One study's results on the effect of a $15 minimum wage.
http://www.youngcons.com/chart-show...be-if-fast-food-workers-were-paid-15-an-hour/
http://www.youngcons.com/chart-show...be-if-fast-food-workers-were-paid-15-an-hour/
Effect of $15 minimum wage
- Thread starter LDB
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Not really a study. It's an opinion piece (it's an academic exercise, actually, an expounded conservative talking point) about the future. An actual study would gather actual information from actual restaurants and see what that information actually tells us.
If minimum wage goes to $15 an hour, the price of a sandwich will remain, as it always has, whatever the market will bear. Higher wages will cut into profits, to be sure, and it will mean many restaurants will have to close, but it won't result in higher priced sandwiches. People will only pay what they have to pay, not a penny more, whatever the bleeding-heart reason might be for wanting them to do so. Menu prices may go up, but it certainly won't be anywhere near 38 percent.
The effect of raising minimum wage to $15 is not as bad as the conservative talking points make it, but make no mistake it'll be bad bad bad. Liberals think you can just take that money out of corporate profits, because corporate profits are obscene. The problem is, most fast food places are individually owned and operated, and an individual restaurant simply doesn't have the money available to nearly double payroll and remain open.
Human labor really is an economic good like pretty much all of the others. Raise the price and the demand for it will drop. That doesn't mean if you raise the wages that people won't want to work, it means that when you raise the wages for labor then the demand for labor drops. And we've already seen that very thing happen in Seattle.
Since their minimum wage went up to $15 an hour, there is an average of 3 fewer employees per restaurant than both the national average and Seattle's own prior average. The prices of sandwiches at McDonald's, Subway and a few other fast food restaurants have seen their menu prices rise 4-5 percent. A $5 footlong is a $5.25 footlong in Seattle. But Subway now has an average of 4 fewer employees per location on the payroll, and the plans of one owner who currently has 7 Subway locations to open 4 new locations have been placed on indefinite hold.
And that information comes from the Seattle Times, the champion of the minimum wage increase. They still maintain, though, that the people who still have their jobs are better off now with the higher wages, and that outweighs the negative of those who have lost their jobs. The prediction was that less human labor will be employed at $15 an hour than would have been employed if the minimum wage had not risen to that amount, and that's exactly what we see happening in Seattle. We also see new restaurants opening at a slower pace than before.
If minimum wage goes to $15 an hour, the price of a sandwich will remain, as it always has, whatever the market will bear. Higher wages will cut into profits, to be sure, and it will mean many restaurants will have to close, but it won't result in higher priced sandwiches. People will only pay what they have to pay, not a penny more, whatever the bleeding-heart reason might be for wanting them to do so. Menu prices may go up, but it certainly won't be anywhere near 38 percent.
The effect of raising minimum wage to $15 is not as bad as the conservative talking points make it, but make no mistake it'll be bad bad bad. Liberals think you can just take that money out of corporate profits, because corporate profits are obscene. The problem is, most fast food places are individually owned and operated, and an individual restaurant simply doesn't have the money available to nearly double payroll and remain open.
Human labor really is an economic good like pretty much all of the others. Raise the price and the demand for it will drop. That doesn't mean if you raise the wages that people won't want to work, it means that when you raise the wages for labor then the demand for labor drops. And we've already seen that very thing happen in Seattle.
Since their minimum wage went up to $15 an hour, there is an average of 3 fewer employees per restaurant than both the national average and Seattle's own prior average. The prices of sandwiches at McDonald's, Subway and a few other fast food restaurants have seen their menu prices rise 4-5 percent. A $5 footlong is a $5.25 footlong in Seattle. But Subway now has an average of 4 fewer employees per location on the payroll, and the plans of one owner who currently has 7 Subway locations to open 4 new locations have been placed on indefinite hold.
And that information comes from the Seattle Times, the champion of the minimum wage increase. They still maintain, though, that the people who still have their jobs are better off now with the higher wages, and that outweighs the negative of those who have lost their jobs. The prediction was that less human labor will be employed at $15 an hour than would have been employed if the minimum wage had not risen to that amount, and that's exactly what we see happening in Seattle. We also see new restaurants opening at a slower pace than before.
Anytime prices rise whether at your favorite fast food joint or at the gas pump or at the lumber yard people vow to cut back on purchases. It doesn't take too long for the new prices too become the accepted norm. People return to their previous buying patterns.
Businesses don't hire people out of the goodness of their hearts. They hire to fulfill the demand by their customers. If they needed x number of employees before the wage increase they will find that they need x number of employees when business goes back to normal. Businesses do not like loosing customers. They spend millions of dollars in advertising to get people in their doors. When those customers turn around and leave because the wait is too long smart businesses will take action.
The buying public have very short memories. All they care about is getting what they want when they want it. I really doubt sales will slip very much with the price increases and any decline will shortly reverse itself.
There is only one reason a business will hire additional employee. They NEED them.
I will be curious to see how staffing levels are in 6 months. That will tell a more meaningful story.
