Wednesday, February 1, 2017

Higher Minimum Wages: Six Months of Laws, Studies, Viewpoints, and Speculation

This employment area has had a lot of activity since the Fourth of July.  What has happened, and what has been said?0

Tom Knighton’s snide-titled July 6th article in PJ Media, “Boston Globe Accidentally Reports That Raising the Minimum Wage Kills Jobs,” showed how the YouthWorks program, which provides pay for teenagers with low family incomes to work at nonprofit opportunities, delivered fewer of them when the lowest legal Massachusetts pay was increased, and correctly pointed out that “no wage” was “harder to live on” than the minimum, whatever it may be.  Radio host Mark Levin hit a similar note later that month, as reported in CNS News, by saying that “raising the minimum wage eviscerates jobs for the little people,” from sheer inability of employers to maintain as many jobs. 

On July 29th, The Washington Post printed Max Ehrenfreud’s “Why raising the minimum wage in Seattle did little to help workers, according to a new study.”  The author wrote that such efforts “have often produced contradictory results,” and reported that, when Seattle’s large-business base rate increased from $9.96 to $11.14, one research project determined that it raised average earnings $5.54 per week, while another found that it reduced them by an almost identical amount.  He named another study result, that birth weights correlated with minimum wages, which could not possibly have shown causality.  Another one Ehrenfreud cited concluded that Seattle’s increase was followed by reduced hours and employment.  The next day, The Seattle Times released something intended and succeeding as an even-handed editorial, “Read between the lines of the minimum-wage experiment,” saying that the new rate was neither “a universal good” nor “a job-killer”;  that while that city’s “white hot” economy had precipitated no reduction in job openings, had mandated pay floors stayed the same there would have been 1.2% more;  and that workers had lost an average of 35 to 40 work minutes per week.  

The negative views continued the next day in New York Post, with Nicole Genilas’s “A $15 minimum wage will crush the retail industry.”  She pointed out that there are now 8 million retail salespeople and cashiers earning hourly averages of $10.47 and $9.28, and maintained that “the result of impossible labor costs will be more automation.”  Much the same viewpoint came out August 1st in Salon, of all places, in Carrie Sheffield’s “Hillary Clinton’s bogus war on poverty:  Her proposed minimum wage hike would only hurt low-income families,” saying that $15 per hour would “price young people… out of the labor market, and for many, their first job.”

Although there are many causes affecting the number of work opportunities, Tyler O’Neil, in PJ Media on August 28, gave as well documented an example of minimum pay affecting jobs as I have seen.  “D.C. Restaurants Lose 1,400 Jobs Amid Minimum Wage Increase” started with a graph showing steady increases in the number of restaurant positions in Washington and its suburbs from 2010 to July 2016, with the only exception being a drop in the city, six months before July’s mandated $1 per hour raise, but not elsewhere. 

On November 30th, Brian Sozzi’s piece in The Street, “Fight for $15 Serves Up Huge Risk for Restaurant and Retail Investors,” predicted that “the latest populist wage protests will come to a head for many companies in 2017.”  He warned that McDonalds and T.J. Maxx stock might each suffer, and concluded that investors should “pay attention now,” or “be served up a side of losses later.”  The next day, an untitled Investor’s Business Daily editorial came out against that rate, citing a study showing it “would have a devastating effect,” with “ultimately, millions of jobs lost” (italics theirs), with the poorest 10% of such workers dropping 28% and 38% of the positions shed in Chicago and Boston.  The authors said those favoring the $15 minimum may “think they’re taking a moral stand,” but are “merely killing jobs that poor people could do, achieving badly needed training and experience along the way,” contributing greatly to “such a large income and jobs gap, and why minorities have such a hard time getting a foothold in our economy.”  Valid points.

From the other side, Barry Ritholz’s “Minimum-Wage Foes Tripped Up By facts” (, December 7) claimed “many” studies have found that “modest increases in minimum wages don’t lead to job losses,” and said that Wal-Mart workers were receiving an average of $1,000 in public assistance.  He did not consider employers cutting positions to prepare for higher pay to be meaningful, and noted the stimulus effect instead.

This year, per Jeanne Sahadi in CNN Money (December 19), there will be minimum wage increases in 19 entire states and seven additional cities and counties.  The floors are going up in Arkansas, California, Colorado, Connecticut, Florida, Hawaii, Maine, Maryland, Massachusetts, Michigan, Missouri, Montana, New Jersey, New York, Ohio, Oregon, South Dakota, Vermont, and Washington, along with, among other smaller places, Washington, D.C. and Albuquerque, New Mexico. 

So what will be the result of all this?  “What will a higher minimum wage do?  Two new studies have different ideas” (Natalie Kitroeff, Los Angeles Times, January 11) gives us some formal conjecture, including, from Berkeley, California, the ideas that that state’s rises will actually cause a net increase in jobs (!), and that “bigger salaries also make people more productive,” which runs counter to the classic literature on that subject.  We won’t know much, though, until near the middle of the year, when, clearly, there will be plenty of data to analyze.  I’ll see you on this topic then.        

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