Yet another fast food worker strike

[ivwshane]

That's a hell of a lot more logical than those who think robbing Peter to pay Paul is better for the economy.

The only reason people say to tax the rich more to pay for programs for the poor is because the GOP screams bloody hell about the debt and deficit.

However the minimum wage has nothing to do with that unless you think making companies pay their employees better is "robbing peter to pay paul".

 

[werepossum]

The productivity has increased for decades without corresponding increase in purchasing power for the workers. Time for the everyone has more wealth part. Just think of it as accelerated trickle down, if it makes you feel better. Inflation would imply that there is no slack in production capacity. That is clearly not the case. Economy is limited by demand, not supply of goods. Boosting pay for people most likely to spend it to improve their quality of life will grow the economy.

Assuming you are correct, why not just raise minimum wage to $100/hour and usher in real prosperity? Think of the demand we've have! You'll find all sorts of justifications against this because you know this relationship is not true.

As far as inflation implying there is no slack in production capacity, that is simply not so. Inflation is merely a devaluing of currency; it is completely neutral with respect to slack in production capacity except that lack of production capacity will cause inflation, yet the reverse clearly is not true. Interwar Germany had plenty of untapped production capacity, but had runaway inflation because they inflated the money supply without creating any more wealth. There is no free lunch.

Resource owners set product and service prices based on their best evaluation of sales versus profit. A company clearly can sell more widgets at $1 than at $5. In return for that $1 or $5, the company receives a certain amount of purchasing power, some of which the company uses and some of which is passed on to its ownership. You're proposing that the company will accept drastically less purchasing power in return for its products simply because you wish it. Yet if this was true, wouldn't that company already be selling at the lower price? If my product or service is $100 I receive in return the equivalent of 12.12 hours of $8.25 minimum wage labor. You're proposing that I should instead accept the equivalent of 6.67 hours of $15 minimum wage labor. Even setting aside for the moment the fact that very, very few companies have that kind of profit, why would they accept that? Beyond that, HOW can they accept that? Even if none of their employees are at or below the new minimum wage, their employees certainly purchase goods or services whose creation and/or delivery involves employees in that range, which includes nearly half our work force. In effect, you want a revolution, so that people with high value products, labor and services become minimum wage earners.

Look at it this way - the economy is at its base an exchange of value for value. Currency is merely a convenient place holder so that if you are, say, a programmer, you don't have to find a carpenter or landlord, grocer, butcher, tailor, etc. in need of programs to get the things you need. Money represents a small slice of the value of our labor and resources. We can interfere with the market economy in small ways such as the minimum wage without significant damage, but if we try interfering with the market economy in very large ways it must collapse or restore itself. Making a minimum wage of $15/hour is a very large interference indeed as it artificially revalues the labor of nearly half of all workers due solely to an outside imposition, with no underlying change in that labor's true value. At that point we can have one of two possibilities - either the market reforms itself into essentially the same distribution as before, or the market collapses completely and we have an economy based solely on government setting wage levels. There simply are no other alternatives.

 

[Matt1970]

The only reason people say to tax the rich more to pay for programs for the poor is because the GOP screams bloody hell about the debt and deficit.

However the minimum wage has nothing to do with that unless you think making companies pay their employees better is "robbing peter to pay paul".

Well, we can keep supplementing those making minimum wage with tax dollars that largely come from the upper class, or we can hike their wages and everyone will make up the difference with higher prices. And somebody needs to scream bloody hell about the debt and deficit.

 

[Veliko]

That's a hell of a lot more logical than those who think robbing Peter to pay Paul is better for the economy.

Complete strawman.

 

[Matt1970]

Complete strawman.

You are entitled to your opinion.

 

[ivwshane]

Well, we can keep supplementing those making minimum wage with tax dollars that largely come from the upper class, or we can hike their wages and everyone will make up the difference with higher prices. And somebody needs to scream bloody hell about the debt and deficit.

Except it has been shown time and time again that raising the minimum wage does not lead to higher prices. Let's also not pretend that tax payers aren't already footing the bill for the working poor via social welfare programs.

 

[theeedude]

Assuming you are correct, why not just raise minimum wage to $100/hour and usher in real prosperity? Think of the demand we've have! You'll find all sorts of justifications against this because you know this relationship is not true.