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Businesses don't hire people out of the goodness of their hearts. They hire to fulfill the demand by their customers. If they needed x number of employees before the wage increase they will find that they need x number of employees when business goes back to normal. Businesses do not like loosing customers. They spend millions of dollars in advertising to get people in their doors. When those customers turn around and leave because the wait is too long smart businesses will take action.
The buying public have very short memories. All they care about is getting what they want when they want it. I really doubt sales will slip very much with the price increases and any decline will shortly reverse itself.
There is only one reason a business will hire additional employee. They NEED them.
I will be curious to see how staffing levels are in 6 months. That will tell a more meaningful story.
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paullud
Veteran Expediter
It will be tough to tell even in 6 months because Seattle is raising the minimum wage to $15/hour over a few years but it is currently $11/hour. I think that businesses are more likely to push the employees harder and expect more, as they should but this will push many people out as they can't or won't try to keep up. How many times do you see employees standing around in restaurants that are there just in case it gets busy? Those jobs will be gone for awhile if not forever. The long term effects won't be known until the minimum wage is fully in place and the businesses adjust. I would imagine Seattle will see a drop in businesses moving in and many moving out to the suburbs. Chasing away retail businesses is a really bad idea since they provide so much tax revenue. We have to remember that this is just the city and not the entire state so it limits the captive audience.
It has already been proven that as stated above, demand for labor will drop - especially for unskilled, inexperienced labor, namely teenagers. The link below depicts a good picture of past results of minimum wage increases and its effect on young people seeking part time jobs. However, in this age of Hope and Change the demand drop will also have an effect on the millions of unskilled, inexperienced workers Obama is bringing across the border to supposedly fill a "need" for this kind of labor. It doesn't take an economic genius to see the developing conflict in this scenario and the coming increase in demand for social services: welfare, food stamps, health care for those who can't afford it, etc.
http://www.aei.org/publication/lets...s-when-it-increased-41-between-2007-and-2009/
That University of Washington study, incidentally, was commissioned by the City of Seattle.
Being employers and merchants, this issue is of great interest to Diane and me. I did not look closely at either study that was recently announced but understand they came out with divergent conclusions. It's going to be hard to pin anything down because the labor market is affected by multiple factors all at once. Even a detailed study based on extensive employer-supplied data will be colored by larger market forces.
In Seattle, for example, if Boeing lost a major contract and laid off thousands, the labor market would be affected but that development would have nothing to do with the minimum wage.
In Seattle, for example, if Boeing lost a major contract and laid off thousands, the labor market would be affected but that development would have nothing to do with the minimum wage.
Coming from a province with a higher minimum wage and higher benefits paid to employees... like the 2% vacation pay law ...on top of wage rAte....
low wage people are usually not savers.... they will spend ... hence helping the economy.... rich people hoard and save not helping the economy...
Let's get more people off food stamps and save our tax dollars and let market forces rule...
low wage people are usually not savers.... they will spend ... hence helping the economy.... rich people hoard and save not helping the economy...
Let's get more people off food stamps and save our tax dollars and let market forces rule...
Do you really believe this? When a rich person buys a six bedroom house and fills the six car garage with six premium rides, is that not spending too? When a rich person hires a contractor to build a retail business and hires employees to run it, does that not help the economy?
What do you think the rich people do with their money, keep it under a mattress?
Yes for the better part.... rich invest a% of their wealth in stocks and bonds or bank notes. Whereas the middle class and lower income spend immediately ....in a roundabout way the wealthy might create a few jobs thru their investment..
From a Forbes article...
Want to create some jobs? Then cut some taxes. But make sure you cut them for the right people. According to Owen Zidar, an economist at the University of Chicago Booth School of Business, you’ll get the biggest bang for the buck by focusing your tax relief on the poor and middle class.
The problem (if you can call it that) is that rich people tend to save a lot. That’s good for some purposes, but not when you’re trying to create jobs. By contrast, less-than-rich people tend to spend most of their income. That makes tax cuts for the poor and middle class more effective, at least over the short term.
Hence I say give the poor and middle class more disposable income and they will spend it.
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"Rich" is a relative term and I do not consider Diane and me rich. That said, we tend to save the money we make. Once saved, we look around for a place to invest it. One such place is our gym, which is a for-profit business that creates jobs and pays employees who spend that money. If you cut our taxes, we'll invest more money more quickly in more gyms, thereby creating more jobs and more consumer spending. Also note that when we spend $10,000 on a piece of gym equipment, people were paid to build it and transport it.
You talk like money made by people who are not employees somehow has a different effect in the economy. It does not. Money made by business owners is spent too. Money invested by rich people is the capital with which they and others build businesses. Put more money in the pockets of business owners by cutting their taxes and watch the economy grow.
