Minimum wage: Another issue on which I’ve never been able to take a position

There’s a very refreshing Fact Checker piece in the Post today. It’s about whether President Biden (I love typing that) accurately represented the proposal to raise the minimum wage to $15 when he said “the whole economy rises” if we do that.

They gave him two Pinocchios. I love it. Pinocchios

No, I don’t love that my guy said something that earned two Pinocchios. I love that we’re back to checking a president’s accuracy in speaking about a technical matter of policy, rather than wild, hostile lies arising from his own deeply disturbed, evil personal impulses.

It’s refreshing.

As to the issue… this is one of those issues that people get very excited about, on one side or the other, but I’ve never been able to make up my mind about it. That’s because both sides present pretty compelling arguments.

That, by the way, is what the Fact Checker gave Joe the two Pinocchios for — stressing the upside as though it were settled fact, when there is plenty of reason to believe otherwise. In Joe’s defense, there is a large body of studies and arguments from experts that supports what he says. (And that’s what you do when you’ve decided to pursue a course and you’re trying to get people to go along — you cite the evidence for it.) The problem is that there remains a large body that says the opposite. It’s about the conflicting conclusions drawn by different economists.

The Congressional Budget Office does a pretty good job of summing up the dilemma:

On one hand, the CBO estimated that raising the minimum wage to $15 an hour by 2025 would cost 1.4 million jobs and increase the deficit by $54 billion over 10 years.

But it also estimated the policy would lift 900,000 people out of poverty and raise income for 17 million people — about 1 in 10 workers. Another 10 million who have wages just above that amount could potentially see increases, as well, the CBO reported.

On the one hand, and on the other hand.

It’s a toughie. And I’ve never been able to join enthusiastically with those who take either position: Those who want to lift 900,000 out of poverty, or those who wouldn’t do it because it might put 1,400,000 people out of work completely.

So I don’t know.

You?

 

25 thoughts on “Minimum wage: Another issue on which I’ve never been able to take a position

  1. Doug Ross

    A national minimum wage is a bad idea for many reasons besides more than a million people losing their jobs.

    1. Minimum wage jobs are intended for people with minimal skills. They aren’t supposed to be careers. They are entry level jobs. A bag person on a register at a fast food restuarant doesn’t deserve $15 an hour — and that’s why those jobs will disappear. Any time a robot / technology can replace a job that requires no skill it will happen.

    2. Raising the minimum wage to $15 makes all the actual skilled people making $15 an hour feel like they aren’t being compensated for having those skills. I know a baker at a grocery store who makes $15 an hour now. That is a skill that deserves more pay than someone who puts food in bags.

    3. $15 in New York City is not the same as $15 in Bismarck, North Dakota. Cost of living matters. Let the states or even the cities set the minimum wage based on prevailing economics. It’s not a national issue.

    It’s good to see Joe backing off all his campaign promises. $2000 checks are now $1400. Kids are still in cages. No student debt erased. Schools aren’t opened. Backing off the minimum wage because its too hard to negotiate with his supposed friends on the other side while his own party holds his feet to the fire. He’s been a zero so far. I recall how Old Joe was going to be all fired up “day one” to start changing things. I think all I am sure he has done so far is literally rearrange the furniture in the Oval Office and rename Operation Warp Speed so Trump gets no credit. You all got the politician you wanted. A stumbling, morose, low key liar to replace the buffoon liar. Duped again… at least he didn’t say “Hope and Change!!”

    Reply
  2. bud

    This has been fun actually debating real issues. Who knew? Just in the past few days we discussed DC statehood, the size of stimulus checks, the minimum wage, immigration and marijuana legalization. Isn’t this better than endlessly pinning over presidential tweets?

    Reply
  3. Bob Amundson

    Expand Earned Income Tax Credits. This a a very complex economic policy issue, but BRIEFLY: While a minimum wage hike will increase the wage earnings of some poor families and lift them out of poverty, some workers will lose their jobs, pushing their families into poverty. In contrast, improving the earned income tax credit can provide the same income transfers to the working poor at far lower cost.

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    1. bud

      There are 2 sides to the minimum wage issue. But it hasn’t been raised since 2007 and big corporations are shrinking their workforces just the same. Walmart has eliminated cashiers in favor of self checkouts. McDonalds, among others, is introducing kiosk ordering. Businesses hire the fewest workers they can get by with. I doubt many workers would lose their job with a small wage hike. Plus, higher wages would stimulate the economy. A big wage hike could be detrimental but $15 seems pretty modest.

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    2. bud

      The earned income tax credit is great. But it would cut revenue to the treasury. Raising the minimum wage would be largely paid for out of corporate earnings. Lots of moving parts to these issues.

      Reply
  4. Barry

    I’m ok with raising the minimum wage

    But Instead,

    What about eliminating the payroll tax for those making under 35,000 a year?

    1) instant raise for employees

    2) instant break for businesses that might be inclined to hire more people.

    Reply
  5. Bryan Caskey

    Just curious, who here runs a business that has employees? If so, do you pay any of them minimum wage? If so, how has that experience been?

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      1. Doug Ross

        I see Joe got caught in another campaign lie. Said that most schools would be open in person in the first 100 days. Now he’s cut that back to most K-8 schools will be open for 1 day a week in person. Aim high, deliver low… the Biden manifesto.