As far as inflation implying there is no slack in production capacity, that is simply not so. Inflation is merely a devaluing of currency; it is completely neutral with respect to slack in production capacity except that lack of production capacity will cause inflation, yet the reverse clearly is not true. Interwar Germany had plenty of untapped production capacity, but had runaway inflation because they inflated the money supply without creating any more wealth. There is no free lunch.

Resource owners set product and service prices based on their best evaluation of sales versus profit. A company clearly can sell more widgets at $1 than at $5. In return for that $1 or $5, the company receives a certain amount of purchasing power, some of which the company uses and some of which is passed on to its ownership. You're proposing that the company will accept drastically less purchasing power in return for its products simply because you wish it. Yet if this was true, wouldn't that company already be selling at the lower price? If my product or service is $100 I receive in return the equivalent of 12.12 hours of $8.25 minimum wage labor. You're proposing that I should instead accept the equivalent of 6.67 hours of $15 minimum wage labor. Even setting aside for the moment the fact that very, very few companies have that kind of profit, why would they accept that? Beyond that, HOW can they accept that? Even if none of their employees are at or below the new minimum wage, their employees certainly purchase goods or services whose creation and/or delivery involves employees in that range, which includes nearly half our work force. In effect, you want a revolution, so that people with high value products, labor and services become minimum wage earners.
Look at it this way - the economy is at its base an exchange of value for value. Currency is merely a convenient place holder so that if you are, say, a programmer, you don't have to find a carpenter or landlord, grocer, butcher, tailor, etc. in need of programs to get the things you need. Money represents a small slice of the value of our labor and resources. We can interfere with the market economy in small ways such as the minimum wage without significant damage, but if we try interfering with the market economy in very large ways it must collapse or restore itself. Making a minimum wage of $15/hour is a very large interference indeed as it artificially revalues the labor of nearly half of all workers due solely to an outside imposition, with no underlying change in that labor's true value. At that point we can have one of two possibilities - either the market reforms itself into essentially the same distribution as before, or the market collapses completely and we have an economy based solely on government setting wage levels. There simply are no other alternatives.

Minimum wage should be in line with what it costs for average minimum wage employee to live without public assistance. Otherwise you are creating a permanent welfare dependency, which I was under impression the conservatives were against. If you want a big portion of population working full time and remaining dependent on welfare and food stamps, fine. For government aid to replace a job as a way out of poverty, fine. Just don't go all 47% and complain about it. If conservatives want to stand in the way of the trickle down they promised, and instead stand for wealth concentration, then I guess we'll just have to do it the liberal way with direct taxation and safety net programs instead.
Also, do you have proof of inflation rising after minimum wage increases? Or you are just making strawmen and slippery slope arguments up as you go along?

 

[werepossum]

Minimum wage should be in line with what it costs for average minimum wage employee to live without public assistance. Otherwise you are creating a permanent welfare dependency, which I was under impression the conservatives were against. If you want a big portion of population working full time and remaining dependent on welfare and food stamps, fine. For government aid to replace a job as a way out of poverty, fine. Just don't go all 47% and complain about it. If conservatives want to stand in the way of the trickle down they promised, and instead stand for wealth concentration, then I guess we'll just have to do it the liberal way with direct taxation and safety net programs instead.
Also, do you have proof of inflation rising after minimum wage increases? Or you are just making strawmen and slippery slope arguments up as you go along?

For ONE minimum wage employee to live without public assistance, with a couple roommates, I would agree. We're talking here about being able to raise a family as a one income, minimum wage earner. That's quite a different thing. Also, please note that this is a good argument for state and local federal minimum wages rather than federal. Or rather, in addition to a modest federal minimum wage, which should be set to the poorest states' level to avoid them devolving into even lower standards. We cannot create one minimum wage that is livable in New York City or Seattle and also payable in small town Louisiana.

As far as proof, seriously? Raise an employer's costs while raising his competitors' costs the same. Why would you believe that employer will not raise his prices? Why would you even believe that employer should not raise his prices? His object in being an employer is to turn a profit by delivering the goods and services you want, not to support you like your daddy.

 

[ivwshane]

For ONE minimum wage employee to live without public assistance, with a couple roommates, I would agree. We're talking here about being able to raise a family as a one income, minimum wage earner. That's quite a different thing. Also, please note that this is a good argument for state and local federal minimum wages rather than federal. Or rather, in addition to a modest federal minimum wage, which should be set to the poorest states' level to avoid them devolving into even lower standards. We cannot create one minimum wage that is livable in New York City or Seattle and also payable in small town Louisiana.