Example: In Florida there is no state income tax. But business owners pay sales tax on rent they pay for space leased in commercial property (like a mall or warehouse). In our county the sales tax rate is 6.5% and we pay a ton of money for rent. Giving us a tax break such that sales tax would not be charged on rent would instantly improve our cash flow by thousands of dollars. That money could be used for a nice advertising campaign that would put the money in the advertiser's pockets while bringing more members to us and improving our cash flow even more. That would increase both the need and the ability to add more staff, thus more jobs.
Agreed.., the money is spent in different ways....
rebate a $1,000 to a middle or lower class earner and it will likely be spent instantly creating a quicker bang for the buck on the economy
Where as a higher earner/professional will likely let the Cheque sit for awhile and then just deposit it, Having almost no effect on the economy.
rebate a $1,000 to a middle or lower class earner and it will likely be spent instantly creating a quicker bang for the buck on the economy
Where as a higher earner/professional will likely let the Cheque sit for awhile and then just deposit it, Having almost no effect on the economy.
And let's not forget any raise in wages would still be tax deductible ... the impact would probably be cash flow and the need for a bigger line of credit... but inevitably wages are covered by tax deduction.
People who are smart with money do not leave it sitting around. Unless it is literally tucked in a mattress or sitting on a shelf somewhere, money is dynamic. Money deposited in a bank or money market fund goes immediately to work as the institution that holds the deposit deploys it for the benefit of the depositor and institution.
A raise in wages reduces profits if the raise cannot be offset with price increases. That's why you see kiosks replacing employees in fast food restaurants where minimum wage rates have been hiked. Where there are no profits to be made, there are no profits to tax. Yes, an employer can write off wages as an expense but if he or she is not in business because wages are too high, nobody makes anything and spending decreases.
There are a couple cities that have imposed high minimum wage rates in recent times. We'll see how that plays out.
In Ontario where minimum has been increased there has been an actually increase in lower level jobs... businesses keep expanding BUT the business structures are quite a bit different... especially corporate tax rates ...
Why is there a minimum wage? If somebody wants to work for 3 dollars, let them. I personally wouldn't work for $15. Gov should find something else to do and let people compete. Who does setting a "minimum" wage benefit?
Things get entirely too mixed up with regulation. The "minimum" wage might be $20 without a law, if they would get out of the way (gov) and let businesses do what they want. Its not a secret that wages have to be higher to attract employees in some industries.
My family had businesses for a lot of years. Saying you couldn't afford to pay more worked hand in hand with minimum wage to take more money home and give employees less. Employees are brainwashed into thinking it's normal to be paid what the gov says; if employees thought about it, they would turn down unlivable wages en masse and businesses would have to pay more.
Truthfully can't afford to pay more as a business? Shut your doors or find a better model. (Or dump those franchise fees and go independent, I'd like more options to eat)
What's the point of keeping a so-so business afloat with a minimum wage when that space could be filled with a more successful model that both made more money and paid more out?
I dunno, the big franchise stores, restaurants, and factories sure have us duped, hand in hand with big gov.
Fortunately it won't really matter since 80% of jobs could be replaced with machinery.
Interesting times
Things get entirely too mixed up with regulation. The "minimum" wage might be $20 without a law, if they would get out of the way (gov) and let businesses do what they want. Its not a secret that wages have to be higher to attract employees in some industries.
My family had businesses for a lot of years. Saying you couldn't afford to pay more worked hand in hand with minimum wage to take more money home and give employees less. Employees are brainwashed into thinking it's normal to be paid what the gov says; if employees thought about it, they would turn down unlivable wages en masse and businesses would have to pay more.
Truthfully can't afford to pay more as a business? Shut your doors or find a better model. (Or dump those franchise fees and go independent, I'd like more options to eat)
What's the point of keeping a so-so business afloat with a minimum wage when that space could be filled with a more successful model that both made more money and paid more out?
I dunno, the big franchise stores, restaurants, and factories sure have us duped, hand in hand with big gov.
Fortunately it won't really matter since 80% of jobs could be replaced with machinery.
Interesting times
Saying lower taxes for the poor cracks me up. Here they pay no income tax and often get a refund equeling more than they ever paid in. Middle class is a different story.
The idea that the rich don't spend is laughable. Even if they don't spend every last penny like someone living week to week doesn't mean they don't put more into the economy than those with less. They spend more on vacations. They spend more on homes, cars, food, etc. Investments is spending that money is used to fund other ventures by those receiving it. Just because someone spends the entire grand they get on a tax refund then are broke with no more to spend doesn't mean the guy who just spent a grand out of his 2 grand out of his 5 grand check spent less.
The idea of one group getting tax cuts over the next is silly, how about all groups getting them.
The idea that the rich don't spend is laughable. Even if they don't spend every last penny like someone living week to week doesn't mean they don't put more into the economy than those with less. They spend more on vacations. They spend more on homes, cars, food, etc. Investments is spending that money is used to fund other ventures by those receiving it. Just because someone spends the entire grand they get on a tax refund then are broke with no more to spend doesn't mean the guy who just spent a grand out of his 2 grand out of his 5 grand check spent less.
The idea of one group getting tax cuts over the next is silly, how about all groups getting them.