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Job Loss Predictions Over Rising Minimum Wages Haven't Come True (axios.com) 305

Eighteen states rang in 2019 with minimum wage increases -- some that will ultimately rise as high as $15 an hour -- and so far, opponents' dire predictions of job losses have not come true. From a report: The data paint a clear picture: Higher minimum wage requirements haven't reduced hiring in low-wage industries or overall. Opponents have long argued that raising the minimum wage will cause workers to lose their jobs and prompt fast food chains (and other stores) to raise prices. But job losses and price hikes haven't been pronounced in the aftermath of a recent wave of city and state wage-boost laws. And more economists are arguing that the link between minimum wage hikes and job losses was more hype than science. What we're hearing: "The minimum wage increase is not showing the detrimental effects people once would've predicted," Diane Swonk, chief economist at international accounting firm Grant Thornton, tells Axios. "A lot of what we're seeing in politics is old economic ideology, not what economics is telling us today."
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Job Loss Predictions Over Rising Minimum Wages Haven't Come True

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  • Shocker (Score:4, Insightful)

    by Pyabo ( 217785 ) on Monday November 25, 2019 @04:15PM (#59453360)

    Remember when someone (damn, wish I could remember who it was exactly) predicted that Seattle would have no restaurants within 5 years? LOL Just outright idiocy.

    Government would be a whole lot easier in general, if more people could just apply basic common sense to it on a regular basis.

    • Re: (Score:2, Informative)

      by Anonymous Coward

      The end of 2017 brought more Seattle-area restaurant closures
      https://www.seattletimes.com/l... [seattletimes.com]

      3 surprising Seattle restaurant closures — plus 11 more (2017)
      https://www.seattletimes.com/l... [seattletimes.com]

      8 Seattle-area restaurant closures — and one closing soon (2018)
      https://www.seattletimes.com/l... [seattletimes.com]

      Why Are So Many Seattle Restaurants Closing Lately? (2018)
      https://www.seattlemag.com/art... [seattlemag.com]

      Bakeman's Restaurant is Closing After 47 Years
      https://seattlemag.com/eat-and... [seattlemag.com]

      Restaurants Unlimited Bankrup

      • Re:Shocker (Score:5, Interesting)

        by cusco ( 717999 ) <brian@bixby.gmail@com> on Monday November 25, 2019 @05:13PM (#59453740)

        And far more restaurant openings than closures, plus a plethora of food trucks sprouting up all over. Whether a restaurant makes it or not depends much more on the competency of its management than the level of minimum wage.

        • Re:Shocker (Score:5, Insightful)

          by superdave80 ( 1226592 ) on Monday November 25, 2019 @05:23PM (#59453810)

          ...plus a plethora of food trucks sprouting up all over.

          Because a truck is cheaper overhead than a physical building, no wait-staff, and disposable everything rather than washing them. If you like eating out of a truck and putting stuff in landfills all the time I guess that's fine.

        • Is a plethora larger or smaller than a breadbasket?

      • Re: Shocker (Score:3, Insightful)

        by OrangeTide ( 124937 )

        Plenty of high quality restaurant if you can afford them. Guess you'll have to make food at home without society subsidizing cheap labor.

      • Re:Shocker (Score:4, Insightful)

        by hdyoung ( 5182939 ) on Monday November 25, 2019 @05:22PM (#59453804)
        Respect for posting lots of research, but correlation isn't causation. Restaurant biz experiences crazy churn even in a good year. And the non-chain restaurants are the ones that turnover the most. How many opened in the same time period?
      • Re:Shocker (Score:5, Informative)

        by barc0001 ( 173002 ) on Monday November 25, 2019 @06:12PM (#59454118)

        Cherry picking much? Seattle has 2600+ restaurants.

        And let's go through your links for actual information instead of you just spamming some links and hoping we don't READ them.

        You posted 11 links. Of those:

        - Your first link doesn't give much information as to why any places closed in particular, especially nothing to do with wages

        - Your second link teases 14 restaurants closed, but literally on the second sentence in the first paragraph has a series of hyperlinks to the site's other articles about a total of 72 just newly opened restaurants. I guess 58 new restaurants opened doesn't get the clicks like 14 closed do...

        - Your third link does mention minimum wage, but doesn't actually tie it to the closures - and also below the fold mentions that 3 of the 8 places closing/closed have been reconcepted by others and will open again.

        - The 4th article tries to tie the minimum wage to its story but is forced to concede that "none of our local departing/transitioning restaurateurs who announced their plans last month have mentioned this as an issue". So they choose to editorialize.

