Highest Minimum-Wage State Washington Beats U.S. Job Growth

[Sonikku]

If you want an inflation and cost of living adjustment every year, you gotta earn it. Work harder than last year and put in more hours.

 

[fskimospy]

If you want an inflation and cost of living adjustment every year, you gotta earn it. Work harder than last year and put in more hours.

You realize that is the exact opposite of what an inflation and cost of living adjustment is, right?

 

[hardhat]

If you want an inflation and cost of living adjustment every year, you gotta earn it. Work harder than last year and put in more hours.

Cost of living adjustments are to offset the rising cost of consumer goods and services provided by.....the businesses that consumers work for! If businesses are going to increase prices, then they should be able to use that additional revenue to pay their workers better wages. If businesses don't provide a cost of living adjustment the salary they are paying to employees is worth less in terms of buying power. Employees would be doing the same work for less compensation.

 

[BUnit1701]

Cost of living adjustments are to offset the rising cost of consumer goods and services provided by.....the businesses that consumers work for! If businesses are going to increase prices, then they should be able to use that additional revenue to pay their workers better wages. If businesses don't provide a cost of living adjustment the salary they are paying to employees is worth less in terms of buying power. Employees would be doing the same work for less compensation.

You have this cycle backwards. Government strolls in, and forces the employer to pay more, As a consequence, they have to raise prices, driving cost of living up, mandating a further pay raise.

 

[fskimospy]

You have this cycle backwards. Government strolls in, and forces the employer to pay more, As a consequence, they have to raise prices, driving cost of living up, mandating a further pay raise.

Maybe you can help us and explain what you think the relationship between the minimum wage and overall inflation is.

 

[Jaepheth]

Well it's simple math. Someone had to cover the costs.

No. It's not simple math. There's a reason that financial analysts aren't hired immediately after acing Algebra 1 and Econ 101.

Multivariate analysis, Brownian motion and Ito calculus, modeling, statistics, feedback, game theory, and more.

When you put it all together things can become a lot more complicated than "Supply and Demand. hurr hurr." It's like saying you know recommendation X won't improve an internal combustion engine because F=M*A; when X has been shown to improve at least one engine already.

 

[Jaskalas]

Unfortunately, what it really does is force businesses to raise prices to cover the increased labor costs...or lay off workers to reduce the labor costs...which isn't always a viable option.

We hear that about increased taxes as well. So if it's one or the other I'd rather the money not flow to Washington DC.

 

[Matt1970]

No. It's not simple math. There's a reason that financial analysts aren't hired immediately after acing Algebra 1 and Econ 101.

Multivariate analysis, Brownian motion and Ito calculus, modeling, statistics, feedback, game theory, and more.

When you put it all together things can become a lot more complicated than "Supply and Demand. hurr hurr." It's like saying you know recommendation X won't improve an internal combustion engine because F=M*A; when X has been shown to improve at least one engine already.

Well maybe the magical fairy can come by your business and with the wave of her magic wand make a raise in someone's pay not be an increase in the cost of doing business but where I live here in reality town USA that hasn't happened. One of 3 things can happen. I can just eat the cost, I can have less people working for me, or I can raise my prices.

 

[dmcowen674]

Well maybe the magical fairy can come by your business and with the wave of her magic wand make a raise in someone's pay not be an increase in the cost of doing business but where I live here in reality town USA that hasn't happened.

One of 3 things can happen.

I can just eat the cost, I can have less people working for me, or I can raise my prices.

There is number 4

Leave the U.S. and leave all the profits you are enjoying behind.

I'm sure you won't do that.

 

[Jaepheth]

Well maybe the magical fairy can come by your business and with the wave of her magic wand make a raise in someone's pay not be an increase in the cost of doing business but where I live here in reality town USA that hasn't happened. One of 3 things can happen. I can just eat the cost, I can have less people working for me, or I can raise my prices.

Or, you know, maybe the increase in generally available disposable income leads to an increase in sales volume that more than offsets your added costs.

A rising tide lifts all boats, as the saying goes.

 

[Matt1970]

Or, you know, maybe the increase in generally available disposable income leads to an increase in sales volume that more than offsets your added costs.

A rising tide lifts all boats, as the saying goes.

What increase in disposable income? You are just taking money that normally would have gone to the business owner and given it to the employee. If you want to argue the morality of that, then fine, but telling me there is now more money in the economy is pissing on my boot telling me it's raining.

 

[Matt1970]

There is number 4

Leave the U.S. and leave all the profits you are enjoying behind.

I'm sure you won't do that.

And then your job goes bye-bye as well. We have been over this before McOwned.

 

[hal2kilo]

What increase in disposable income? You are just taking money that normally would have gone to the business owner and given it to the employee.

Now that's about the funniest thing I 've read on this forum in a long time.

Ha, ha, ha ,ha!

 

[BoberFett]

On the surface it appears to have a positive effect. I'd be interested in an industry breakdown on job growth. Where are those minimum wage earners spending their money that they would otherwise not be spending, causing growth in what particular industries?

And how does their minimum wage compare to other states that also beat the national average? And those that didn't? Is there a correlation to min wage vs growth rate, or are different states all over the place? I can't verify right now, but doesn't Texas have one of the best job growth rates? And their minimum wage is $7.25.

And of course we could turn it around and use the bailout excuse "Well if they had a lower minimum wage, it would have been even better."

I'm not sure correlation is causation in this case.

 

[Vic]

Unfortunately, what it really does is force businesses to raise prices to cover the increased labor costs...or lay off workers to reduce the labor costs...which isn't always a viable option.

