Should the US raise the federal minimum wage?

[Admiral Yi]

You suggested that unemployment would rise if the minimum wage was above the prevailing market wage.  I asked what that was and you don't know.  I asked if wages for illegal immigrants factor into this, and you said you didn't know.  That seems like important information.  I also wonder if this minimum wage/job loss is linear or otherwise predictable.  For if we raised it five dollars above the prevailing market wage how much employment are we talking about?  .01% increase?  50% increase?

I agree that it's important information.

Recorded price elasticities of minimum wage labor range from -0.1 to -0.3.  I.e. a 10% increase in the minwage would lead to a loss of 1% to 3% of the minwage jobs.

We don't know if the relationship is linear.  That's why I welcome the LA experiment.

[The Minsky Moment]

Ah, so you guys think this is one of those empty gesture deals?  I.e.  "minimum wage" workers are already getting paid more than minimum wage?

Not exactly.
Thinking more of the empirical work more generally, plus the fact they are more significant factors at play.

[Razgovory]

You suggested that unemployment would rise if the minimum wage was above the prevailing market wage.  I asked what that was and you don't know.  I asked if wages for illegal immigrants factor into this, and you said you didn't know.  That seems like important information.  I also wonder if this minimum wage/job loss is linear or otherwise predictable.  For if we raised it five dollars above the prevailing market wage how much employment are we talking about?  .01% increase?  50% increase?

I agree that it's important information.

Recorded price elasticities of minimum wage labor range from -0.1 to -0.3.  I.e. a 10% increase in the minwage would lead to a loss of 1% to 3% of the minwage jobs.

We don't know if the relationship is linear.  That's why I welcome the LA experiment.

I have another thought.  If there is already a glut in minimum wage type jobs, would the loss of a small percentage even be noticed?  If say the minimum wage increases, and there is still a glut in these type of low paying jobs, is any harm done?

[Admiral Yi]

I'm not entirely sure what you mean Raz.

[DontSayBanana]

Not exactly.
Thinking more of the empirical work more generally, plus the fact they are more significant factors at play.

Such as excess profits being banked as trophies instead of shared with ground-level workers actually earning large companies their millions and even billions.  Crappy, moderate-risk, low-yield IRA portfolios where employees have no say in where their investments are going do not constitute profit-sharing in my book.

Commission sales soften the blow a small bit, but compensation is far too stratified- a prime example is a recent sales contest at my store: the top 10 associates in each district by total ticket sales received $100 Visa gift cards.  The managers of stores where these associates worked, on the other hand, were offered big-screen TVs.  For someone else's work.

[Maximus]

I have another thought.  If there is already a glut in minimum wage type jobs, would the loss of a small percentage even be noticed?  If say the minimum wage increases, and there is still a glut in these type of low paying jobs, is any harm done?

I'm not an economist, but doesn't elasticity handle the phenomenon you're describing?

[MadImmortalMan]

Hmm.

[Monoriu]

Hong Kong's minimum wage is around US$4.  That's not a nominal amount.  Hundreds of thousands of people are paid that wage, and we are as expensive as New York.

[Admiral Yi]

That's not a nominal amount.

That might not mean what you think it means.

[Razgovory]

I have another thought.  If there is already a glut in minimum wage type jobs, would the loss of a small percentage even be noticed?  If say the minimum wage increases, and there is still a glut in these type of low paying jobs, is any harm done?

I'm not an economist, but doesn't elasticity handle the phenomenon you're describing?

I don't know.  Rubber bands can do quite a bit, I don't know their roll in economics beyond rolling up news papers (that was my first job!).

[jimmy olsen]

Hmm.

The COL of San Fran and NYC especially look far too low.

[Admiral Yi]

The other way around Timmy.  Minimum wage adjusted for COL.

[jimmy olsen]

The other way around Timmy.  Minimum wage adjusted for COL.

What?

[Admiral Yi]

The second column is the local minimum wage adjusted for local cost of living.  I.e. someone in Manhattan making minimum wage is equivalent to earning 3.86 in Averageville.

[jimmy olsen]

The second column is the local minimum wage adjusted for local cost of living.  I.e. someone in Manhattan making minimum wage is equivalent to earning 3.86 in Averageville.

Ah, gotcha. Thanks.