My wife and I each had rates of 6.25%ish on our student loans with a couple pushing 7...

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Pactimo brand ambassador, ask me about promo codes

Everyone doesn't make more. Only the working poor make more. Everyone else effectively makes less. Disparity is reduced.

Only the worst sort of monopoly is able to set prices based on what we can afford to pay. Competition keeps a reign on prices; closer to production costs.

There's nothing wrong with some disparity, but the degree that we have now is unhealthy for the economy. Consumer demand is depressed due to poor wages (real median wages nearly flat for 40 years!), and the excess profits are sitting in non-productive assets. Raising the MW doesn't solve this however; rather it's a bandaid to shore up the bottom, which has been the most negatively effected.

That sounds like the "marginal productivity" fallacy at work. In the real world, the "market wage" is whatever you make it.

Let's say I've employed someone to clean rooms. That person is currently making $7.25/hr because that is the minimum wage. Then the MW goes to $15/hr. What do I do? Lay them off and do the job myself? Not clean the rooms anymore?

Let's assume that everyone that hires low wage employees simply pays the higher salary, and passes the increased cost onto their customers. People who did not receive a pay increase will experience higher real prices (a real pay decrease) while those who did get a pay increase will be able to afford more. These cancel each other out. It's a zero sum. There will be some shifting around because demand for some products and services will decline and others will increase, but there is no net negative effect.

Prominent economic theory (science) completely refutes this statement. There is an observed dead weight loss as a result of artificially manipulating the price of labor (see chart from OP). What theory or evidence are you using to back this statement up?

You might say that you will accept a minor overall net negative economic effect (dead weight loss) to ensure everyone can eat and pay rent, but you can't truthfully say that there is "no net negative effect".

In terms of your "cleaner" example, there are several things that might happen.

• Clean your rooms less often. This is bad for you and customers, good for cleaner
• Pass cost onto customers. This is bad for customers since they have less real disposable income. It's bad for you because the increased prices will likely lower demand (depending on the elasticity of the good you are selling) and will likely cut into your profits. Again, good for the cleaner.
• Eat the loss - bad for you. Neutral for customers. Good for the cleaner.

In any scenario, economic theory and math show that the negatives ALWAYS outweigh the positives. It's literally science (albeit the "dismal" science).

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Strava

You guys have never had any experience in the restaurant business, have you?

slowguy is spot on.

In the restaurant business, you always need to hire more than you think you need because you generally cannot rely on what you have. No-shows, sickness, life emergencies, and incredible turn-over make it so you rarely, if ever, have enough staff. Then you have the very small percentage of staff who actually seek more hours, more shifts, and more OT. You give it to them because they are reliable and it makes your life easy. But, when MW jumps this greatly, you now have to cut those hours and it is the go-getters who get hurt the most.

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If there are no dogs in Heaven, then when I die I want to go where they went. - Will Rogers

Emery's Third Coast Triathlon | Tri Wisconsin Triathlon Team | Push Endurance | GLWR

Several of my associates have law school loans in the 9% range.

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If there are no dogs in Heaven, then when I die I want to go where they went. - Will Rogers

Emery's Third Coast Triathlon | Tri Wisconsin Triathlon Team | Push Endurance | GLWR

Maybe it was just that I worked in the cheapest of the cheap in food service. But I never saw anyone get OT. Or even over 35 hours/week to make sure they didn't get OT. For a couple years in college I drove for Domino's and Pizza Hut at the same time so I could get more hours. Frequently on the same day.

Any minimum or near minimum wage job I ever had treated OT as if it were the plague.

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I'm beginning to think that we are much more fucked than I thought.

I worked in, and did scheduling for, a restaurant while in college (and we pay servers min wage up here, not a 'serving' wage) and I currently employ a few people at rates marginally above our minimum wage.

What you are describing has not been my experience.

Min wage jumps, and more often then not that cost is just passed on to customers. If hours get cut, it is not from the 'go getters', because good managers know those few good servers are what make your business tick. You cut the shit, the part time students, the people who call in sick every Friday, etc.

After a little while, your business finds it's new normal, and a year after that, you have more or less forgotten about the wage hike. I'm not saying it's a painless experience, but, you adapt.

When smoking was banned in restaurants here, the restaurant industry went ape shit. They complained that they would all go out of business. Same thing when drinking and driving rules became more strict. Complaints about overbearing, un-business friendly legislation were everywhere. Yet, the world moves on, and those restaurants and bars are still doing fine.

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Long Chile was a silly place.

I represent a number of restaurants and a few chains. What I describe is what I have observed over the past two decades, especially in chain restaurants. They have metrics regarding hours worked, OT, etc.

Note - I am not claiming the new MW will destroy restaurants. I am responding only to the comments of rruff and sch340 and their exchange with slowguy. In that discussion, slowguy is spot on and the other two are off base.

