Worst “Slate take” ever? Why there’s nothing “ugly” about a $15 minimum wage

[xchrom]

http://www.salon.com/2014/05/07/worst_slate_take_ever_why_theres_nothing_ugly_about_a_15_minimum_wage/



Last week, Seattle Mayor Ed Murray announced a plan to gradually increase the minimum wage within the city limits to $15 an hour, higher than any large city in the nation. And it wouldn’t be an issue of economic empowerment in America if someone at Slate wasn’t willing to argue against it in contrarian fashion. In this case, Jordan Weissmann warns that the proposal is “misbegotten,” “a step too far,” “dubious,” “ugly,” and a “cause for concern,” and will inevitably lead to low-wage workers getting replaced with robots and businesses shipping out to nearby suburbs.

First of all, the idea that this is an unprecedented expansion of the minimum wage isn’t all that true if you factor in cost of living. Seattle is one of the more expensive cities in America. The Economic Policy Institute’s 2013 Budget Calculator shows that a family of two parents and two children would need $70,025 a year to live modestly in Seattle. Two parents working full-time at the new proposed minimum wage would earn a little over $60,000. More than 120 municipalities have living-wage ordinances for some or all workers, all at wages that reflect the cost of living in their communities. And a handful, like Manchester and Hartford, Conn., Santa Barbara and Sonoma, Calif., and Burlington, Vt., are over $15 an hour. None of these cities have yet fallen into the sea, to my knowledge. Gradually moving to a citywide $15 minimum wage aligns Seattle’s worker compensation with its true expenses, and after that, the wage floor will get indexed to inflation, so low-wage workers will no longer see their purchasing power eroded.

Weissmann cautions that under the plan, Seattle will have a far higher minimum wage than surrounding cities, where businesses can easily move, even though the industry most affected by a minimum wage hike is food services. Because restaurants that want to serve customers in the place where the most people in the region live and work will just push off to Bellevue or Bainbridge Island, daring the public to come find them. Fortunately, gas is free and everyone has time on their lunch hour to take a ferry, get a burger and ride back, so this will cause no disruption or depressed sales.

More seriously, Seattle actually sought out studies on what would happen after a large minimum wage increase. In March, Mayor Murray released a report from three professors at UC Berkeley who looked at the impact of local wage laws on employment, and specifically whether businesses move outside local borders for lower labor costs. Simply put, the researchers found no such dynamic. The report indicates that increases in business operating costs get offset by reduced employee turnover, meaning less recruitment and training. Outside of food services, most businesses don’t have to pass on any costs to their customers. And in the end, the study shows, each 10% increase in the minimum wage leads to a small price increase for restaurant consumers of 0.7%. So Seattle’s roughly 60% increase would lead to your $10 lunch costing an extra 42 cents (and not all at once, as you’ll see). Considering how many new potential customers will have extra purchasing power to actually buy that lunch, the policy holds as many potential economic benefits for the city as it does obstacles.

[Shivering Jemmy]

1. That's not really what the slate article is arguing

The argument is that we have studied smaller bumps in the minimum wage and found negligible ill effect. But we haven't really looked at a bump of this size. It's possible it could have a bad effect.

And examined honestly it could. I am hopeful that it will not but we don't know.

Weissmann concludes the article by saying he is glad Seattle is doing this because now we will have data on such larger wage increases.

So while it wasn't a positive article, the Salon response isn't that fair.

[el_bryanto]

2. Conservatoids like to pretend that there is a natural wage that we will get to

Through a process of negotiation between the bosses and the workers. The problem is that in that relationship the bosses have all the power; left to their own devices they will keep wages in the cellar if not the sub-cellar. And since the union movement has been effectively gutted there's no real recourse, except minimum wage laws. Even if an individual Joes Discount Bar-B-Que boss might realize the benefits to extending a higher wage to his employees, the competition might well restrain him from doing so.

The only real solution I can see is what Seattle is doing; so good on them.

Bryant

[Skink]

3. What's next rent control