Higher Minimum Wage. Is it bad?

The Seattle City Council has just passed an ordinance that will increase the minimum wage in the city to $15 an hour and Michigan just passed a bill to raise the state's minimum wage to $9.25 by 2018. Is this a good or bad thing? I currently make $9 a hour as a bartender at the local Bowling alley after being there for a couple of years and working hard enough to earn a few raises. What do you guys feel about this whole minimum wage thing?

It would be great, but I feel prices will increase aswell.

I guess it's good, but 15 an hour seems like a pretty high minimum wage doesn't it? Does that include 15 year olds selling italian ices in the city during the summer?

it doesn't change anything. It just increases all the prices around it so nothing actually changes. It may help a few more things but companies will also wanna profit from this and they ones that have staff at minimum wage have to make a higher profit than what they're using up. Though I heard some state wanted to raise theirs to $15 an hour das just crazy.

I wonder about this. I feel like most huge corporations are making an absolute killing and are increasing prices across the board on everything you can buy anyway.

It's good in general, but is sort of just a stopgap; pushes the problem further into the future instead of solving it. Much like every other economic decision in this country.

There's good and bad about minimum wage going up. People need to be able to live, and at the current minimum of 8.00 (in California anyways, I believe it just went up to 9 this or next month, goes up to 10 in a couple years) and even at the maximum 40 hours a week, that is not enough to afford an apartment let alone food, gas, utilities, any other bills, and then any entertainment expenses. It all adds up really quickly, even my wife and I who barely make above minimum scrape by each paycheck with just a couple hundred to put in savings. Oh, and god forbid you want to also go to college in a world where its needed to even get a job in a shrinking job market.

On the other hand, once minimum wage goes up, then all the prices of groceries, labor, gas, bills etc etc go up with it. Gas will always be a ridiculous expense, but if grocery stores have to up the pay for their staff, then they either need to cut down all their employee's hours or raise the price on all their groceries (Protip based on experience: they'll do both).

It is a catch 22.

On one side of the coin, I and many people I know are struggling to get by at minimum wage.. so an increase would be very helpful. On the other side, I know all too well about trying to keep labor in check, and I know a significant increase in the minimum wage would cut our man hours severely in an already stressful, rush-based job. We wouldn't be able to raise our prices since those are all set by corporate, and they won't raise prices unless the wage increase is nationwide, so jobs and hours would be lost...

I work at a pizza place, where the drivers already make $0.55 less than minimum due to their tips. If there was a significant raise, their wages could actually be dropped to be more in line with restaurant servers, which is perfectly legal. It would also mean they wouldn't be able to sustain their vehicles and we'd start to lose them left and right.

Just a perspective from my industry.

Yeah, its a big win/lose situation. It just shows how greedy the world is.

It's hard to say. My guess is that, though it'll be nice in the short term for the employee, in the long term things like rent, goods and services will go up to match the increase in income and the $15 an hour won't become enough anymore. Plus, I could see many business doing away with many minimum wage positions, automating where they can, so that they can keep their margins where they want them. But we'll find out over the next few years in Seattle if this is a good thing or bad thing. Keep in mind, when I first started working in 2005, in Washington state, the minimum wage I earned was just over $7/hour. Before this vote, it was up to $9.32 state wide. So it's not like the wages stayed at a constant, low level. The minimum wage has been rising steadily for a while. Which makes me all the more confident in saying that, sooner rather than later, $15/hour won't be enough again.

@falserelic: Who exactly is greedy in this situation and who is winning? It's a lose/lose situation.

I guess you're a communist?

Yeah, as others have said double edged sword here. On one hand yeah people are getting paid more but then the cost of living just goes up along with that and the cycle continues. If anything it just drags people that were starting to get ahead down in terms of their pay bracket.

just give everyone $100 and set them loose on a desert island and let god sort 'em out.

A blanket minimum wage is a bad thing.

The intentions are good; to help those making the least amount of money now, and to potentially punish business owners that some feel are making too much themselves, at the expense of their employees. But unfortunately, it has the opposite effects.

