you are assuming there's a job out there.

No, I'm assuming there's a job IN HERE, as in right at the company he's already working for.

If you can't find something to do in the place you already work, it's because you're a shitty employee. If you can't find something for your employees to do after you've hired them, it's because you're a shitty boss.

No, you're missing the point.

That is literally all you have left isn't it?

 

[Crazy Eddie]

Paying ENOUGH is the route to success. People who understand business know this. It is not surprising that you do not.


McDonalds tried it.

Many companies are finding they need to pay $10/hr to get decent workers. That's not evidence that paying more gets better workers, but rather that paying more allows you to be more selective in who you hire.

That's a fine theory... too bad it's directly contradicted by all three of the articles I just quoted. One of them explicitly says that the SAME EMPLOYEES actually become more productive when their pay is RAISED, compared to workers who start out at the higher pay rate. Another one describes McDonalds giving pay raises and further incentives to existing employees as well as new ones; they AREN'T being more selective, they're motivating their best and most qualified workers to STAY ON THE JOB longer. Apparently, when working for McDonalds is actually worth the time put into it, people who could otherwise afford to find better jobs stay on a little longer, and McDonalds' sales -- and therefore profits -- improve.

And then there's the example of Henry Ford, who was NOT being selective about his hiring process and was actually training workers who knew nothing about the auto industry (meaning "all of them") and turning them into kickass employees while also paying them higher-than-standard wages so they would stay with Ford longer, learn their skills better, and hold themselves to a higher standard on the job.

In NONE of these articles is it even distantly theorized that employers are "more selective" because wages are higher. It's exactly the opposite: EMPLOYEES are choosing to stay longer and work harder, because they believe the company is paying them better than it otherwise could and therefore work that much harder to try and justify the raise.

There is a metric fuckton of research that all but decisively shows higher wages increase productivity even among unskilled labor. If you had bothered to read ANY of it you would not be making such an asinine claim.

 

[Canard DuJour]

Then countervailing effects (income effect, increased velocity of money, reduced welfare bill, improved productivity) would equally be lost in the noise.

Arguing that it's harmless because we can't see the effect is showing they are interested in pushing their position rather than in the truth.

Arguing that it's harmful because we can't see the effect, even more so.

The effects in either direction are generally lost in the noise. An inability to measure them doesn't mean they don't exist, though.

Indeed, therefore statistical noise might equally conceal a positive employment effect.

We can only measure them when something increases the signal to noise ratio. The cases I'm aware of:

1) American Samoa. There was a sudden, sharp increase in the minimum wage and a lot of minimum wage workers. Major unemployment and an economic slump resulted.

2) Teenage unemployment, especially black teenage unemployment. These groups have a far disproportionate number of minimum wage workers and thus feel the bite much harder. And have a much higher unemployment rate.

3) Now, the Seattle study. They tracked workers rather than unemployment.

But they don't exclude statistical noise, they exclude the conditions and metrics under which a MW hike would be employment neutral or positive :

1) a sudden, sharp increase where 75% of the population worked for the same canary. Duh, yeah anyone would expect some unemployment there (and even then, DelMonte Foods moved rather than eliminated jobs).

2) and 3) are entirely consistent with employment neutral or positive outcomes (as appears to have been the case in Seattle). Even if statistical noise conceals a positive effect, you'd expect reductions in the low wage/skill bracket. That's a feature, not a bug.

Crude example : MW increase -> a few burger flippers at the margins are laid off -> the rest get their cars/plumbing/whatever fixed with the additional income -> a few mechanics/pumbers/whatever at the margins are taken on.

Whether or not the upside happens, you'd see the same downside looking at the burger flippers in isolation.