$15 Minimum Wage Is A Bad Idea, Says Washington Post Editorial Board

A little bit of common sense from the Washington Post Editorial Board, though, one gets the idea that they might be a wee bit upset that this might affect their own operations soon

$15 is the wrong goal for minimum-wage advocates

GOVERNORS OF the nation’s most and fourth-most populous states, California and New York, respectively, have signed a$15-per-hour minimum wage into law. In the District, a judge has just ruled that proponents can try to get a $15 minimum on the ballot in November; Mayor Muriel E. Bowser (D) supports accomplishing the $15 goal legislatively. What the success of the $15 minimum wage movement shows, in part, is that politics abhors a vacuum. In the absence of action by the Republican-controlled Congress to raise the federal minimum wage, states and cities encompassing about 65 percent of the U.S. population have decided to enact higher minimums, though usually less than $15. Maybe the GOP should have taken President Obama up on his request for a $9 minimum when he offered it back in his 2013 State of the Union address.

Perhaps Obama should have offered an actual plan, rather than a sticky note/box checking bit of a fluff. Furthermore, let’s remember that it was the GOP who raised the minimum wage the last time, as they slipped it into a defense spending bill that virtually every Democrat voted against.

Another lesson, however, is that, when it comes to public policy, popular and wise are not necessarily the same. Stuck on $7.25 per hour since 2009, the federal minimum is due for an increase, especially in light of stagnant wages and income inequality. The magnitude of that increase, however, is a matter for caution, given the widely varying labor-market conditions across the country and the likelihood that sharp mandatory wage hikes would reduce the supply of jobs. Also, the minimum wage is not an especially well-targeted way to help the working poor, because — unlike the earned-income tax credit wage subsidy — it benefit.

It’s simple economics: if you artificially raise the cost of labor, in many cases it will be a 50% to over 100% increase, businesses will have to cut back on the workers or raise costs. Which do you think business owners will choose, especially when it regards low-skilled or un-skilled labor? Sure, the worker might have skills, but they aren’t necessary for the jobs. Of course, proponents of the increase will say that the company should just have lower profits. But, the proponents did not put their lives on the line in opening the business. They aren’t the ones working long hours, and responsible for paying the loans, nor responsible for the operations. The owners could lose it all in a heartbeat.

Even phased in over a few years, $15 would represent a major departure, about which existing economic research offers little solid guidance. This might be why Alan B. Krueger, the minimum-wage expert who formerly headed Mr. Obama’s Council of Economic Advisers, has written: “A minimum wage set as high as $12 an hour will do more good than harm for low-wage workers, but a $15-an-hour national minimum wage would put us in uncharted waters, and risk undesirable and unintended consequences.” The obvious risks — borne disproportionately by the very-low-income workers whom minimums are meant to help — are apparent even to advocates of the $15 minimum, as the many loopholes and caveats built into the California and New York increases implicitly demonstrate.

Businesses that can move will move. Low wage workers will be let go. Those who were out blowing off work to protest against their own businesses will surely be the first let go, and said businesses will surely look for cause in order to avoid unemployment payments. Many will be replaced with automation. Others will outsource. Part time positions will disappear. We already see this in Seattle, where the unemployment rate has spiked, yet, in the surrounding areas without the minimum wage raise have seen jobs increase.

There’s an old saying about being careful what you wish for, because you might get it. It’s not a positive saying. There will be quite a few people taking one for the team to make this wage happen.

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24 Responses to “$15 Minimum Wage Is A Bad Idea, Says Washington Post Editorial Board”

  1. Dana says:

    The minimum wage should be abolished: businesses ought to have to pay whatever it takes to hire and retain people, but the minimum wage sets a concept in people’s minds that $7.25 is a fair number. The recession has kept people at that wage.

    Prior to the previous minimum wage increase, there were few people actually at the minimum wage, because economic pressures had forced even the traditional minimum wage employers to pay more just to get people to show up for work.