Proponents of a blanket minimum wage increase ignore one simple yet crucial economic fact; workers are a commodity. And like any other commodity, as we've recently seen a clear example of with the PS4 vs. the XOne, when you charge a higher price, they will sell less. A worker able to be employed for $8/hour, might be too expensive to make a profit for their business at $12/hour, and so rather than having a job that doesn't pay much, they'll have no job that pays nothing. This video explains it pretty well:

So rather than helping people earning the lowest wages, a blanket minimum wage can actually make things far worse for those who need an income the most.

The other goal, which I mentioned above, is that people consider the huge wages that those at the top make, and think that a blanket minimum wage will basically force them to do the right thing, stop being jerks, and pay fairly. But in this situation those jerks can still thrive, at the expense of hurting those bosses who already pay a fair wage. If a competing company's profits are smaller because they pay more to their workers in general, they are far less flexible than the company who makes way more because they give their employees less. In the case of the Seattle plan, the wage will increase gradually over seven years. In that time, the company with the greater profits can expand to try and be able to increase their overall profits as the wages go up. But the company with smaller profits because they pay well already doesn't have the capital to take on huge projects like that, so they'd have to potentially lay employees off if they wanted to try and expand, or raise the cost of their products, both of which would hurt them and let the jerky business get ahead.

The simple truth is that most business owners are not the 1% wall street fat cats doing lines of coke and laughing at all those dumb poor people. They're folks who work 12 hour days, doing tons of complicated tasks to try and provide a good product/service while giving people jobs at the same time. Laws like this hurt them and their employees, not the greedy rich.

There are concrete things that affect wages overall that can be changed. Inflation is largely a result of government spending, and as Federal budgets grow every year, our current wages are worth less and less. Curtailing inflation is a simple way to help workers at all levels, and not destabilise large workforces, but it's not nearly as sexy as a politician saying, "If you elect me you'll get paid more!", so it's almost never discussed.

Minimum wage laws come from a good place, but like so many well intentioned but not thought out deeds do, they end up hurting those that they're trying to help.

My mother has worked hard all her life raising two children, it would be nice to see her able to by herself a new pair of pants after 25 years.

Since I'm employed by my state as a system administrator (it's also a temporary seasonal position while I wait for my real career to begin once USAF activates me as a computer engineer later in the year), I'm fairly certain I'm allowed to disclose (my boss and other members of the state university I work for have their salaries posted in public record as a requirement) that I actually make $13 an hour to do a job that typically requires a college degree. Even though I *just* graduated, and I'm not particularly upset at my boss directly (the university really shortchanged the budget for our 5-man subdivision that handles IT for about 2,000+ undergraduate engineers), I almost feel ashamed to admit I make $2 less with an Electrical & Computer Engineering degree currently than Seattle's minimum wage.

I think it's really cool and all that this is happening for whoever gains and whatever good comes out of this (I hear the unemployment rate over there is decreasing, but I'm not sure if it is proven to exactly correlate with the minimum wage increases), but it personally strikes a chord due to the aforementioned.

I agree with most of the sentiment here. In Australia our minimum wage is massive but so is our cost of living. Like in most things a balance is always good, unfortunately alot of countries get the balance wrong.

All I can say is good on Seattle for trying something different.

I do work in Airports and Ive seen Australia really start taking the push for automated systems, like checkin, bag drop, boarding gates, etc. Mostly because it costs too much to employ staff to fulfill a job a machine can do.

Too early to tell, but we'll know the answer this time next year. Seattle will be a test-case - if it works, great. If it doesn't, more people will be out of jobs and smaller businesses who can't afford a $15/hr minimum pay will close and dry up. Not to mention everything in the city becoming more expensive, and the general cost of living increasing as well.

