McDonalds: "What, my peon, you don't work two full time jobs?"

[Zanza]

Developments in other countries:

BERNE — Switzerland will hold a vote on whether to introduce a basic income for all adults, in a further sign of growing public activism over pay inequality since the financial crisis.

A grassroots committee is calling for all adults in Switzerland to receive an unconditional income of 2,500 Swiss francs — about $2,800 — per month from the state, with the aim of providing a financial safety net for the population.

[...]

A separate proposal to limit monthly executive pay to no more than what the company's lowest-paid staff earn in a year, the so-called 1:12 initiative, faces a popular vote on Nov. 24.

http://news.msn.com/world/swiss-to-vote-on-dollar2800-monthly-income-for-all-adults

Didn't check the entire thread, so maybe this was posted before...

[Caliga]

My ancestors were right to leave Switzerland.

[DGuller]

Well, if you want to completely remove disincentives to work, welfare payments that are not means-tested are the best approach.

[Admiral Yi]

Nobody is suggesting doing that. And in my example I could afford a third guy if I wanted, paying the other two a little more is affordable.

It's not that hard to construct a hypothetical scenario in which an employer is absolutely indifferent to increases in wages.  The question is how much relevance these scenarios have to the discussion of the likely impact of an increase in the minimum wage on unemployment.

[Sheilbh]

And as I said empirical research suggests there's either no significant impact, or there's a very low impact.

[The Brain]

Minimum wage people have it pretty sweet. They get paid above market wage. I do not.

[Caliga]

Here's a real-world example that's not directly related to minimum wage, but somewhat relevant to the discussion in general:

At my old company we provided in-home healthcare services for both private pay clients and on behalf of Medicare and Medicaid.  The way this worked with regard to state-funded services was that, for any given service, there was a set hourly rate that the company was paid for each service provided.  So, let's say you send an employee to an old man's house to watch him and make sure he doesn't do anything stupid (he has dementia, for example).  The state will pay you as a company $19 an hour to provide this service, and as a company you might pay your employee $14 an hour to provide the service, leaving $5 an hour profit on the service for the company to use to offset G&A, etc.

So as you can see, that's a pretty slim margin, and the numbers I'm using aren't hypothetical: they were standard in the state of Texas for a couple of services.  Then the 2008 recession thing hit and a number of states, including Texas, decided unilaterally to slash Medicaid reimbursement rates 'indefinitely'.  In one case there was a service that had been reimbursed at $19 an hour that was cut to $13 an hour.  So that meant that it immediately became unprofitable to provide this service, so our only options were to either cut the employee's pay OR to just discontinue providing the service.  But wait!  We were locked into contracts with Texas that required us to keep providing said service till x date and IIRC there was no exit provision even if the reimbursement rate was adjusted.  So for a while, we were forced to lose money in Texas and the last I heard, the company has since ceased providing services to Medicaid in Texas (though continues private pay operations).

My point in sharing this is to illustrate that with many low-wage jobs, there's a surprisingly slim operating margin on services provided and corporations don't pay these people low wages because they are 'greedy' or 'mean' or 'LOL FATCAT CEOS' ... though in that case that CEO is a pretty fat dude.

[Admiral Yi]

And as I said empirical research suggests there's either no significant impact, or there's a very low impact.

Yes you did, but that's not what your dynamic monopsony paper says.  It says that's one competing interpretation.  The other found elasticities ranging from -.1 to -.3 in 28 of 35 studies reviewed.

[Razgovory]

Okay, if you want to maintain there is only one reason why people take a minimum wage job then no need having a discussion.

Okay, I'll bite what are the other reasons people take minimum wage jobs besides there not being a higher paying job available to them?

[Ideologue]

Okay, if you want to maintain there is only one reason why people take a minimum wage job then no need having a discussion.

Okay, I'll bite what are the other reasons people take minimum wage jobs besides there not being a higher paying job available to them?

Barbara Ehrenreich had her own reasons, I guess.

[Razgovory]

Okay, if you want to maintain there is only one reason why people take a minimum wage job then no need having a discussion.

Okay, I'll bite what are the other reasons people take minimum wage jobs besides there not being a higher paying job available to them?

Barbara Ehrenreich had her own reasons, I guess.

I had to look that up.  So besides the multitude of investigative journalists, what else?

[Sheilbh]

Yes you did, but that's not what your dynamic monopsony paper says.  It says that's one competing interpretation.  The other found elasticities ranging from -.1 to -.3 in 28 of 35 studies reviewed.