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If there are no dogs in Heaven, then when I die I want to go where they went. - Will Rogers

Emery's Third Coast Triathlon | Tri Wisconsin Triathlon Team | Push Endurance | GLWR

Customers don't necessarily have less disposable income. It depends on who your customers are; it will likely go up if your customers trend to the lower income side. Real aggregate income did not decline at all, it was simply shifted around... so real aggregate demand shouldn't change either.

Dismal science indeed. The "free market" advocates are pushing a system that is inherently dysfunctional. If you want to know what works, look at how the best developed countries operate... and all of them have extensive wage and benefit supports to modify what "naturally" happens... which is a lot of poor people and a few wealthy ones (like in the 3rd world). Industrial society has had 200 years to figure this out.

I have. But this is not restaurant specific.

If you are *choosing* to cut hours in response to a MW increase, then you are running your business very differently than I would. And the "go-getters" would be the last people who would get cut in any case.

Yet that is exactly what a number of restaurants are doing in NYC and what a number of very, very lucrative chain restaurants do on a regular basis.

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If there are no dogs in Heaven, then when I die I want to go where they went. - Will Rogers

Emery's Third Coast Triathlon | Tri Wisconsin Triathlon Team | Push Endurance | GLWR

I'm not surprised that some respond this way. Apparently they believe that reducing service and squeezing their employees harder is the best approach. This will sort itself out quickly enough.

You would think so, yet, the Applebee's of the world remain packed every weekend.

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If there are no dogs in Heaven, then when I die I want to go where they went. - Will Rogers

Emery's Third Coast Triathlon | Tri Wisconsin Triathlon Team | Push Endurance | GLWR

Well, except that's just not an accurate reflection of reality. We've increased minimum wage more than 20 times over the last 100 years and the disparity between the rich and the working poor is greater than ever. Any reduction in disparity seems to be fleeting.

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Slowguy

(insert pithy phrase here...)

The real minimum wage was a lot higher in the 60s and 70s. We can discuss the reasons for the high disparity we see now (it isn't that mysterious), but it would be a different discussion. The MW is for for keeping the floor at a decent level.

Agreed, and I'm not against a minimum wage, or even an increase to the current minimum wage. It's just important for people to understand the floor is still the floor. People earning minimum wage aren't suddenly going to be living middle class lifestyles because the MW goes up. The market will adjust, and MW jobs will continue to give people working them a MW lifestyle.

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Slowguy

(insert pithy phrase here...)

I'd assumed that wages were high in NYC in general, but apparently not. They are actually right around the national median (~$50k/yr). IMO that isn't high enough to justify paying a $15/hr MW (which is ~$30k/yr working full time). It creates too much salary compression and hurts substantial numbers of people making barely more than the MW. And the idea of making the MW $15 nationwide is nuts. In some places the median is lower than that now.

I've noticed a phenomena lately where young people tend to flock to trendy cities, then bitch about the lack of affordability. Like... maybe you could take that into consideration beforehand? There are no shortage of places that don't suck in the US where you can get a decent job and pay rent, maybe even buy a house? But there is something about the appeal of being in the epicenter of where "things are happening" and where "all the cool kids are" that overwhelms everything else. That's fine, but welcome to supply and demand. I'm not sympathetic.

The fact that our current MW is quite low compared to the 60s and 70s, and still so many people are earning near it (back then it really was for entry level; teenagers mostly), should be alarming. Propping up the bottom to some degree makes sense, but that doesn't address the root issue of salaries being depressed (for 40 years!) nearly across the board. Like how Obamacare ended up, the ones who pay the most to "help the poor" are the ones who are barely above that category themselves.

Two aspects of this that seem alarming to me. First, it's not great that minimum wage doesn't buy as much as it used to. I think it makes sense to raise minimum wage some amount to raise that buying power. Second, it seems (anecdotally) that more people expect to be able to simply live on minimum wage indefinitely, with no ambition to move up to higher paying jobs. Minimum wage is not supposed to be a wage that allows someone to live and raise a family and buy a house, etc. It's meant for jobs that are entry level, part time for kids in H.S. and college, or for people who are going to hover right at the poverty line.

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Slowguy

(insert pithy phrase here...)

It was easy to make more money. Guys with low skills had a variety of options (unions were strong back then) and it wasn't hard to support a family and live decently. That isn't true anymore.

The conventional wisdom is that everyone just needs more schooling, so a few more years of your life and a lot of money and you still can't get a decent job. Why? Because a college degree isn't a guarantee of anything. It's still highly competitive, and people who are not very smart, too ugly, too surly, or whatever make them unimpressive, are back to scraping the bottom of the barrel. Only with a lot of debt. Many people just aren't cut out for "professional" jobs or even jobs that require talent. Half the population has an IQ of <100 after all...