As far as proof, seriously? Raise an employer's costs while raising his competitors' costs the same. Why would you believe that employer will not raise his prices? Why would you even believe that employer should not raise his prices? His object in being an employer is to turn a profit by delivering the goods and services you want, not to support you like your daddy.

He didn't ask for your opinion, we already know how you feel, what he asked for was facts. You either have them or you don't and no, "common sense" isn't proof of your claim.

 

[werepossum]

He didn't ask for your opinion, we already know how you feel, what he asked for was facts. You either have them or you don't and no, "common sense" isn't proof of your claim.

What sort of proof would you accept, keeping in mind that we've never had a 180% increase in minimum wage?

Let's look at a typical small business utilizing a lot of minimum wage labor. Let us posit ten employees working an average of thirty hours each at an average wage of $8.50 as well as two assistant managers working full time at $18, so that his total weekly payroll is $3,990. The owner's weekly fixed costs are $1,000 and his consumables cost are $8,000 for a gross weekly revenue of $16,000. This leaves him $3,010 weekly to pay his own salary, bank enough to replace equipment and see him through hard times without bankrupting, and grow his business. This is a 19% gross profit, a pretty damned good percentage for a small business, and assuming he invested no more than a few hundred grand a pretty good investment. Now let's bump the minimum wage to $15. Our owner's weekly payroll is now $5,940, leaving him $1,060 weekly to pay his own salary, bank enough to replace equipment and see him through hard times without bankrupting, and grow his business, assuming he doesn't see the slightest increase in his fixed costs and his consumables costs. (For the purpose of this example we'll assume that he owns his own building, his taxes, electricity and gas all go to or come from entities without a single person making less than $15/hour, and he buys his consumables from a group of self-made millionaires just working to get out of the house.)

By what math does this owner not raise his prices?

By what math do his assistant managers not demand more money?

Where is your proof of this?

 

[Matt1970]

Except it has been shown time and time again that raising the minimum wage does not lead to higher prices. Let's also not pretend that tax payers aren't already footing the bill for the working poor via social welfare programs.

How could it not raise prices? Unless businesses are willing to just eat the cost, it gets passed on to the consumer.

 

[TreVader]

$15 is unrealistic but, sadly, not even close to enough to support even one person in your average Beach City in CA.


I don't see them raising min wage to $10 soon. I think we will continue to allow people to starve in poverty while simultaneously feeding us fat ass rich people*








*Disclaimer: I am neither fat, nor rich.

 

[ivwshane]

What sort of proof would you accept, keeping in mind that we've never had a 180% increase in minimum wage?

Let's look at a typical small business utilizing a lot of minimum wage labor. Let us posit ten employees working an average of thirty hours each at an average wage of $8.50 as well as two assistant managers working full time at $18, so that his total weekly payroll is $3,990. The owner's weekly fixed costs are $1,000 and his consumables cost are $8,000 for a gross weekly revenue of $16,000. This leaves him $3,010 weekly to pay his own salary, bank enough to replace equipment and see him through hard times without bankrupting, and grow his business. This is a 19% gross profit, a pretty damned good percentage for a small business, and assuming he invested no more than a few hundred grand a pretty good investment. Now let's bump the minimum wage to $15. Our owner's weekly payroll is now $5,940, leaving him $1,060 weekly to pay his own salary, bank enough to replace equipment and see him through hard times without bankrupting, and grow his business, assuming he doesn't see the slightest increase in his fixed costs and his consumables costs. (For the purpose of this example we'll assume that he owns his own building, his taxes, electricity and gas all go to or come from entities without a single person making less than $15/hour, and he buys his consumables from a group of self-made millionaires just working to get out of the house.)

By what math does this owner not raise his prices?

By what math do his assistant managers not demand more money?

Where is your proof of this?

Your arguments are tiresome.

http://www.dol.gov/minwage/mythbuster.htm

http://www.epi.org/publication/raising-federal-minimum-wage-to-1010/

This study shows an increase in food prices by 4% at most and no more than .4% for overall prices.

Most studies show that job losses at the lowest end of the spectrum are typical and temporary.