    What increasing the minimum wage to $15.00 an hour will really do is cluster more people closer to the minimum wage. Will the guy currently making $15.00 an hour see a $7.75 dollar an hour raise, to keep him as far above the new minimum as he is now? (and even that doesn’t take into account that, percentagewise, he’d still be closer to the minimum wage?) Will the guy now making $10.00 an hour get a $7.75 an hour raise, or just the $5.00 an hour it takes to get him to the legal minimum?

    Having a minimum wage creates economic and business abnormalities, setting wages without regard to economic conditions or productivity. The left combitch that the middle class is being squeezed out, but this leftist idea of a big jump in the minimum wage will contribute to further squeezing!

  2. Dana says:

    Of course, California and New York would love to see the minimum wage increases, because that would bring in more tax dollars. That those tax dollars might be devalued through inflation doesn’t bother them much, because that simply means that the value of their dollar-denominated debts will decrease, helping them to pay down their bonds.

    Heck, everyone in the government wants inflation, for just that reason: to decrease the real value of the bonds they have to redeem. The Fed says outright that their goal is a 2% inflation rate, and Janet Yellen id disappointed that inflation is so low.

  3. Dana says:

    And plenty of private citizens like inflation, too. Anyone with a dollar-denominated debt will see the real value of his debt decrease, which is good, as long as his income keeps up with inflation.

    But, if you are on a fixed income, it ain’t so great. Even if you own your home outright, your property taxes will increase. If you are a renter, your rent will go up, while people who have bought their homes will see their mortgage payments decrease in real value. The already prosperous will, for the most part, do well, while the working class will not.

  4. larryw says:

    Let’s not forget that many Union wage contracts are indexed on the minimum wage (thus the push from the unions for the increase).

  5. Jeffery says:

    Alan B. Krueger, the minimum-wage expert who formerly headed Mr. Obama’s Council of Economic Advisers, has written: “A minimum wage set as high as $12 an hour will do more good than harm for low-wage workers, but a $15-an-hour national minimum wage would put us in uncharted waters, and risk undesirable and unintended consequences.”

    Teach: So you support an increase to $12 an hour as Mr. Krueger suggests would be valuable?

    Politics abhors a vacuum. The Republican psychos in Congress could have written a reasonable step-wise increase in the national minimum wage but declined, as they were busy repealing the ACA for the 50th time. So the states and cities have stepped in.

    How about a national maximum wage? This is easily accomplished using the tax code, but Ronald Reagan decided that the super wealthy needed tax relief, and America has agreed with him since. And since that time the super wealthy have been getting super wealthier and the poor get poorer.

    And $12 and hour is just too much for a laborer to make.

  6. o0Nighthawk0o says:

    I agree with the first post. Abolish minimum wage.

  7. jl says:

    J’s revisionist history strikes again. “The Republcan psychos could have written…. an increase in the minimum wage.” Really? But before that the hypocritical Dems could have written an increase in the minimum wage when they had a super-majority in Congress during Obama’s first term. Raised taxes to whatever they wanted to, also. I’m sure it was just an unintentional oversight by J. “Wealthy get wealthier and poor get poorer.” But as money is not a zero-summed game, the fact that someone else gets rich doesn’t mean it makes another become poor. Besides, income brackets are fluid. Many who were poor 5 years will have moved into higher paying jobs, only to be replaced by Bernie Sanders liberals who majored in a course name ending in “studies”, thereby replenishing the ranks of the poor.

  8. Jeffery says:

    Yes, the Republican psychos (and I should have added conservative Dem psychos) would absolutely oppose an even slight increase in the minimum wage. The last increase was approved in 2007 by a bypartisan vote. Those days are gone.

    When was the Democratic “super-majority” such that even conservative Dems could be overcome?

  9. jl says:

    “A reasonable increase in the minimum wage…” An argument started from the false premise that there should be an increase in the minimum wage.

  10. Dana says:

    jl wrote:

    “A reasonable increase in the minimum wage…” An argument started from the false premise that there should be an increase in the minimum wage.

