Min Wage increase kills a SF small business

[DucatiMonster696]

The impacts are small across the board and are barely measurable, especially when it comes to the cost on businesses. Minimum wage increases are not business destroyers.

I agree with the rest of your points though.

The impacts are there even if they are barely measurable because the rate hike is itself barely measurable in its effect to do anything that its supporters claim it will do. Mean while ignoring the true long term and self-defeating detrimental costs of what it would take to actually push people out of poverty by raising the wage to something that could be measured is also just as bad.

 

[ivwshane]

The impacts are there even if they are barely measurable because the rate hike is itself barely measurable in its effect to do anything that its supporters claim it will do. Mean while ignoring the true long term and self-defeating detrimental costs of what it would take to actually push people out of poverty by raising the wage to something that could be measured is also just as bad.

I can't say I disagree, it's treating the symptoms and not the cause. However I'm sure there is even less will to treat the cause

 

[openwheel]

any business that has to rely on low minimum wage probably deserves to fail.

 

[blastingcap]

I agree with most of what you said. The issue is with this statement...

Strong is subjective, and does not mean important. As you said, the noise in the data makes it very hard to see much. But, the reason for that is largely because researchers are trying to measure something that is a very small part of the economy. The implication of your statement will typically be read to say that minimum wage increases don't have a negative effect. The logic behind why minimum wage increases are a net negative are very sound. When we know that the data is not strong, but the data we do have shows something inconclusive, then its more likely a problem with the data.

I think you would agree that wages are a function of supply of labor vs demand of labor. So if the supply at any given time is constant, and wages are low, its because demand is low. If demand is low, then its because companies cannot make a profit off of the available labor.

I think we would both agree that underemployment is very high among teens and minorities.

Do you think the minimum wage has a net negative effect on employment?

I agree with the sentiment that there are too many variables for long term studies to cut through.

As for the rest, well, I don't know. I think the data is ambiguous and inconclusive for at least the short term. And possibly even the long term, because you get into factors like "learned unemployment," where if someone falls out of the labor pool for too long, they are less likely to reenter it even if the economy picks up again, whether due to employer discrimination (this is well-documented) or because of other factors (e.g., the unemployed person becomes clinically depressed, or makes a false claim of disability to get by once welfare checks run out). On the other hand, if wages are so low that minimum wage is not enough to support someone, then that someone may decide to keep remaining unemployed rather than work for barely any more money than they get from welfare/unemployment. They could then add to the pool of people who have been out of work for so long that they have a hard time getting back to work. This really happens, by the way, especially if someone needs a car and fuel to get to work, as the car payments and fuel can eat up a big chunk of someone's minimum wage. So they continue to not-work.

Someone else beat me to it, but poor people tend to spend more of their earnings than rich people, for obvious reasons. So that minimum wage gets recirculated into the local economy, which may improve the sales revenue and profits of the employer. That doesn't always happen, though, especially with commodity products that people can easily order online. But there remains some of this effect which can offset any negative impact from minimum wage.

For this and other reasons (some of which were laid out in the blog), small increases in wages it would appear that the minimum wage does not always produce a statistically significant negative effect on employment in the short term. The various studies' collective results are inconclusive.

 

[feralkid]

Everyone knows this will happen; an increase in wages whether mandated or market-driven is going to take out some marginal businesses. But it should be noted that evidently this store's "best year ever" in 2014 must not have been very good (e.g. in 2014 I managed to set myself on fire only sixteen times, a new personal best!) if it's shutting down without even attempting to adjust its business model. I hate it for the owner, who might have been living his modest little dream, but everything government does has winners and losers. We can hardly give up government just because government inherently shuffles the deck.

Stop making sense.

 

[feralkid]

No. Its a fucking straw man plain and simple. You're just not personally honest enough to admit it to yourself.

"Strawman" doesn't mean what you think it does.

 

[feralkid]

Ah yes, the tired old "move to somalia" bullshit strawman argument, with some other worthless platitudes about "living wage" mixed in. Nice try.

Same to you.


http://en.wikipedia.org/wiki/Straw_man

 

[FelixDeCat]

 

[umbrella39]

Typical excuses. Surprised the business owner didn't blame Obama. Whaaa... no cheap labor.... Tough shit.

 

[realibrad]

I agree with the sentiment that there are too many variables for long term studies to cut through.

As for the rest, well, I don't know. I think the data is ambiguous and inconclusive for at least the short term. And possibly even the long term, because you get into factors like "learned unemployment," where if someone falls out of the labor pool for too long, they are less likely to reenter it even if the economy picks up again, whether due to employer discrimination (this is well-documented) or because of other factors (e.g., the unemployed person becomes clinically depressed, or makes a false claim of disability to get by once welfare checks run out). On the other hand, if wages are so low that minimum wage is not enough to support someone, then that someone may decide to keep remaining unemployed rather than work for barely any more money than they get from welfare/unemployment. They could then add to the pool of people who have been out of work for so long that they have a hard time getting back to work. This really happens, by the way, especially if someone needs a car and fuel to get to work, as the car payments and fuel can eat up a big chunk of someone's minimum wage. So they continue to not-work.