 

[ivwshane]

How could it not raise prices? Unless businesses are willing to just eat the cost, it gets passed on to the consumer.

There are multiple reasons why.

A) the % of people making minimum wage is small, therefore it's effects are small.

B) the increased purchasing power means more goods and services are sold lessening the need to raise prices.

C) low wage reliant employers reduce emoyment to compensate.

Lastly, some businesses will choose to simply raise prices, the net effect however is small ,

 

[Matt1970]

There are multiple reasons why.

A) the % of people making minimum wage is small, therefore it's effects are small.

B) the increased purchasing power means more goods and services are sold lessening the need to raise prices.

C) low wage reliant employers reduce emoyment to compensate.

Lastly, some businesses will choose to simply raise prices, the net effect however is small ,

The increased purchasing power of the min wage earners is only because of the decreased purchasing power of business owners paying out more in wages or by consumers having to pay more for the same product. The % of people making minimum wage is small but they aren't the only ones that go up with min wake hikes.

 

[ivwshane]

The increased purchasing power of the min wage earners is only because of the decreased purchasing power of business owners paying out more in wages or by consumers having to pay more for the same product. The % of people making minimum wage is small but they aren't the only ones that go up with min wake hikes.

Except I just showed you that wasn't the case. You and werepossum have yet to show me anything of substance.

Finding case studies to support your argument shouldn't be too hard to do, so how about doing that. I don't need to waste my time with either of your opinions when you've proven, very recently, to ignore any and all facts.

 

[Matt1970]

Except I just showed you that wasn't the case. You and werepossum have yet to show me anything of substance.

Finding case studies to support your argument shouldn't be too hard to do, so how about doing that. I don't need to waste my time with either of your opinions when you've proven, very recently, to ignore any and all facts.

Alright, let me ask you this. Where do you think the extra money comes from to pay the increased wages?

 

[ivwshane]

Alright, let me ask you this. Where do you think the extra money comes from to pay the increased wages?

If you can't be bothered to read my posts or the links I supply to back up my claims then why should I bother responding to you?

 

[Matt1970]

If you can't be bothered to read my posts or the links I supply to back up my claims then why should I bother responding to you?

For one you are contradicting yourself.

Except it has been shown time and time again that raising the minimum wage does not lead to higher prices.

This study shows an increase in food prices by 4% at most and no more than .4% for overall prices.

Second, there isn't a study in the world that will convince me hikes in wages don't lead to either higher prices or less money in business owners pockets. For it to be true it would somehow mean money is being pulled out of thin air.

 

[ivwshane]

For one you are contradicting yourself.





Second, there isn't a study in the world that will convince me hikes in wages don't lead to either higher prices or less money in business owners pockets. For it to be true it would somehow mean money is being pulled out of thin air.

Yes up to, that is on the higher end of the scale that's what they've seen. If .4% is high to you or not worth the risk then fine.

If you can't supply your own data to back up your own claims then it's time for you to fuck off, seriously.

 

[werepossum]

Your arguments are tiresome.

http://www.dol.gov/minwage/mythbuster.htm

http://www.epi.org/publication/raising-federal-minimum-wage-to-1010/

This study shows an increase in food prices by 4% at most and no more than .4% for overall prices.

Most studies show that job losses at the lowest end of the spectrum are typical and temporary.

Learn to read, dude. Let us discount for the moment the fact that these studies are from the department of Labor (which is going to say whatever the President wants it to say) and the EPI, a far left think tank. (Should that be feel tank?) As the EPI says of itself: "We are recognized as national leaders on breakthrough liberal economic policies." But set aside your sources for a moment. Both studies are for the Harken-Miller bill, which would raise the minimum wage to $10.10 over three years. That's an increase of 39%, a hefty raise in minimum wage to be sure but not completely out of line with some historic levels. We're talking here about fast food workers demanding $15 - a whopping 107% increase and above what probably 35% of the nation earns. Here we're talking about government artificially setting the wages of over a third of our population, a major disruption sure to drive a great deal of our remaining manufacturing off shore. At that point we have no free market, period, and either we see rampant inflation as the economy adjusts or we become a hard socialist nation with the economic policies of the Soviet Union or Red China pre-capitalism. At $15/hour either every non-executive becomes minimum wage labor and we're back to serfdom, or every job that can be outsourced, will be outsourced and we're a nation of unemployed, where burger flipper and store clerks earn $15 an hour but every non-government design, accounting, programming, etc. job is in China or India.