It think raising the minimum wage somewhat isn't a bad thing necessarily, but there is a hard limit. $9, $10 sounds reasonable. $15 for minimum wage is insane. There are people who are college educated, working at jobs that are skilled labor that aren't making $15 an hour. Asking for a $15 minimum for unskilled (ie anyone can do it) labor is crazy. You can increase the minimum wage all you want, but the more you do, the more everything else costs as well. That person working in a skilled-labor job making $12-$15 dollars an hour, well, now they need to be making $20+. If not, then what is the point of skilled labor?

As a Seattle resident, I'm on the fence about this. As others have said, minimum wage hikes like these have their pros and cons. I make well above minimum wage, so this doesn't affect me in the most direct sense, but I'm really wondering what sort of residual effects I'll see around here.

Keep in mind, Seattle residents are ridiculous when it comes to politics regarding taxation and spending. Back in April, a referendum failed to garner enough votes that would have established a sales tax with funds going toward transit. Now the city council is scrambling to minimize a catastrophic effect on the metro bus system, which is going to be gutted. (Because people couldn't pay a fucking tax that would have benefited everyone in the state, as the funds would also go to road maintenance and construction). We've also voted down a state income tax, and about a decade ago, we voted for an expanded Seattle monorail system on three separate occasions only for meddlers to complicate and derail those affirmations each time. What are we putting our transit money to? A new tunnel being run by the same idiots that bungled the Big Dig in Boston. Now we have a huge drill stuck under ground, in need of maintenance and sucking up funding while it sits there doing nothing until next March.

God damn it. I love this city, but the local politics are infuriating.

capitalism is bad

Maybe the concept of minimum wage needs some rethinking, then. Tie it to the standard of living and have it increase alongside that at fixed intervals, rather than just call a vote every so often.

The problem with that is that the standard of living is grossly disproportional across the country. The cost of living in a place like San Francisco is obscene compared to, say, a small town in Wyoming. The federal minimum will never be a good match for all regions and regional minimums would vary dramatically based on need.

Another thing to consider is costs of living in a specific area. Living in California, especially in a large city, going to be way more expensive than living in a smaller town/city, in a state where the cost of living is lower. For example a $9 minimum wage isn't much in California, but compare that to somewhere, say, Georgia, the same $9 can buy a lot more. This is one of the reasons why I am kind of against a Federal Minimum Wage because what might be good in one part of the county might not be good for the rest. I think the whole minimum wage issue should be a local or state-level thing, assuming that state even wants a minimum wage at all.

Raising (or lowering) the minimum wage is not a catch-all blanket solution - there are way too many variables to do that successfully.

@video_game_king:

That's a big, hard issue. I guess what I would hope for is that working to move up in a company would be easier then raising the minimum bar. But that's just another big, hard problem.

I only have a brain for mental health. This political economic stuff is beyond me.

@stonyman65: Actually as time goes on the increasingly absurd income gap effectively makes the difference between minimum wage and baseline collegiate wages completely negligible; so this doesn't really have much of an impact on that. It does impact prices and number of available jobs though.

Been interested in economic theory lately, and heard a compelling argument from Milton Friedman about the negative side effects of policies such as this (specifically referring to 'equal pay for equal work', but it seems to me to be applicable to minimum wage as well).

The theory goes that when you set a limit on wages, it incentivizes employers to be that much more choosy about their applicants. It makes it harder for someone without entry level work skills, without a high school diploma or with a rap sheet to get their foot in the door. It helps those people who already have jobs and hurts those looking for one. So you're automatically handicapping many of the very people these sorts of social programs are meant to help. If there was no minimum wage, a potential employee would have more bargaining power to negotiate lower pay in exchange for the chance to prove themselves in the work place. In a time when every job has dozens and dozens of applicants and a business still only has X amount with which to pay its total pool of employees, its problematic if policies are making for those desperate enough to do what it takes. That's 66% more true here, since the increase proposed could shrink the money available to support three new positions down to two.