        - 5th article - Bakeman's is closing because the guy owning it wants to retire, and the only potential buyer was scared off when the building the restaurant is in wanted to force said buyer to agree to a list of expensive renovations before they'd agree.

        - Article 6 - due to a parent company going belly up for unrelated reasons (Restaurants Unlimited)

        - Article 7 - literally mentions in the second sentence that a new Thai restaurant will open in the same location immediately after.

        - Article 8 - cites lack of business. Fad concept doesn't prosper when fad cools. Whodathunk?

        - Article 9 - Actually on point.

        - Article 10 - Another doom and gloom headline with an article that below the fold again reveals more openings than closures.

        - Article 11 - Similar to above - closures, then a link to more openings. Individual closures indicated varied circumstances like retirements, hint at a sudden tragedy, but again no mention of wage.

        • Re:Shocker (Score:5, Insightful)

          by AmiMoJo ( 196126 ) on Monday November 25, 2019 @06:56PM (#59454304) Homepage Journal

          This is a kind of asymmetric warfare. Google "restaurants closing in Seattle" and spam the resulting links. Anyone arguing with you now has to spend 100x as long debunking each one.

          While they prepare their argument many people will mod the post up without reading the links.

          To counter I usually just debunk the first link and then state that I couldn't be bothered with the rest since the poster put near zero effort.

          • The point I was making is that posting little articles here and there about 10 restaurants, or 20 restaurants when the overall number in the city is in the thousands, coupled with the fact that there are other articles on new opening restaurants - is pointless. It gives no context and anyone can use it to put forward any point of view they wish, although the poster I replied to did a very bad and easily debunked job of it.

            Now, if someone can dig up several years of aggregate data year over year on restaura

    • Re:Shocker (Score:5, Insightful)

      by olsmeister ( 1488789 ) on Monday November 25, 2019 @05:04PM (#59453680)
      Employment is a function of demand, not wages. If there is demand for a product or service, companies will hire to produce it and price it accordingly. Higher wages were never going to cause mass layoffs, however they probably will spur price increases. It's the same thing in reverse with the Trump corporate tax cuts - they were sold (at the time) as huge 'job creators', they ran around telling everyone that companies would be hiring people left and right with all the savings. But if you give a company a million dollars, the last thing they will do with it is hire people if there is not any additional demand for their product. Hell, they may very well use it to automate away their current staff.
      • Re:Shocker (Score:5, Interesting)

        by dryeo ( 100693 ) on Monday November 25, 2019 @07:47PM (#59454550)

        Funny enough, there's evidence that the exact opposite is needed to create jobs, higher taxes so companies are more interested in writing off stuff such as wages. Given a choice between giving the government money and giving their employees money, many will choose their employees along with spending the money on other capital costs such as expanding or buying newer equipment rather then stock buybacks to boost the stock price for the CEO to cash out on.
        Of course that is assuming there is enough demand for whatever the company is producing to be profitable enough to worry about taxes.

    • Re: Shocker (Score:2, Interesting)

      Restaurant industry? No, absolutely not. Remember that they're not subject to minimum wage constraints, they rely on tips. As far as the big chain fast food joints, they are mostly franchises so the bigger companies don't feel the impact very much. Also given they have less capital, they could be simply waiting for the technology to be more affordable to reduce the need for those workers.

      Common sense told most Americans that Smoot-Hawley was a good idea, but it didn't turn out so well. The Trump tariffs are

      • Re: Shocker (Score:5, Informative)

        by superdave80 ( 1226592 ) on Monday November 25, 2019 @06:06PM (#59454080)

        ...Remember that they're not subject to minimum wage constraints, they rely on tips....

        I keep seeing this myth posted time and time again. Waitstaff are required by Federal law to be paid minimum wage, regardless of how much they receive in tips. I wish people would ACTUALLY look up the rules on minimum wage before spouting ignorant comments.

        https://webapps.dol.gov/elaws/faq/esa/flsa/002.htm

        If an employee's tips combined with the employer's direct wages of at least $2.13 an hour do not equal the Federal minimum hourly wage, the employer must make up the difference.

        When you tip, you are in effect paying most of the wage for the employee, and the employer thanks you for it. Now, anything tipped ABOVE the minimum wage does increase the employee's take home pay, but please stop spreading the myth that 'waiters get paid less than minimum wage'. It's simply not true.

      • Re: Shocker (Score:5, Insightful)

        by EllisDees ( 268037 ) on Monday November 25, 2019 @07:13PM (#59454382)

        >Restaurant industry? No, absolutely not. Remember that they're not subject to minimum wage constraints, they rely on tips.

