Minimum Wage - the fallout!

[SlugSlinger]

REPORT: Seattle Wage Hike Off To ‘Pretty Bad Start,’ Kills 700 Jobs
Seattle, which recently passed a $15 minimum wage, has seen the loss of 700 restaurant jobs despite the rest of the state seeing huge increases, according to a Wednesday report.
In its report, the American Enterprise Institute looked at restaurant job growth in both Seattle and the rest of Washington. The state itself has gained 5,800 industry jobs since January. Seattle, however, lost 700 jobs in the same time. The state minimum wage is $9.47. Back in June Seattle passed its own minimum wage of $15 an hour. The city ordinance is designed to phase in over the course of several years. It will reach $15 an hour by 2017 for most employers.
“One likely cause of the stagnation and decline of Seattle area restaurant jobs this year is the increase in the city’s minimum wage,” the report speculated. “It looks like the Seattle minimum wage hike is getting off to a pretty bad start. Especially considering that restaurant employment in the rest of the state is booming, and nearly 6,000 more restaurant workers are employed today than in January.”
Seattle was the first place to pass a $15 minimum wage measure and became the first major victory for supporters. San Francisco and Los Angeles followed not long after and now many cities have either enacted it or are considering it. Some states are also giving the $15 minimum wage serious consideration. Currently it has not passed on the state level.
New York Democratic Gov. Andrew Cuomo first announced Sept. 10 his plan for raising the state minimum wage. If enacted, the increase will gradually put New York City to the $15 mark by 2018 and the rest of the state by 2021. Florida and Massachusetts have also began taking steps to pass it.
The impact minimum wage increases have on workers and employers is in dispute. Critics often argue increasing the minimum wage, especially as high as $15 an hour, will hurt the poor by limiting job opportunities. The problem is businesses need to offset the extra cost of labor by either raising prices or cutting workers. It is particularly troublesome for low-profit industries like restaurants who struggle much more to absorb the extra costs.
Supporters, though, say wage will help the poor by allowing them to afford basic necessities. The increased purchases would than stimulate economic activity. Fight for $15 has been the main advocate behind the push. The union-backed group has utilized rallies and media marketing campaigns in its efforts.

Simple supply and demand graph applied to the minimum wage.

Blue line is demand, red upward sloping line is supply.

When blue crosses red, you have market equilibrium and the market price.

When the minimum wage is artificially increased, the demand will decrease (law of demand). The red vertical and horizontal lines represent the artificially minimum wage and this falls on the supply and demand curves. As you can see, there is greater supply for people to work at an artificial minimum wage and there is less of a demand. This is the direct result of raising the minimum wage to an artificially high amount. And the loss of 700 jobs once again proves the theory of supply and demand.

And the average college age voter:

 

[Ace_on_the_Turn]

REPORT: Seattle Wage Hike Off To ‘Pretty Bad Start,’ Kills 700 Jobs
Seattle, which recently passed a $15 minimum wage, has seen the loss of 700 restaurant jobs despite the rest of the state seeing huge increases, according to a Wednesday report.
In its report, the American Enterprise Institute looked at restaurant job growth in both Seattle and the rest of Washington. The state itself has gained 5,800 industry jobs since January. Seattle, however, lost 700 jobs in the same time. The state minimum wage is $9.47. Back in June Seattle passed its own minimum wage of $15 an hour. The city ordinance is designed to phase in over the course of several years. It will reach $15 an hour by 2017 for most employers.
“One likely cause of the stagnation and decline of Seattle area restaurant jobs this year is the increase in the city’s minimum wage,” the report speculated. “It looks like the Seattle minimum wage hike is getting off to a pretty bad start. Especially considering that restaurant employment in the rest of the state is booming, and nearly 6,000 more restaurant workers are employed today than in January.”
Seattle was the first place to pass a $15 minimum wage measure and became the first major victory for supporters. San Francisco and Los Angeles followed not long after and now many cities have either enacted it or are considering it. Some states are also giving the $15 minimum wage serious consideration. Currently it has not passed on the state level.
New York Democratic Gov. Andrew Cuomo first announced Sept. 10 his plan for raising the state minimum wage. If enacted, the increase will gradually put New York City to the $15 mark by 2018 and the rest of the state by 2021. Florida and Massachusetts have also began taking steps to pass it.
The impact minimum wage increases have on workers and employers is in dispute. Critics often argue increasing the minimum wage, especially as high as $15 an hour, will hurt the poor by limiting job opportunities. The problem is businesses need to offset the extra cost of labor by either raising prices or cutting workers. It is particularly troublesome for low-profit industries like restaurants who struggle much more to absorb the extra costs.
Supporters, though, say wage will help the poor by allowing them to afford basic necessities. The increased purchases would than stimulate economic activity. Fight for $15 has been the main advocate behind the push. The union-backed group has utilized rallies and media marketing campaigns in its efforts.

Simple supply and demand graph applied to the minimum wage.

Blue line is demand, red upward sloping line is supply.

When blue crosses red, you have market equilibrium and the market price.

When the minimum wage is artificially increased, the demand will decrease (law of demand). The red vertical and horizontal lines represent the artificially minimum wage and this falls on the supply and demand curves. As you can see, there is greater supply for people to work at an artificial minimum wage and there is less of a demand. This is the direct result of raising the minimum wage to an artificially high amount. And the loss of 700 jobs once again proves the theory of supply and demand.