As a side note, there was an interesting corollary effect proposed: it further allows prejudiced employers to discriminate at the hiring level. Sure, many racists/sexists/whathaveyou will continue to make decisions based on those biases regardless, but at least here they would be positively incentivized to put them aside and hire someone who was willing to be paid less and in order to keep more of the money that the business is already bringing in. Hell, they might even have their prejudices tested- or changed- in the meantime.

I'm sure I'm going to get all sorts of flak for this, but i found the logic compelling enough to stick with me.

While I am happy to see people make a living wage, and I totally know this is greedy, I can't help but feel it kind of devalues what I have fought hard to make. It's not like my employer is going to be cool giving me 8$ an hour more to compensate for the low-skill wage bump.

Having said, I am all for a wage increase, I lived in poverty most of my life and so has my family. It is unsustainable currently especially with our fucked health care system.

@daneian: Minimum wage jobs don't have worthwhile upward mobility to begin with; or if they do it is extraordinarily rigorous and ultimately the equivalent of searching for an actual job; thus your point is moot except in the case of illegal immigrants.

Same.

Milton Friedman is always a good person to listen to. He won the Nobel Prize in economics for a reason. Also, Thomas Sowell is great too (he studied under Friedman at some point).

Well it's super bad if one small area like Seattle has a massively higher one than everybody else and the surrounding areas don't.

Businesses that rely on entry and unskilled labor are almost guaranteed to move out of the metro for competitive reasons if they can. Fast Food places and retail stores that rely on hyper local business can't, But say Amazon.com shipping centers, call centers, assembly lines, bottlers and places like that almost certainly will. And future businesses in those sectors will probably not even consider locating there in the first place.

If other places don't follow Seattle's lead, I suspect this will cost Seattle tens of thousands of jobs.

as for general, It's a zero sum game for the most part as businesses have to come up with the money to pay that higher payroll somewhere, which usually means higher prices.

And doesn't address the root of the problem of decreased economic upward mobility this country is experiencing.

It's well intentioned, but really it's a political solution that benefits politicians not an effective economic one for workers.

http://truth-out.org/news/item/14050

Things to take away from that: A wage hike of 10% equals a sales cost increase of 1/10th of 1%.

@fredchuckdave said:

Well it sounds like you know more about all this than i do, but isn't a person that can get a job in a much better place to develop marketable skills than someone who cant get one? Couldn't those skills allow them to be promoted within that job and thus better able to take those new skills to get another, maybe better paying job?

Just a quick thing about the $15 being more than some people with college degrees. My first job after I got my masters was $16.31 and it was quite a bit more then my other classmates. But that was just the starting pay. With a degree you're more likely to get newer, better paying jobs then someone who is in a minimum wage position.

Also, I make more now but it's because I'm at greater risk in my position and have more liability then I did when I first started. My brother had an AA and works in the carpenters union and makes more then me, in part because of experience, but also because he is at an even greater risk in his position then me. My Dad is one of the higher ups in the carpenters union and gets paid much more then my brother and I because every job he works on he is responsible for a multi-million dollar budget.

So I guess what I'm trying to say is that the entry pay for a college graduate is not representative of their actual earning potential. But also, a mean as this sounds, if you don't think you are paid well enough consider how much risk and responsibility is associated with your job, to yourself and the company, and if it is fairly low, maybe the pay is appropriate.

@daneian: Theoretically there is a benefit to being able to negotiate for a lower wage; but practically this isn't something that happens on a massive scale with fairly bureaucratic large organizations (the manager who hires a person doesn't even have the authority to adjust wages; nor does his manager, or the manager above that) ; however if someone isn't legally able to work the job in the first place and the employers don't care about this issue then they will pay for extremely cheap labor. While I could find a privately owned small business that was interested in competent individuals and "sell" myself to them, the issue is finding those sorts of businesses in the first place. Start-ups are bought out at an alarmingly fast rate and moderately sized corporations that become suddenly successful are bought out immediately. Every time that happens the capacity of the employer to have a direct and transparent relationship with each and every employee rapidly decreases; something that is a virtual necessity for any sort of negotiations to take place.