    No, an argument started from the false premise that there should be a minimum wage at all. I’m reminded of the old joke:

    Would you have sex with me for a million dollars?

    Oh, yes, absolutely!

    Then, would you have sex with me for $20?

    Absolutely not! What kind of girl do you think I am?

    We’ve already established what kind of girl you are; all that we are doing now is dickering over the price.

    If you concede that the government should set a minimum wage, then it is perfectly reasonable to argue that it ought to be set higher.

  11. Hoss says:

    How does a national maximum wage (you lefties do love using the power of government to control, don’t you) change anything. Do you actually think there is some mythical pie of money that’s handed out by the government, and that the greedy rich come in and hog it all up. A maximum doesn’t increase everyone else’s paychecks, it just decreases the amount of tax collections your beloved federal government gets. Oh, and FYI, a maximum isn’t just going to hit those business types you lefties hate so fucking much, it’s also going to hit actors, musicians, and athletes. I wish you lefties were as concerned about effort equality as you are about pay equality.

  12. Jeffery says:

    Hoss,

    I’m one of those business types. If you think for one minute that CEOs or CFOs or VPs work harder or smarter than 7/11 clerks you are sadly mistaken. What happens when the board of directors (mostly CEOs of other corporations) wants to give one of their buddies a $19 million salary, but the top marginal rate above 5 million a year is 80%? They will be less likely to reward the CEO – thus more money for the shareholders, R&D, other employees. If they decide to give him the compensation anyway, more money for infrastructure, road builders, healthcare, SNAP and unemployment payments!

    Please remember – corporations are government creations. No company or economic entity is forced to form a corporation. Corporations are formed to protect investors and shareholders and corporate officers from individual liability.

    Did you know that the top marginal income tax rate was 90% and more during America’s heyday, post WWII?

    We used to build stuff in America. Now we are driven by the rich figuring out how to squeeze even more money out of the working classes. The Wall Street driven Great Recession that killed trillions of dollars of wealth should have driven the point home, but conservatives have fought every effort to block a repeat.

    If the working classes, the mass of men and women in America, cannot pay the bills, cannot save for retirement, cannot send the kids to college – then you get Donald Trump and Bernie Sanders. This is just the beginning. Pitchforks and torches.

    The religion of the far-right – that organization and fairness are the problems – has never been more obviously wrong.

  13. Jeffery says:

    Who or what decides if there should or should not be a minimum wage?

    Some market fetishists claim it interferes with the free market.
    But so do patents and copyrights. Do you wish to eliminate patents?
    Anti-trust and anti-monopoly laws interfere with the free market? Should we eliminate them? Anti-pollution laws?
    Laws against false advertising?
    Child labor laws?
    Overtime laws?
    Worker safety laws?

    Our regulations DO limit the actions of corporations.

    We have regulated the US economy into the greatest economic engine in history and still the envy of the world. Do we really want to turn the US economy into China’s?

  14. jl says:

    J-“the argument started from the false premise that there should be a minimum wage at all.” Actually, no, as I was referring to your first comment selectively berating Republicans for not raising it. “Then it is perfectly reasonable to argue that it should be set higher.” But yet you didn’t argue that it should be set higher. You just said “Republicans-bad” for not doing it, and later “conservative” Democrats (actually, they’re just Democrats). Hence, the “false premise”.

  15. Hank_M says:

    jeff, “We have regulated the US economy into the greatest economic engine in history…”

    Tell us how this works, regulating an economy into the greatest economic engine….
    Personally this seems like the stupidest thing I’ve ever read here, John excepted.
    But I’d love to see this explained.

  16. Jeffery says:

    Mr_M

    Which of these regulations are you ready to eliminate?

    Do you wish to eliminate patents?

    Anti-trust and anti-monopoly laws interfere with the free market? Should we eliminate them?

    Anti-pollution laws? A true market would allow/support the dumping of heavy metals etc.