You fail Econ 101.

 

[Jaepheth]

What increase in disposable income? You are just taking money that normally would have gone to the business owner and given it to the employee.

You're being small minded; only considering the effect of a minimum wage increase on a single business when the entire community must be considered as a whole.

All the businesses out there have to pay all their minimum wage earners more. Most of whom are not on YOUR payroll, so there's more money floating around in the economy with those who are more likely to spend it. Which means more customers walking in the door and giving you a sales boost.

A sales boost at the retail/service level means a boost in the supplier level.

Money trickles up, not down; and without a system in place to force sufficient amounts of money back to the bottom the whole system will eventually get top heavy and fall over (See: French Revolution) Or to use another analogy, If you want to make the tree grow, try watering the roots, not the leaves. At least, that's my view.

My main point here is that it's not "simple math"; it's a complex system which may have counter-intuitive reactions to stimuli. Probably the best thing to do would be to try and gain enough data points to see if increasing the minimum wage helps or hurts job creation and the economy as a whole. We have here a data point that shows it could help. Would you like to offer data showing it does what you're claiming (preferably a concrete example of some society/city/nation eliminating their minimum wage), or would you rather insist that you have a flawless grasp on the intricate workings of chaotic systems?

 

[Londo_Jowo]

I can't verify right now, but doesn't Texas have one of the best job growth rates? And their minimum wage is $7.25.

Yes and yes. Washington in 10th.

http://www.dallasnews.com/business/headlines/20140128-texas-led-national-job-growth-in-2013.ece

 

[Jimzz]

Yes and yes. Washington in 10th.

http://www.dallasnews.com/business/headlines/20140128-texas-led-national-job-growth-in-2013.ece

And Texas also has one of the highest poverty rates in the union as well.

 

[Londo_Jowo]

And Texas also has one of the highest poverty rates in the union as well.

Based on this map there are 10 states that have a higher poverty rate and based on colors on the map showing percentage there are many that are close to the same level.

http://www.povertyusa.org/the-state-of-poverty/poverty-map-state/#

 

[DucatiMonster696]

Let us ignore that Washington state already had a high level of high paying jobs, especially in the tech sector. Let us also ignore that Washington state has no personal or corporate income tax and a relatively low tax rate which does and would effect the level of job creation and unemployment rates compared to other states which impose a high personal and especially corporate taxes.

Let us also ignore that very few people making 15 dollars an hour can actually live in Seattle proper or other surrounding areas with similar high minimum wages. Let alone that those few that do actually own property in that city. And lastly lets not even consider where the bulk of job growth is actually occurring which is fueling this circle jerk....I mean increase of employment state by this cobbled together article. Also nevermind looking at the states population demographics Because what works in Washington state would work in George or Mississippi right? Instead lets just focus on one specific statistical number and pretend that it is the end all be all with no need toward any other in actual depth analysis which basically sums up this article.

 

[spacejamz]

And Texas also has one of the highest poverty rates in the union as well.

Pretty sure that all of the states that border Mexico have high poverty rates...

 

[DucatiMonster696]

Based on this map there are 10 states that have a higher poverty rate and based on colors on the map showing percentage there are many that are close to the same level.

http://www.povertyusa.org/the-state-of-poverty/poverty-map-state/#

Now overly a map of racial demographics and start comparing.

 

[Matt1970]

You're being small minded; only considering the effect of a minimum wage increase on a single business when the entire community must be considered as a whole.

All the businesses out there have to pay all their minimum wage earners more. Most of whom are not on YOUR payroll, so there's more money floating around in the economy with those who are more likely to spend it. Which means more customers walking in the door and giving you a sales boost.

A sales boost at the retail/service level means a boost in the supplier level.

Money trickles up, not down; and without a system in place to force sufficient amounts of money back to the bottom the whole system will eventually get top heavy and fall over (See: French Revolution) Or to use another analogy, If you want to make the tree grow, try watering the roots, not the leaves. At least, that's my view.

My main point here is that it's not "simple math"; it's a complex system which may have counter-intuitive reactions to stimuli. Probably the best thing to do would be to try and gain enough data points to see if increasing the minimum wage helps or hurts job creation and the economy as a whole. We have here a data point that shows it could help. Would you like to offer data showing it does what you're claiming (preferably a concrete example of some society/city/nation eliminating their minimum wage), or would you rather insist that you have a flawless grasp on the intricate workings of chaotic systems?

There is not more money floating around in an economy because of a minimum wage increase unless businesses raise their prices and that's called inflation and Washington is certainty not immune from it. They rank 36 out of 50 in terme of the cheapest places to live.

http://www.missourieconomy.org/indicators/cost_of_living/

 

[fskimospy]

Yes and yes. Washington in 10th.

http://www.dallasnews.com/business/headlines/20140128-texas-led-national-job-growth-in-2013.ece

Texas is also the recipient of an oil and gas boom in recent years, which would exist with or without minimum wage laws.

 

[BoberFett]

Texas is also the recipient of an oil and gas boom in recent years, which would exist with or without minimum wage laws.

And in Washington? Were there other factors involved in their job growth? How much of this growth is due to increased minimum wage vs growth in specific industries not generally affected by minimum wage, such as tech?

How many people earn minimum wage in Washington? What is the aggregate increase in yearly income due to the higher minimum wage (employees_earning_minimum_wage * $2/hr) and does that amount support the theory that the increased economic activity of those earners resulted in higher than average job growth?

I'm not asking to be argumentative, but because that information is left out. The article is sparse on details, and intended to leave the reader thinking that higher minimum wage = higher job growth, when reality is more complex.