Someone else beat me to it, but poor people tend to spend more of their earnings than rich people, for obvious reasons. So that minimum wage gets recirculated into the local economy, which may improve the sales revenue and profits of the employer. That doesn't always happen, though, especially with commodity products that people can easily order online. But there remains some of this effect which can offset any negative impact from minimum wage.

For this and other reasons (some of which were laid out in the blog), small increases in wages it would appear that the minimum wage does not always produce a statistically significant negative effect on employment in the short term. The various studies' collective results are inconclusive.

The only part that I think I disagree with, is the idea that the increased revenue of minimum wage can be a net boost to the economy when it gets spent. I think there is an effect there, but I think the net is offset by those who lose their jobs or future jobs that never open.

Further, there is also the effect that people whom would have normally gained stills making low wages would have gained skills and increased their utility, and commanded higher wages. As you explained previously, some may drop out of the market and never return, as it is easier and possibly cheaper to live off of Welfare. You then create a class of people for whom the incentives are to not work, because it would be too costly.

I think we both agree that Welfare is not a huge hit to the economy. I don't have a problem with a safety net for those who hit hard times. What I think is sad is the fact that we are taking away the ability through incentives for people to improve their lives.

I think it would be far more productive to take the increase of minimum wage, and put it into training programs. If the labor pool does not have skills sufficient to command "living wages", then give them the tools.

 

[DAPUNISHER]

--sci fi and horror bookstore? check
--rise of amazon and ebooks? check
--standard rent increase all across the city? check
--decline of print media and book stores all across the country, for a decade plus? check


--new minimum wage has killed us in one year! D:

Uh, OK. sure.

No.

Spot on.

And calling the premise this is based on tenuous, is being generous.

 

[Jaepheth]

Wait... wait... I got it.


So... if a law kills a single business it should be repealed?

Then, if a law or, say, 2nd amendment results in actual dead people it too should be repealed, yes?



States and countries are big places. No matter what gets passed some people are going to fall between the cracks. It's inevitable. Both sides need to stop with the anecdotal evidence.

 

[werepossum]

The only part that I think I disagree with, is the idea that the increased revenue of minimum wage can be a net boost to the economy when it gets spent. I think there is an effect there, but I think the net is offset by those who lose their jobs or future jobs that never open.

Further, there is also the effect that people whom would have normally gained stills making low wages would have gained skills and increased their utility, and commanded higher wages. As you explained previously, some may drop out of the market and never return, as it is easier and possibly cheaper to live off of Welfare. You then create a class of people for whom the incentives are to not work, because it would be too costly.

I think we both agree that Welfare is not a huge hit to the economy. I don't have a problem with a safety net for those who hit hard times. What I think is sad is the fact that we are taking away the ability through incentives for people to improve their lives.

I think it would be far more productive to take the increase of minimum wage, and put it into training programs. If the labor pool does not have skills sufficient to command "living wages", then give them the tools.

Well said, but I'll raise two small points. First, we aren't taking away the ability for people to improve their lives, merely some of the incentives. Some people will continue to be raised on welfare and/or work minimum wage jobs and then become reasonably or even wildly successful.

Second, with automation and off-shoring and a weak recovery we are desperately short of good jobs. I'm not at all opposed to training programs, especially where there is a demonstrable lack of skilled workers, but that won't reduce the comparatively number of people who earn minimum wage.

 

[Apple Of Sodom]

If you aren't a small business owner who has had to scrape together to make payroll and payroll taxes, then you need to shut the fuck up because you have no goddamn idea what you are talking about.

 

[realibrad]

Well said, but I'll raise two small points. First, we aren't taking away the ability for people to improve their lives, merely some of the incentives. Some people will continue to be raised on welfare and/or work minimum wage jobs and then become reasonably or even wildly successful.

Second, with automation and off-shoring and a weak recovery we are desperately short of good jobs. I'm not at all opposed to training programs, especially where there is a demonstrable lack of skilled workers, but that won't reduce the comparatively number of people who earn minimum wage.

When I said "taking away through incentives", I meant that we are incentivising people not to improve. So we agree there.

The number of people making "minimum wage" has been going down. From the time the BLS started measuring this, it used to be that 7.9%, and is now 2.6%. So really, if that is anything, it shows that its getting better. Where jobs are being "lost" are well above minimum wage.

As for training, you could have companies request skills in a set area. Companies get better skilled labor, and labor gets more skills to make more ect.

 

[werepossum]

When I said "taking away through incentives", I meant that we are incentivising people not to improve. So we agree there.