        Not in Seattle, they aren't. Tipped workers make the full minimum wage.

      • Re: Shocker (Score:5, Informative)

        by dryeo ( 100693 ) on Monday November 25, 2019 @08:06PM (#59454624)

        Remember that if minimum wage merely followed inflation from when it was first introduced, it would still be less than $5 an hour.

        What? I've heard numbers closer to $20 an hour. I was making minimum wage in the mid 70's, $3.65 an hour in Vancouver, BC and it was enough to live on pretty well. Now minimum wage won't buy you a room to sleep in unless you work a lot of hours.

        Hmm, this article, https://www.politifact.com/tru... [politifact.com] points out that the Federal minimum wage in 1968 was $1.60, about $11.76 in todays dollars rather then the current $7.25 an hour Federally. Now Seattle is an expensive place to live so it makes sense the minimum should be higher then $7.25
        Other articles claim around the same based on inflation. Based on productivity, well over $20 an hour

    • Re:Shocker (Score:4, Interesting)

      by cusco ( 717999 ) <brian@bixby.gmail@com> on Monday November 25, 2019 @05:19PM (#59453784)

      This is the reaction of old-school economists every single time, dating at least to the 1970s. "Raising the minimum wage will destroy the country! Mass unemployment! Business failures everywhere! Skyrocketing inflation! Dogs and cats sleeping together!"

      Then nothing happens (except that some people can actually afford food and rent the same week) and they quietly forget that they ever made the prediction to start with. Wash, rinse, repeat.

      Finally now there is a small contingent of economists who are actually **USING DATA** (gasp!) and attempting to convert Economics from a religion to a science. I wish them luck.

    • Re:Shocker (Score:5, Interesting)

      by Zak3056 ( 69287 ) on Monday November 25, 2019 @05:25PM (#59453824) Journal

      Not restaurant related, but applicable to the conversation: Results of minimum wage increase at Target [cnn.com].

      TL;DR: Total number of jobs not reduced (in some creases increased), workers paid more per hour BUT are given fewer hours, fewer qualify for benefits, and actual payroll difference is close to net 0.

      • Re:Shocker (Score:5, Insightful)

        by Uberbah ( 647458 ) on Monday November 25, 2019 @09:20PM (#59454884)

        BUT are given fewer hours, fewer qualify for benefits, and actual payroll difference is close to net 0.

        Except employers are doing just that in states that haven't raised minimum wage. It's almost like corporate greed is a constant variable.

      • by cusco ( 717999 )

        My wife worked there over two decades, the changes you pointed out have nothing to do with the minimum wage, it's been the trend for retail management for the last quarter of a century. Every year each store as a goal handed down to them to increase sales by X percent while decreasing employee expenses by Y percent, the ultimate goal appears to sell everything in the world while not paying anyone.

        They've recently reduced the number of LOD's (essentially assistant managers) from six or more per store to one

    • People with common sense don't enter government.

    • Re:Shocker (Score:4, Informative)

      by guruevi ( 827432 ) on Monday November 25, 2019 @07:34PM (#59454486)

      First of all, we've had tremendous business growth due to tax cuts which offset state minimum wage requirements. More and more restaurants have been investing in automation and cutting people outright. Nowadays most QSR in high minimum wage areas have fully automated drink dispensers and most chains have cut the amount of staff in half. Whereas before you had waiters tending ~5 tables, most chains now have 2-3 waiters for the entire restaurants leading to high wait times unless you want to engage with the table-side tablets.

      Open your eyes, businesses don't just fail, they cut workers and adapt. Some do fail and a lot of mom and pop restaurants have closed or become high tech losing all their appeal.

  • Because fast food restaurants raising prices should be the bar for wages.

    --
    Maybe life is random, but I doubt it. - Steven Tyler

  • by Hadlock ( 143607 ) on Monday November 25, 2019 @04:21PM (#59453374) Homepage Journal

    One thing I've noticed, moving from a $7.50/hr state to a city that has ~$15/hr minimum wage, is that most everything closes between 8pm and 9pm, almost no stores are open (except Grocery Stores) after 10pm, and 24 hour stores almost do not exist here. If you want to go grocery shopping you have to do it between 6am and 12am.
     
    In $7.50/hr land, many stores are open 24/7, fast food is open 24/7, auto parts stores, many CVS/Walgreens are open 24/7... that is not true in $15/hr land. Most of those shops close by 9pm, and for the largest flagship stores, 10pm or very occasionally 12am (midnight).
     