Everyone repeat after me: There is no free lunch.

 

[ivwshane]

Just shut the fuck up already. You don't have the balls to address a post on its merits without resorting to calling everything that doesn't agree with you a biased source.

When you can start providing your own fucking sources to back up your claims then I might start taking you serious. Really this conversation was just a test to see if you were even capable of having a rational debate and you failed miserably. Had you not been such retarded hack, you could have easily came up with studies, that at best, would have shown my claims to be off and at worse to show the data to be inconclusive. But not only do you not have an honest bone in your body but you are also a fucking nut case!

 

[werepossum]

http://www.heritage.org/research/reports/2014/09/higher-fast-food-wages-higher-fast-food-prices

No, Fast-Food Joints Cannot Absorb Cost Increases
Artificially inflating wages would substantially increase fast-food restaurants’ total costs—labor makes up a considerable portion of their budget. Chart 1 shows the financial statements of the average fast-food restaurant in 2013. Labor costs (26 percent) and food and material costs (31 percent) make up the majority of the typical restaurant budget.
The Bureau of Labor Statistics reports the average cook in a fast-food restaurant earned $9.04 an hour in 2013.[2] The SEIU’s push for $15 an hour would consequently raise fast-food wages by at least 66 percent. Paying $15 an hour would raise fast-food restaurants’ total costs by approximately 15 percent.[3]

I can't link charts, but here're the numbers. Note that these are based on an average fast food restaurant's 2013 tax returns:
Item_____________________Amount____Percentage of sales
Wages & payroll taxes_______$217,484___26%
Purchases (food, paper, etc.)__$254,589___31%
Depreciation________________$29,565____4%
Marketing__________________$24,638____3%
Rent and utilities____________$73,913____9%
Other expenses_____________$193,965__24%
Before-tax profit_____________$27,101____3%

We're talking here about increasing wages for the average employee by 66%. Assuming the managers are good little drones as ivwshane envisions and are fine with suddenly earning only a couple bucks an hour more than the workers with no responsibilities, that raises their costs by 15%. Note that this 15% is ONLY the direct cost for the restaurant and assumes that purchases, depreciation, marketing, utilities, and other costs have zero impact, which obviously is highly unrealistic. Even so, there clearly is not 15% to be had here.

People who are are convinced that their employer is raking in money hand over fist need to note how many businesses go under. At $15/hour, the vast majority of small businesses are gone forever. They simply do not have the money to ride out such an increase. (And of course, assuming this thing got indexed to inflation there would be no riding it out.) Ditto for the less affluent chains or those caught cash-poor in mid-expansion, since their excess stores would be near worthless. We'd have a handful of giant mega-corps (no doubt incorporated in Canada or Europe if not Bermuda for tax advantages) controlling all prepared food. Does that sound like a recipe for affordable food?

Heritage also compiled studies on price sensitivity for fast food restaurants. Depending on things like methodology, economic environment, and restaurants studied, these studies show price inelasticity of between -0.743 and -1.884, with an average of -0.946. In other words, raise prices by 1%, lose business of 0.946%. There are a LOT of these studies because fast food is an extremely price sensitive, low margin business. And these aren't studies tied to minimum wage increases, but increases due to any cause, because with a before-tax 3% profit margin, being able to successfully project the effect of a price increase is very big business and can literally make or break an employer.

So now we raise wages 15% and fast food restaurants lose over 14% in sales. (As everyone in the business knows, lower end restaurants are extremely price sensitive.) But the restaurant's fixed costs don't go down. So now prices must be increased further to cover this shortfall. Bottom line, Heritage's study found that prices would have to increase by an estimated 38% to remain viable, assuming businesses had to accept a 77% decrease in profits, a 36% decrease in sales, and a 36% decrease in hours worked. Now, a typical fast food restaurant might cost between $300,000 for a very cheap hole in the wall mom-and-pop store to $2+ million for something comparable to a full service Krystal - NOT including land. (I know; we've done a LOT of restaurants.) Restaurants are already a very low margin business - how many people do you think would be willing to put up even $300,000 for an expected profit of around $6,200? Fuck-all, that's how many. That's a return of around 2% assuming the very cheapest restaurant and average sales and costs - not typically a goal that gets realized.