    Laws against false advertising?

    Child labor laws?

    Overtime laws?

    Worker safety laws?

    The free market would allow all elephants to be killed for their tusks. Any objections?

    FDA? Why can’t I sell a pill that I claim prevents Alzheimer’s, except only after spending $250 million or more on clinical trials?

    What regulations on corporations are keeping our economy from being “all it could be”?

    And would you agree that the greatest economic meltdown since the Great Depression resulted from too little regulation? (This is a “baiting” question for conservatives, who all know for certain that the feds forced innocent lenders to give loans to shiftless Negroes.)

  17. Hank_M says:

    As usual you didn’t answer the question.
    You merely responded with more questions.

    Please explain how we regulated our economy to be the greatest economic engine in history?

  18. Jeffery says:

    My questions answer your question.

    We have one of the most regulated economies, if not the most. It is also the greatest economic engine in history.

    That you even question either of those concepts illustrates your ignorance. Are you wearing conserva-goggles?

  19. Hank_M says:

    Questions answer a question?
    No, they show you haven’t a clue and simply spout nonsense.

    I didn’t think you could explain it. It remains a remarkably stupid statement, even for you.

  20. Jeffery says:

    Mr. M.,

    I’ll excuse your hostility out of your ignorance and frustration. Ignorance and frustration… hallmarks of the right.

    Let me ask a couple more questions to help your enlightenment.

    What do you consider the most significant advances enabling the US economic engine?

    Certainly the government creation of the Corporation is one, right? Most businesses need capital to start and stay in business. The owners might be rich, they may borrow from friends and banks. But to really grow, most need to acquire large amounts of investment. The invention of the Corporation allows businesses to “sell” part of the business to outside investors, but importantly, shields those investors from the debts or liabilities engendered by the Corporation. All tightly regulated by, you guessed it, the government! Who would invest in a Corporation (buy stock) if the Corporation’s creditors could seize your home in court if the Corporation defaulted? What if a drug Corporation sold an FDA approved drug that killed 14,750 Americans? As a shareholder, would you like to be on the hook for all those lawsuits? I bet not.

    Here’s another example. Your little Corporation manufactures the dashboard wiring harnesses that GM installs in most of their automobiles. Your little Corporation signs a contract with a wiring supplier (who was the low bid), for 10,000 meters/year of a specific wire type at particular specifications. The supplier reneges on the contract, saying they cannot meet the terms of the contract. Your contingency supplier can meet the terms but at a significantly higher cost and not meet your timelines. Your little Corporation was significantly damaged by the supplier and owe’s you compensation spelled out in your contract. How do you make them pay? (Hint: The government enforces contracts.)

    Forming all sorts of protective Corporate entities and enforcing contracts… those seem like regulations to me. Do you disagree?

    Do you think that eliminating regulations of corporation and contract enforcement would improve economic growth?

    Do you think eliminating child labor laws, pollution emission restrictions, worker health and safety laws etc will improve economic growth?

    You can discuss these things like a grown-up or you can continue to spout your bullshit. Your choice. I don’t much care about the hopeless “lost boys” that comment here.

  21. Hank_M says:

    Jeff, I want to see you explain the statement that “We have regulated the US economy into the greatest economic engine in history.”

    Are you unable to do so?

  22. drowningpuppies says:

    You can discuss these things like a grown-up or you can continue to spout your bullshit.

    -the little guy who exaggerates often and continuously spouts child-like bullshit like a confused middle schooler

  23. Jeffery says:

    Dear Lost Boys M and sucking,

    I did explain it. You just refuse to understand or are incapable of understanding.

    And frankly, I don’t care which.

  24. Hank_M says:

    jeff, ‘I did explain it. You just refuse to understand or are incapable of understanding.”

    No, you responded with a bunch of leading questions never once explaining how “We have regulated the US economy into the greatest economic engine in history.”

    Not surprising. The statement was pure stupidity and your only recourse was to run away from it if your deflections didn’t work.

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