    Additionally, food quality at restaurants is a lot lower, unless you are willing to pay $50/plate, service is about 1/3rd to 1/2 as good/fast etc.
     
    That said, the people working service industry jobs are a lot happier and look a lot less stressed.

    • by courteaudotbiz ( 1191083 ) on Monday November 25, 2019 @04:30PM (#59453412) Homepage

      I have absolutely noticed that here in Quebec, where minimum wage is still 12.50$, but has constantly hiked over the past few years. Also, full employment means that salaries naturally go up, even in the fast food industry, so we regularly see 14-15$/h salaries.

      Most Tim Hortons used to be 24/7, but now, they almost all close at night, with a few exceptions, or only the drive-thru is open. Same at Mc Donald's. All their prices have hiked. Now I can't get a combo at subway under 10$. And in all these food chains, service is now slow, poor and rude.

      There is even a local fast food chain from Quebec City that kept a few restaurants open at night, but they increase prices by 12% between midnight and 5:00AM (And they also offer night shift bonuses, so the maths still work)

      Baseline now, I only go to restaurants when I have no other choice, or when I have a couple hundred bucks to spare. Otherwise, I eat at home.

      • One other problem we have in Quebec is a lack of labour in the market.

        Wages in the further regions are rising because of lack of people to work. Which is also the cause of the 24h stores/restaurants disappearing.
        Heck, many are closing on Mondays because there is no one to work.

        Many mention the generational issue of youngsters not wanting to work much or at night/weekends.
        Might be true, might not, I'm unsure.

    • by b0s0z0ku ( 752509 ) on Monday November 25, 2019 @04:30PM (#59453416)

      NYC has $15/hr and many stores stay open either until 2-3 am or overnight ... it's killed a few overnight stores, but not all, and it's hardly becoming a city that goes to sleep at 8 pm.

      Rolling up the sidewalks at 8-9 pm might just be local culture unrelated to minimum wage. I know San Francisco was that way well before $15/hr was even discussed.

      • According to TFA:
        • wages went up, but the number of hourly wage workers didn't change.
        • revenue hasn't increased (prices have remained the same).

        (steady revenue) - (increased expenses) = losing money. That math is inescapable no matter what your opinion on the minimum wage. The topic being discussed is how businesses are making that (revenue)-(expenses) equation balance out. OP postulated that the increased wage cost was being canceled out by decreasing worker hours.

        According to you, hours worked rem

    • by _xeno_ ( 155264 )

      One thing I've noticed, moving from a $7.50/hr state to a city that has ~$15/hr minimum wage, is that most everything closes between 8pm and 9pm, almost no stores are open (except Grocery Stores) after 10pm, and 24 hour stores almost do not exist here. If you want to go grocery shopping you have to do it between 6am and 12am.

      It's this.

      I remember the standard closing time for stores used to be 9PM. Every store would be open until 9PM, and restaurants would generally be open until 10PM.

      Enter the minimum wage hikes.

      Now everything closes at 8PM or earlier. Some stores have outright weird hours where the time it closes varies by weekday - clearly someone did the math and figured out what days weren't worth staying open later.

      It's also a reason portions in restaurants are getting bigger: it hides the cost of labor. Cooking and servin

    • by aitikin ( 909209 )

      One thing I've noticed, moving from a $7.50/hr state to a city that has ~$15/hr minimum wage, is that most everything closes between 8pm and 9pm, almost no stores are open (except Grocery Stores) after 10pm, and 24 hour stores almost do not exist here. If you want to go grocery shopping you have to do it between 6am and 12am. In $7.50/hr land, many stores are open 24/7, fast food is open 24/7, auto parts stores, many CVS/Walgreens are open 24/7... that is not true in $15/hr land. Most of those shops close by 9pm, and for the largest flagship stores, 10pm or very occasionally 12am (midnight). Additionally, food quality at restaurants is a lot lower, unless you are willing to pay $50/plate, service is about 1/3rd to 1/2 as good/fast etc. That said, the people working service industry jobs are a lot happier and look a lot less stressed.

      My anecdote is precisely the opposite. Coming from a state with a minimum wage of nearly double my current state (this is 7 years ago that I moved), I was SHOCKED at just how few places were open past 9. Just about every restaurant (including some sports bars) in my new town wouldn't take food orders past 9 and would start getting people out of the restaurant by ten. In the state I grew up in, there were a bunch of 24 hour stores.