A report from the American Enterprise Institute that "speculated" is just about meaningless. No, that's not true. It's utterly meaningless. The minimum wage hike may be the cat's pajamas or may be the cause of economic collapse but either way, the American Enterprise Institute is not a true arbitrator of its impact.

 

[Hoov]

A report from the American Enterprise Institute that "speculated" is just about meaningless. No, that's not true. It's utterly meaningless. The minimum wage hike may be the cat's pajamas or may be the cause of economic collapse but either way, the American Enterprise Institute is not a true arbitrator of its impact.

I can assure you that the wage hike is not the cat's pajamas. SlugSlinger has it right. Even if the graph is not artistic, it is correct. My graph would not be that well drawn, by the way.

 

[tRidiot]

Simple math.

Braum's pays their employees a starting wage of $7.75 an hour.

Braum's charges $4.65 for your basic cheeseburger and $3.25 for a gallon of milk.

Braum's makes a decent profit off the costs across their entire menu and the business is successful.



Fast-forward 5 years. Minimum wage is now $15.

Braum's pays their employees a starting wage of $15.00 an hour.

How much do you think they are going to have to charge for a cheeseburger and a gallon of milk to maintain profitability?

How far is that $15.00/hr going to go now that every single product down the line is going to increase enough to cover the increase in labor costs at fast-food places, at grocery stores, at convenience stores, at shopping malls, at restaurants, at daycares and schools, at every single solitary business in the country that has any employees at minimum wage up to 200% of minimum wage?? And your people out there now who make $20 an hour and are making it as middle-classers are all of a sudden going to be making just above minimum wage? Nurses? Paramedics? Teachers? Skilled factory technicians and mechanics? etc.? All these people who are currently highly-trained and skilled and make a normal living wage are just going to be content to continue where they are and lower their standard of living through reduced buying power and value of their dollars?




How much is a minimum wage hike going to actually help the people who depend on minimum wage??? You figure it out.


<edit> Prices above are simply examples and I have no idea how close they are to real-world at the moment.

 

[yukonjack]

One thing that isn't addressed is what affect will this have on retirees on a fixed income? If prices rise significantly to cover increased labor costs what will that do to the rest of society that no longer has the ability to increase their income?

 

[dennishoddy]

One thing that isn't addressed is what affect will this have on retirees on a fixed income? If prices rise significantly to cover increased labor costs what will that do to the rest of society that no longer has the ability to increase their income?

And people on disability that honestly can't work.
Caught a snippet today on the news that congress is talking cutting SS payments in order to get a budget bill pass before the election.
I'll have to see if I can find any supporting info.

 

[ronny]

Go to Chili's or Applebee's (and, maybe a few others). Notice the little device on each table and booth. You know, the one that let's you play games for 99 cents while you wait for your order. Also, notice it will let you modify your order without calling your server over, i.e., add dessert to your order, for example. Skip forward a few years and look around - no servers! Just a couple of workers who deliver food to the table and a couple more who pick up the dirty dishes. But those few get a good minimum wage.

I asked a waiterperson last summer if these things would take his place. He looked at me like I was crazy and gave me a nervous little laugh.

 

[yukonjack]

And people on disability that honestly can't work.
Caught a snippet today on the news that congress is talking cutting SS payments in order to get a budget bill pass before the election.
I'll have to see if I can find any supporting info.

I'm semi-fortunate in that my retirement from the State of Alaska includes an adjustment for cost of living increases. However they use whatever percentage that Social Security comes up with. Last year that amounted to $13.59 a month. A real joke. They raised our water/trash/sewer bill here in Piedmont by over $20 a month. So much for reality.

 

[dennishoddy]

Go to Chili's or Applebee's (and, maybe a few others). Notice the little device on each table and booth. You know, the one that let's you play games for 99 cents while you wait for your order. Also, notice it will let you modify your order without calling your server over, i.e., add dessert to your order, for example. Skip forward a few years and look around - no servers! Just a couple of workers who deliver food to the table and a couple more who pick up the dirty dishes. But those few get a good minimum wage.

I asked a waiterperson last summer if these things would take his place. He looked at me like I was crazy and gave me a nervous little laugh.

No waitstaff has been around for a long time in some restaurants. Pick up a phone, place your order, and somebody brings it out. These are sit down, and not fast food drive in places.

 

[SlugSlinger]

I'm semi-fortunate in that my retirement from the State of Alaska includes an adjustment for cost of living increases. However they use whatever percentage that Social Security comes up with. Last year that amounted to $13.59 a month. A real joke. They raised our water/trash/sewer bill here in Piedmont by over $20 a month. So much for reality.

And another .gov lie is inflation and the cost of living. You tell me prices haven't gone up in this year!
With the quantitative easing propagated by the .gov, there is an extreme amount of surplus money in the economy and that money is currently sitting on the sidelines. And this is the reason for the FED semi-panic to raise rates. If that excess money actually is moved from the sideline to trading in the economy, there will be MASSIVE or hyperinflation.

And you, yukonjack, and every other retiree who has earned their social security get this from the .gov:

Cost-of-Living Adjustment (COLA) Information for 2016
With consumer prices down over the past year, monthly Social Security and Supplemental Security Income (SSI) benefits for nearly 65 million Americans will not automatically increase in 2016.

https://www.socialsecurity.gov/news/cola/