Note this isn't malicious behavior, it is functionally just something that happens as society increases in population; large organizations frequently demand very high levels of efficiency from their low level employees and it simply isn't efficient to negotiate with each and every worker.

15$, when adjusted for inflation and workforce productivity increases, isn't really that high by historical standards.

The REAL problem for lower class people is the gutting of working class jobs through outsourcing and automated systems. Whether by artificial minimum wage boosts or by natural market forces, the salaries of people working service jobs kinda need to rise the fill the gaping hole left in the manufacturing industry in order to preserve a large, stable consumer base.

A minimum wage job might not have upward mobility itself, but that doesn't mean it doesn't help one's prospects. There can only be one manager of McDonalds at a time, so of course it's absurd to say that every fry cook just needs to work hard and they'll eventually be promoted to that higher paying job. But that person, who's been steadily employed for, say, two years, has a hugely better chance of getting a better job somewhere else, when compared to another candidate that hasn't been working for that same amount of time.

Employers want to see that a perspective employee has had a steady work history, and if huge blanket minimum wage increases like this leads to larger unemployment (which it already has in some places), it destroys all of that potential upwards mobility for some low wage earner choosing their next, better job.

I dunno, it's really fucked up that people are struggling and theres assholes out there getting multimillion dollar bonuses ontop of their multimillion dollar earnings. The way things are is completely fucked up. It's gonna fall apart in a decade or two. maybe sooner. Shit is not sustainable. Things are gonna get real bad soon i think, hopefully im wrong and things get better on their own but yeah.

I dunno maybe i should take off my tin foil hat.

The problem starts with people thinking that $15/hour is a lot of money. It's like that it equates to a million dollars and year and everyone will be buying yachts and Ferraris left and right. Let me just lay it out for you in simple numbers. $15/hour equals about $30,000/year. It's more money than a lot of people make (sadly, which is why it should go up in my opinion), but it's not going to make anyone rich. If you're single with no kids, you can live pretty comfortably, but you're not rich or even well-off by any stretch of the imagination. As soon as people get past the rate of $15/hour and look at it more reasonably at only $30,000/year, there may be some progress. Until then, stupid people are going to continue to think that $15/hour is going to bankrupt these huge corporations and drive costs up, since they believe they are going to be making everyone millionaires.

Also, I'm all for double standards here. Companies like Wal-Mart, Target, and Best Buy, need to be singled out and forced (yes, forced, in some way) to pay their employees, that they grill constantly about idiotic bullshit, more money, if anything, because they are making billions of dollars in profit and can afford it. Then, maybe, all the corporate propaganda they shove down their employees throats may not taste so bitter if it's being chased by a more respectable and more importantly, livable, wage.

The fact that we're actually debating whether the minimum wage should be increased from the flat out insulting $7.25/hour is deeply unsettling. I could understand if it was already $15 or $20 an hour, but seriously, $7.25/hour? How the fuck is it even a debate? Every time I see that despicable excuse for a minimum wage I just shake my head and face-palm, wondering how this country could sink any further than basically telling poor people that they should remain poor, because it's for the good of the country. FFS, America, really?

@clonedzero: Actually internally the system is quite stable and the level of organization required for an upheaval just isn't there; what will ultimately cause a restructuring are external forces and the US gradually falling out of its position as the sole superpower (recent events have moved up the timetable on this so it could be sooner than 20 years; would still be surprising though). Revolutions don't happen in the most powerful countries, they happen in countries that are declining rapidly. While the US might be declining faster than any other historically dominant world power it's still not catastrophic by any means.

I mean, I understand why people say living cost will go up if minimum wage does. However, I feel like at a certain point when there are CEO's and executives in plenty of companies making $850,000+ a year and getting bonuses for millions more, while their employees make shit. I understand they earned their position, but it's still odd feeling I suppose. If more of these corporations did stuff like this and just offered someway to help employees make a living wage I feel like it would be better. Obviously, not every business is insanely wealthy and can't always afford changes, so it's not black and white. Really hard to say, but I guess trying something can't make it too worse, right?