The number of people making "minimum wage" has been going down. From the time the BLS started measuring this, it used to be that 7.9%, and is now 2.6%. So really, if that is anything, it shows that its getting better. Where jobs are being "lost" are well above minimum wage.

As for training, you could have companies request skills in a set area. Companies get better skilled labor, and labor gets more skills to make more ect.

Agreed. I would support such training, but I still say increase minimum wage (preferably on a state and city level where cost of living can be taken into account) for those people who are willing to work hard but too dumb to train to something better. I certainly don't agree with Obama that minimum wage should be sufficient to allow one to raise a family, but I do think it should be sufficient that a full-time worker should be able to live with a couple roommates. Admittedly not many people fall into this category, but some isn't none.

 

[Fern]

Lol! Minimum wage increases to $15 by 2018. Saying minimum wage killed a business when that minimum wage hasn't even kicked in is laughable.

I know that. It's phased in and begins rising now:

http://sfgsa.org/index.aspx?page=411

If the numbers he claims are true then sometime between now and 2018 he'll HAVE to go out of business. So it's only the timing that is of question. This is up to him and his individual circumstances. E.g., exercise that additional 5 yr lease extension when you know you can't last that long etc.

Not only that but an owner who doesn't think San Francisco residents would be will to pay a 20% increase in prices on books! is the most retarded thing I've ever heard. How much are these books? $5-15 equals $1-3 increase. Good lord people are retarded!

There's a decent likelihood that he is contractually prevented from charging more than the 'sticker price'. If you think about it's not a good policy for the publisher.

Fern

 

[Fern]

Yea and if YOU had bothered to read the whole article, you would see that:



So no, the business was not killed.... just the UNPROFITABLE part of it. So the part that was paying SHITTY wages is gone, the part that remains will be paying BETTER wages.

Why the fuck should there be $10/hr jobs in the 21st century? That is like 50 cent/hr jobs in the 1970s....

Fail. Two different businesses.

Fern

 

[Atomic Playboy]

I certainly don't agree with Obama that minimum wage should be sufficient to allow one to raise a family...

Why not? Reproducing is the most fundamental part of life there is, even beyond personal survival. Trying to limit reproduction to those that have proved themselves worthy (by having better than minimum wage employment, for example) is a losing proposition; humans have tried time and again to control reproduction and it's always ended in abject failure. Always. So people are going to reproduce... in which case, why shouldn't the minimum allowable wage be enough to cover for that eventuality?

 

[realibrad]

Why not? Reproducing is the most fundamental part of life there is, even beyond personal survival. Trying to limit reproduction to those that have proved themselves worthy (by having better than minimum wage employment, for example) is a losing proposition; humans have tried time and again to control reproduction and it's always ended in abject failure. Always. So people are going to reproduce... in which case, why shouldn't the minimum allowable wage be enough to cover for that eventuality?

The implication of your statement is that people who make minimum wage just got bad luck. Further, why should others pay for someone who decided to have kids?

 

[Pens1566]

Let's see... Let's say the minimum wage goes up $3/hour. And, that requires a "20% increase in prices on books." Then, a couple of guesses/assumptions and we can pull some more numbers out. If there's 1 employee working at any particular hour during the day, then the total selling price of the books he's selling has to increase by $3 during that hour. $3 is 20% of $15.

So, assuming the owner is telling the truth, that San Franciscans would have to pay 20% more on books, that means his book store is currently selling $15 worth of books each hour.

Now, let's say there were 10 employees. That means $30 more per hour, and thus, $150 worth of books - it scales pretty linearly. If you're only selling $15 worth of merchandise per employee per hour, you're full of crap saying that the minimum wage increase is the reason you're going out of business. Your business is already failing.

He stated he has 3 min. wage employees.

 

[Atomic Playboy]

The implication of your statement is that people who make minimum wage just got bad luck. Further, why should others pay for someone who decided to have kids?

Because we end up paying anyway through social services and welfare? The implication of my post was not that people earning minimum wage got there through bad luck but that people on minimum wage will reproduce regardless and it is bad luck for their children who end up in a minimum wage household through no fault of their own. We've already determined as a society that we aren't going to hold children accountable for the faults of their parents in not possessing marketable skills, so we end up subsidizing them one way or another. There's no humane alternative, either, unless you're comfortable with breaking up families or mandating abortions for people under a certain income threshold. A livable wage doesn't seem unreasonable by comparison.

This is, of course, based around the idea that you will never convince poor people that they shouldn't reproduce. And you won't. Ever. You can have the most logical argument in the world for why they shouldn't, but it's not going to trump the innate desire to pass on one's genes. Billions of years of evolution haven't conditioned people to act as rational actors in all scenarios, especially if it means sacrificing their ability to reproduce. It's not feasible to tell people "get a better job before you have kids" and expect them to actually follow that advice. And since we aren't willing to punish the children for that transgression, we might as well deal with the reality of figuring out the best way to subsidize the people who need it.