It's no surprise that this is being pushed by the SEIU, an organization dedicated to the destruction of the nation as we know it.

 

[werepossum]

http://www.commonwealthfoundation.org/issues/detail/the-harmful-effects-of-a-minimum-wage-increase

The Harmful Effects of a Minimum Wage Increase
APRIL 7, 2014 | Policy Points by COMMONWEALTH FOUNDATION

In his 2014 State of the Union address, President Obama proposed increasing the minimum wage from $7.25 to $10.10 an hour. Although it sounds beneficial to low-wage workers, minimum wage hikes fail to reduce poverty and result in fewer jobs. Instead of increasing costs for employers, lawmakers should focus on expanding job opportunities through pro-growth policies, thereby raising wages for all.
Minimum Wage Increases Hurt the Most Vulnerable
A National Bureau of Economic Research review of more than 100 minimum wage studies found that the vast majority concluded raising the minimum wage increases unemployment for low-wage workers.
The U.S. Department of Labor’s assessment of the first 25-cent minimum wage in 1938 found job losses for 30,000 to 50,000 workers.
In 2007, Pennsylvania gradually increased the minimum wage from $5.15 to $7.25. Businesses reacted by raising prices or laying off workers and non-profits faced program cuts.
The Pennsylvania Chamber of Business and Industry reported roughly 70 Kennywood Park employees—largely high school and college students—were laid off and ticket prices were increased.
The Philadelphia Inquirer reported that the Philadelphia Youth Network—a program offering summer jobs to low-income teens—would need to cut 1,100 jobs if they did not receive more state funding, which was necessitated by an increase in the minimum wage.
According to the U.S. Bureau of Labor Statistics, the labor force participation rate for 16 to 19 year olds has steadily declined. Today, only 32% of teens have jobs compared to 42% in January of 2007.
A 2014 Congressional Budget Office analysis found increasing the minimum wage to $10.10 would eliminate about 500,000 jobs for low-wage workers.
A recent report from the National Federation of Independent Businesses found three proposed minimum wage bills in Pennsylvania would reduce employment. One bill was estimated to result in more than 118,000 lost jobs in ten years, mostly from small businesses.
Joe Olivo, owner of a small printing business, explains why a higher minimum wage would result in layoffs: “I couldn’t make that up in raising prices. It would lead to layoffs and me looking at using more automation, at least I can control that cost.”
Most Minimum Wage Earners are Young, Childless and Middleclass
In 2013, 3.2% of Pennsylvania workers earned at or below the minimum wage, according to Census figures. While overall employment increased, fewer workers made minimum wage in 2013 than in 2012.
Less than a quarter of all minimum wage earners come from households at or below poverty, according to a Heritage Foundation analysis.
In Pennsylvania, 58% of minimum wage earners are younger than 25, and about 26% are teenagers.
Among Pennsylvanians earning at or below the minimum wage, 81% do not have children.
According to the Heritage Foundation, two-thirds of minimum wage workers receive a raise within a year.
The Minimum Wage is Not an Effective Tool for Reducing Poverty
According to the U.S. Census, since 2003, poverty in Pennsylvania has increased from 10.5% to 12.6%, despite an increase in the minimum wage.
According to a study by the Employment Policies Institute, less than 10% of the beneficiaries of a $9.80 minimum wage are single parents with children.
Increases in the minimum wage harm the populations most likely to be unemployed.Economists William Evan and David Macpherson found a 10% increase in a minimum wage decreases employment by 1.2% for Hispanic males without a diploma and 6.5% for black males without a diploma.
In fact, more young Black men lost jobs due to minimum wage increases than the Great Recession.
A 2013 analysis by Joseph J. Sabia, associate professor of economics at San Diego State University, found no evidence that higher minimum wages helped people avoid financial or health insecurity.
As the Cato Institute has noted, there is no evidence that minimum wage increases reduce poverty among less-educated single mothers.
Policies that Help Reduce Poverty
Lower the cost of doing business: It is possible to raise wages and increase hiring at the same time. According to a Mercatus Center study, a one-percentage point drop in the corporate tax rate would likely increase annual economic growth by 0.1 to 0.2%. This would make Pennsylvania more competitive and increase productivity, leading to more jobs and higher wages as outlined by a 2013 Commonwealth Foundation analysis.
Reform welfare: Restructure welfare programs to reward work thereby avoiding the arbitrary benefit cutoffs that discourage employment and trap families in poverty.
Increase school choice: Ensure young people are well-educated by offering an alternative to failing schools through school choice. Unfortunately, too many kids today are trapped in violent and failing schools.
Lower barriers to entry: Scale back professional licensing to give low-wage earners the opportunity to increase their incomes through entrepreneurship.