@tyrrael:

In the rest of Washington the minimum wage is $9.32 not $7.25.

Fivethirtyeight has some great quantitative data-based articles on matters of wage. It's always great to keep in mind that while we have both our individual opinion and references to others' view, there is data out there that serves to greatly inform the debate, or at the very least our individiual understanding.

As for whether it's a good or a bad thing is at the root of the history of the policy itself. It was always rooted in conflicts over political ideology/spectrum, economic policy, and America's particular issues with federal vs. state government. Wage is also a pernicious ideological issue in that it strikes at the core of values concerning labor, what is "earned" by individuals, inequality in wealth and class, and views on economic "strength." Historically speaking, I think it would be a huge mistake to back pedal on minimum wage as a policy since you'll likely see way too many gaps and exploitations in the nooks and crannies where many American workers would get payed far less than they do now. One need only look at how wage and labor was handled a century ago to see what was possible. Is that a justification for this particular increase and across the board increases? Not necessarily although keeping wages with inflation is a quality of life policy that most would agree is worth keeping.

As for how it impacts Seattle I can't say.

I just graduated with an accounting degree and took a lot of economics classes. Minimum wage makes no mathematical sense and hurts the people that it's supposed to benefit.

EDIT: Also, on the topic of Seattle's minimum wage, there's this: http://www.nwasianweekly.com/2014/05/blog-seatac-tells-us-15-minimum-wage/

There are always tradeoffs. The money has to come from somewhere. Forced higher wages mean less employment, less benefits, and more menial work for higher-skilled workers that could be doing more applicable tasks, among other things.

I'm curious what your response would be to my post above and that video, which basically argue that it's precisely the measures like a blanket minimum wage that unintentionally work to keep the poor poor. There are things that need to happen (reining in inflation, improving education), as this is a very real problem and horrible situation as you say, but this kind of policy is the opposite of helping.

A further less argued (but still critical) point, which I didn't make above is that a blanket minimum wage also works to help stagnate impoverished communities. I live in Philadelphia, PA, a city (sadly like most in America) with huge economic disparity, which mostly falls on racial lines. Areas directly north and north east from the economically flourishing center city are little more than slums. Abandoned houses everywhere, broken down houses where people struggle to live, rampant crime, and almost no stores to be seen. And as district public schools are funded by property taxes, little hope of a solid education for any of the extremely poor children.

For any of those people to work, they have to leave their part of town, and watch it rot as they work for people who will never even see where they live. Certainly, making more per hour would help those people at the moment, but it could never amount to enough to try and change their living conditions.

A real solution is for those people to open up businesses in their own communities. A corner grocery store, day-care center, barber shop, whatever. There are a wealth of businesses that are relatively low-skilled, which could improve the overall local economy simply by existing in those downtrodden places, and simultaneously providing employment for local people. But consider what happens to that business person's plans when she has to factor in with all the costs of starting her business... paying each of her employees $15/hour. It's an impossibility.

Tl;dr: A blanket minimum wage also works to insure that slums remain slums and impoverished people have even less of a chance to improve their own struggling communities.

I'm of the opinion that it should be raised. To those saying that it would cause inflation of prices for everything, that's basically guess work. You can't really prove it other than give some sort of mathematical estimation. I'm not an economist, but I do know that a mathematical estimation is an estimation, a statistic. There's proof that people can't survive on minimum wage as is. Consumer spending is down, the difference in wages between the rich and the poor is astounding, and people who do have work are still homeless.

I could go on, but I really think we should raise it. $7.50 isn't nearly enough.

Let's get rid of the minimum wage, and the 40 hour work week, and child labor, and unions. Who needs them?

@shivermetimbers:

It's $9.32 statewide in Washington and only in Seattle, just recently, was it raised to $15. Not $7.50 (though I know that's the minimum wage elsewhere).

When a couple with two children are working four jobs between them just to keep themselves steady but still under the poverty line, there is obviously a huge problem.