        Reply
    1. Barry

      This is from 2019, so with that said

      Looking for another sign of a strong economy? Nearly half of states in the U.S. just raised their minimum wage, and most small business owners reacted with a shrug. In the latest CNBC|SurveyMonkey Small Business Survey for the first quarter 2020, small business owners across the country report sustained optimism at the start of 2020, and only a minority report a negative business impact resulting from the increased minimum wages.

      In fact, in this quarter’s survey, 57% of all small business owners say these minimum wage increases will have no impact at all on their business in 2020, indicating that they can absorb the cost of the wage increase, sustain any loss in profits and find ways to raise revenue to compensate for the increase on their balance sheets. Or perhaps many were always paying their workers above the minimum wage even before the change was made.

      https://www.cnbc.com/2020/02/20/minimum-wage-increases-arent-a-job-killer-small-business-survey.html

      Reply
  6. Bryan Caskey

    Other minimum wage questions:

    1. Who benefits the most from a minimum wage law?

    2. Who is hurt the most from a minimum wage law?

    Reply
    1. Barry

      I think most of the support you see for a minimum wage hike is for a wage less than $15.

      The more popular options seem to be $10.10 or $12 and indexing it to inflation.

      Your first question would be hard to answer. Another important consideration is how many would benefit enough to possibly not be on public assistance anymore if they were making $12-$15 an hour as a new minimum wage? I have no idea.

      I also don’t know who is most hurt from a minimum wage law. My high schooler has applied for several jobs. All of them were offering in excess of the current federal minimum wage. Several of them were offering over $10 an hour. So the current law doesn’t really seem to have an impact at all on those jobs.

      I think the victims of the current minimum wage law are usually the least educated, and often immigrants – or those on the borders of society. They have no power. They can’t complain about wages, or even working conditions.

      Reply
    2. bud

      Boiling this down to two questions is an over simplification. With a properly set minimum wage law the economy broadly should benefit. That would include small businesses that would have an increase in sales owing to greater disposable income from workers generally. Granted, a few could be hurt especially if the wage is set too high. It’s complicated.

      Reply
      1. Bryan Caskey

        I certainly didn’t intend for you to think I was boiling anything down to just these two questions. Those are just two of many. Broad questions to prompt discussion.

        Reply
  7. Bryan Caskey

    Just for context on where the current market is, there’s a McDonald’s near my neighborhood with a sign indicating they are hiring at a starting hourly wage of $10.

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    1. bud

      Interesting that the unemployment rate is still high but restaurants are having a tough time finding workers. Part of it might be that older workers who pre-COVID may have sought a part time job to stay active are afraid of COVID and have removed themselves from the workforce. The economy is just not behaving the way it did in 2019.

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    2. Barry

      That starting hourly wage might be low considering Fast Food chains are doing quite well.

      This report is from the end of November

      Taco Bell – Same-store sales at the chain rose 3%. ( I recently ate lunch at a Taco Bell and ask the cashier who told me their business had been growing throughout 2020. She was a multi year employee at the location).

      KFC – same-store sales soared 9%, drive-thru sales increased 60% last quarter.

      Popeyes – same-store sales rose 19.7%

      Wendy’s – same stores sales rose 7% last quarter
      McDonald’s – Reported September 2020 same stores sales were the best in nearly a decade
      Jack in the Box – same-store sales rose 12.2% last quarter

      Arbys- in October, their CEO reported good US sales, and stated their research suggested they had served “16 million new customers” in 2020. As a result of their recent growth, they are looking to expand into Latin America.

      Bojangles- I don’t have the numbers but I talked to a franchise owner recently – one who owns multiple locations. I was told sales were doing “quite well” and their problem was finding employees- and that he had actually had to close some stores a few days here in some of their more rural areas because of lack of staff. (I wondered then if they had considered raising wages but I didn’t ask).

      Reply
  8. Michael Dey

    Can we agree to raise the minimum wage to an amount that reflects historical norm and index it to inflation? $7.25 in 2007 is about $10 today. Adjusted for inflation, the minimum wage has been worth as much as $12 in today’s dollars. But for the most part it has been worth about $8-$10, and as little as $4 when it was first enacted. We should take that into consideration. I don’t know many employers paying less than $10/hour today, even to a teenager. But $15 would be catastrophic for many small businesses. We have already seen the impact in some cities that have implemented $15. Like someone else already wrote, if you have never made a payroll, you won’t understand the consequences of what you are demanding. And before we get all high and mighty about the virtues of the minimum wage, perhaps a little historical context is in order? If 1.2 million will lose their jobs, which groups will be impacted the most? Minorities? Young people? Women? This article offers a clue.
    https://www.forbes.com/sites/carriesheffield/2014/04/29/on-the-historically-racist-motivations-behind-minimum-wage/?sh=7b21802111bb

    Reply
    1. Barry

      I think somewhere in the $10-$11 range is a fair compromise and indexing it to inflation.

      I also think some sort of payroll tax break (no payroll tax at all for the employee and employer) for those under about $30,000 a year 2 years would be a good start that would help employees get a quick raise and help employers hire more people. I’m not firm on the $30,000 figure. It could be lowered a little if necessary.

      Reply

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