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Monday, March 24, 2014

Kshama Sawant and Tim Burgess Say You Should Read This Piece on Minimum-Wage Hikes

Posted by on Mon, Mar 24, 2014 at 1:01 PM

At this morning's city council briefing, Council Member Kshama Sawant passed around copies of this New York Times opinion piece, on some evidence favoring higher local minimum wages, for her colleagues to read; Council President Tim Burgess had already linked to it on Facebook and called it "insightful."

And where will its authors, Michael Reich and Ken Jacobs of U.C. Berkeley, be this Thursday? Why, right here in Seattle, at the all-day Income Inequality Symposium convened by the city, with a host of politicians, academics, local business leaders, and other people who the city likes to classify as "stakeholders" in this minimum-wage debate. See more details and register for the free event right here.

From the NYT:

One city we have studied in detail, San Francisco, has passed a dozen labor standards laws since the late 1990s. After adding the effects of other local laws mandating employers to pay for sick leave and health spending, the minimum compensation standard at larger firms in San Francisco reaches $13. Our studies show that the impact of these laws on workers’ wages (and access to health care) is strong and positive and that none of the dire predictions of employment loss have come to pass. Research at the University of New Mexico on Santa Fe’s floor (now $10.66) found similar results.

These are not isolated cases. Research on the effects of differing minimum wage rates across state borders confirms the results of the city studies. But how can minimum wage increases not have negative effects on employment? After all, according to basic economic theory, an increase in the price of labor should reduce employer demand for labor.

That’s not the whole story, though. A full analysis must include the variety of other ways labor costs might be absorbed, including savings from reduced worker turnover and improved efficiency, as well as higher prices and lower profits. Modern economics therefore regards the employment effect of a minimum-wage increase as a question that is not decided by theory, but by empirical testing.

Go read the rest.


Comments (5) RSS

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seatackled 1
I'm sorry, I don't understand this editorial or the economic study. Can someone meinertsplain it to me?
Posted by seatackled on March 24, 2014 at 1:32 PM · Report this
auntie jim 2
Hiring decisions are not made on the basis of supply and demand alone. Rare is the instance where new employees are added based on how inexpensive they are or how much revenue the potential employer has. Rather, it's the demand for the employer's products which will determine how many workers are added or laid off.
If wages were cut in half, but demand for goods and services remains constant or drops, no additional hiring will take place. The producer will not add equipment or employees to expand capacity when he cannot sell all of the production he now realizes.
Demand is defined as the amount consumers (including business and government) are willing and able to pay for. By putting money in the hands of people who can be relied upon to promptly spend it, an increase in the minimum wage will increase demand. This is why we have seen an increase in hiring after voters raised the minimum wage by initiative, not the layoffs the opponents predicted.
Posted by auntie jim on March 24, 2014 at 2:31 PM · Report this
Dominic Holden 3
@1) "meinertsplain." Hahahahaha.
Posted by Dominic Holden on March 24, 2014 at 3:08 PM · Report this
Mike Force 4
Why is she pointing to the most expensive city in the nation as an example to follow?
Posted by Mike Force on March 24, 2014 at 4:31 PM · Report this
Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn 5

Why San Francisco? Maybe because of wealth creation? Innovation? Job creation?

The irony is that those who condescendingly lecture us children that we know nothing about creating wealth or creating jobs then have to spin like tops to say we don't want to end up like San Francisco, an engine of wealth and new technology and new ideas driving the global economy. Not that! Then, before you've had time to think, they spin around again and warn that we don't want to be like Detroit, where the minimum wage is $2 less than the current Washington rate. Huh?

In the end, the story is just that the Seattle status quo works for guys like Dave Meinert. Business as usual works for him, made him who he is. Obviously the winners don't want to change the way the game is played.
Posted by Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn on March 24, 2014 at 7:01 PM · Report this

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