Again, this is the projected effect of a $10.10 minimum wage, a 39% increase, not the 107% increase of a $15 minimum wage.

 

[werepossum]

http://www.cato.org/publications/commentary/minimum-wage-hike-means-more-sub-minimum-workers

the State of the Union address, President Obama endorsed a bill to raise the $7.25 federal minimum wage by nearly 40% over three years to $10.10 an hour in 2016. That would be an exact copy of what President Bush did on May 25, 2007, by signing into law a 40% minimum wage hike in three stages — from $5.15 to $5.85 on July 24, 2007, then $6.55 a year later and $7.25 on July 24, 2009. Have we not learned anything from what happened last time?

Nearly 20 million young people ages 16 to 24 were working before the first increase in the minimum wage went into effect in 2007, but that number fell to 16.9 million shortly after the final increase. The unemployment rate for teens jumped from 15% to 25%. All that might be dismissed as bad luck or bad timing were it not for what happened to the number of people earning less than the minimum wage.

People are usually surprised to learn there are far fewer people earning the current $7.25 minimum wage than the number earning less than $7.25 an hour. In 2012, 1,566,000 people were paid the minimum wage in 2012, or 1.1% of all 142.5 million civilian employees, the Bureau of Labor Statistics says. In the same year, however, there were nearly 2 million people earning less than the $7.25 “minimum wage” — 1.4% of all jobs.

image
Since those 2 million obviously did not benefit from the last increase in the federal minimum wage, or from even-higher minimum wage rates in 23 states, why would anyone imagine they would now be paid more if the minimum were greatly increased again?

Minimum Wage Exemptions

The minimum wage law, under the Fair Labor Standards Act, does not prevent people from working at below $7.25 largely because of legal exemptions. All businesses with less than half a million dollars of annual sales are exempt (unless engaged in interstate commerce), as are seasonal amusement and recreational businesses, fisheries and small newspapers.

“
Whenever the federal minimum wage has been increased, the number earning less than the minimum wage has increased and the number earning the minimum has sometimes gone down.”
Many jobs are also exempt, such as home companions for the elderly, newspaper delivery people, babysitters, disabled workers, fishermen, switchboard operators. Independent contractors and some outside sales jobs are exempt. Tips often count against the minimum wage. And a minimum wage is virtually impossible to enforce for day laborers or housekeepers paid by the job in cash, or those paid on a piecework basis.

Whenever the federal minimum wage has been increased, the number earning less than the minimum wage has increased and the number earning the minimum has sometimes (notably in 2007) gone down.

At the time of the first 13.5% increase in the minimum wage in 2007 — before the recession began — the number of workers earning the minimum wage was nearly cut in half, falling from 409,000 in 2006 to 267,000 to 2007 (and still just 286,000 in 2008).

With additional increases in the minimum wage in mid-2008 and 2009, the number earning less than the minimum wage eventually doubled — rising from 1.28 million in 2006 to 1.46 million in 2007, 1.94 million in 2008 and 2.59 million in 2009. The recession explains some of the rise in sub-minimum-wage jobs, but not what happened in 2007 or why the number of sub-minimum-wage jobs remains close to 2 million.

The percentage of jobs that paid the minimum wage did finally rise in 2009 and 2010. The numerical increase mainly consisted of people who had previously earned more than the minimum, not less. Also, minimum wage employees were a larger fraction of all workers in 2010 than in 2007 because jobs had fallen by nearly 6.2 million.

Judging by what happened after the 2007-2009 increase in the minimum wage, repeating that failed experiment over the next three years would first reduce the number being paid the minimum wage and then greatly increase the number being paid less than the minimum. It would also result in millions more young people being unable to find any employment even at wages far below the higher minimum wage.

This is presumably not the effect salaried folks expect when they tell pollsters that another big increase in the minimum wage sounds like a terrific idea.