That's one view which I described as significant difference but limited. Their review is largely about teenage unemployment because they're a group that tend to get the minimum wage. The easy solution to that seems to do what we do over here, which is have an age-graduated minimum wage. It also supports the classical view from the late 70s mentioned in that paper:

In 1977, the Minimum Wage Study Commission (MWSC) undertook a review of the existing research on the minimum wage in the United States (and Canada), with a particular focus on the likely impact of indexing the minimum wage to inflation and providing a separate, lower, minimum for younger workers. Four years and $17 million later, the MWSC released a 250-page summary report1  and six additional volumes of related research papers.2

In their independent summary of the research reviewed in the MWSC, Brown, Gilroy, and Kohen, three economists involved in producing the report, distinguished between employment effects on: teenagers (ages 16-19), where they concluded that a 10 percent increase in the minimum wage reduced teen employment, most plausibly, from between zero and 1.5 percent; young adults (ages 20-24), where they believed the employment impact is "negative and smaller than that for teenagers"; and adults, where the "direction of the effect...is uncertain in the empirical work as it is in the theory."3, 4  Their summary
of the theoretical and empirical research through the late 1970s suggested that any "disemployment" effects of the minimum wage were small and almost exclusively limited to teenagers and possibly other younger workers.

The critique in that paper of the Neumark review is this:

The Neumark and Wascher review, however, is considerably more subjective and arguably less relevant to the United States than the two meta-studies discussed earlier. Only 52 of the 102 studies reviewed by Neumark and Wascher analyzed U.S. data. Of these, Neumark and Wascher designated 19 as "most credible," five of which were their own studies.19  The Neumark and Wascher (2006) review also excludes several important papers that were not published until after the review was completed, including the important contributions of Arindrajit Dube, William Lester, and Michael Reich (2010) and Sylvia Allegretto, Dube, and Reich (2011) (to which we will return to below).20

The meta-study conclusions mentioned were as follows:

"Two scenarios are consistent with this empirical research record. First, minimum wages may simply have no effect on employment... Second, minimum-wage effects might exist, but they may be too difficult to detect and/or are very small."

"The largest in magnitude are... positive [and] statistically significant... Several are economically irrelevant though statistically significant and several others [are] slightly larger but...statistically insignificant."

The conclusions of subsequent papers, not included in Neumark's review, go like this:

Using this large sample of border counties, and these statistical advantages over earlier research, Dube, Lester, and Reich "...find strong earnings effects and no employment effects of minimum wage increases."

"Our evidence does not suggest that minimum wages reduce employment once controls for trends in county-level sectoral employment are incorporated. Rather, employment appears to exhibit an independent downward trend in states that have increased their minimum wages relative to states that have not, thereby predisposing estimates towards reporting negative outcomes."

But, once they controlled for different regional trends, the estimated employment effects of the minimum wage disappeared, turning slightly positive, but not statistically significantly different from zero.

Against that, there's a study, from New York rises in the minimum wage (from what I can tell of 40% in a year, which is in my view rather too rapid):

"...robust evidence that raising the New York minimum ... significantly reduced employment rates of less-skilled, less-educated New Yorkers." Their estimates implied "...a median elasticity of around -0.7, large relative to consensus estimates ... of -0.1 to -0.3 found in the literature."35

The majority of studies seem to suggest no significant link and they are also the ones based on the broadest sample. Against that there's the consensus you've pointed which, as I say, is significant but limited by population and, I'd suggest, easily mitigated. There's also the outlier New York study which maybe can be explained by how quickly the rise took effect.

If nothing else you can now say you know plenty of economists who predict zero rise in unemployment

I think for me the stronger worry would be inflationary effects. That may not be an issue in the US but in the UK we've had many quarters of over-target inflation so that would be a problem.

[CountDeMoney]

We're not talking about people like you or me. We're talking about career minimum wage slaves.

Who ought to be learning a skill to get a higher paying job.

You should go on down to the 'hood and help them with that.

Oh look, Seedy playing the race card. How original.

Plenty of white trash in Highlandtown can use the help, if you want to avoid the darkies instead.

[CountDeMoney]

Okay, if you want to maintain there is only one reason why people take a minimum wage job then no need having a discussion.

Okay, I'll bite what are the other reasons people take minimum wage jobs besides there not being a higher paying job available to them?

According to Berkut, they're all students working their way through college, or people trying to earn a little extra money for that holiday cruise.

[MadImmortalMan]

I might just be the only one hiring your stoned kids, languish. No degree, no certs, no guild memberships? No problem. Give me your tired, your poor, your huddled masses yearning to breathe free. Whoops, no wait, HR is on the other line...