      The correlation is probably more in where in the state we respectively move

    • by reanjr ( 588767 )

      That's not something I've noticed, but in my San Diego neighborhood, that sounds about right. High minimum wage; nothing is open after midnight. Business hours are way more a thing here than I remember in Michigan.

  • by SuricouRaven ( 1897204 ) on Monday November 25, 2019 @04:27PM (#59453402)

    Unless minimum wage is tied to inflation, it will gradually fall in real terms - so every decade or so there can be a big political fiasco.

    • This is the correct answer right here.

    • That's kind of the point of inflation. (The money supply is managed to create a little inflation but not too much) - it creates a sort of deterioration so that interests that are not actively pursed by anybody fade away and die over time, hopefully increasing efficiency. Instead of giving 'pay cuts,' companies can give smaller-than-inflation 'raises' which are the same thing but easier to do. (Another example is that it discourages keeping your savings in a pillow case and effectively forces you to dump
  • Either the law of supply and demand is false, or not. Fight!

  • Just as silly... (Score:3, Interesting)

    by Schmo Schollie ( 6164562 ) on Monday November 25, 2019 @04:37PM (#59453460)
    As supply-side economics tax cut theory always working in every circumstance.

    The modern economy is so globalised and intricate these days it's hard to predict anything until we observe the real-world outcomes. Its unfortunate that speculation itself can tank an economy for a small period of time.
  • by imperious_rex ( 845595 ) on Monday November 25, 2019 @04:45PM (#59453508)

    I've generally been a supporter of $15 minimum wage, but there are a couple little things about it that has bothered me...

    When minimum wage goes up, the prices of goods and service usually go up in response to increased labor costs (I saw this happen in 1993 when Oregon voters passed a min wage increase and when the increase took effect my local McDonalds immediately raised its value meal prices). If the prices of goods and services go up, then won't that negate or partially negate any meaningful benefits of a higher minimum wage? Also, given how expensive housing, formal education, and healthcare is, aren't the benefits of a $15 minimum wage negligible at best? These are serious questions, and I would appreciate serious answers.

    • If the prices of goods and services go up, then won't that negate or partially negate any meaningful benefits of a higher minimum wage?

      You have to tie the minimum wage to inflation (the price of goods and services going up) in order for it to work properly. The federal minimum wage hasn't kept up with inflation for over three decades.

      The worker's share of profits also has been falling consistently since the feudal era. If the US federal minimum wage had kept pace with increases in executive bonuses, it would be over $30/hr today.

    • Remember, at one time every single Zimbabwean was worth over $1 trillion Zimbabwean dollars...
  • by reanjr ( 588767 ) on Monday November 25, 2019 @04:48PM (#59453536) Homepage

    I don't know how they are gathering metrics, but fast food prices HAVE been rising noticeably in southern California, pretty much in lock-step with minimum wage increases.

    • The only actual links to studies in the article are to studies which do show job loss as the result of minimum wage hikes. Their evidence otherwise appears to be quotes from a few economists, for example from "Bill Spriggs, chief economist at labor union AFL-CIO". But hey, I guess the summary above only stated it's from a "report", not a study.

      "Report" in this context generally translates into a press release from an advocacy organization, so I wouldn't take anything they say as actual evidence.

      In short, the headline isn't true, which, for example, a simple google search for new york restaurant job loss [google.com] quickly demonstrates by displaying result after result about the recent impacts of their rising minimum wage in the restaurant industry.

      • Mod this up!

      • by Uberbah ( 647458 ) on Monday November 25, 2019 @09:39PM (#59454936)

        The only actual links to studies in the article are to studies which do show job loss as the result of minimum wage hikes.

        Sure, you can find any number of massively dishonest studies [fortune.com] using wingnut calculus:

        For decades, conservative ideologues have insisted that raising the minimum wage will hurt, not help, low-wage workers. Mandating higher wages will cost jobs, the old canard goes, and the obvious solution is to let the free market function unfettered.

        This argument received a significant bump from a recent study by the University of Washington (UW) looking at the impact of the minimum wage increase in Seattle, where in 2014 the city council voted to phase in a $15 wage over the next few years.

        The research has significant flaws-most glaringly that its data excludes 40% of the Seattle workforce. It also stands in contrast to a massive trove of actually credible studies showing that raising the minimum wage is a boon for working class families and the communities they live in.

        Wingnut calculus that counts people being able to afford to cut back to 1-2 jobs instead of working 2-3 as a "job loss". Calculus that completely ignores the fact that a minimum wage increase can create jobs by giving workers more money to spend. More money in the consumer economy == more demand == more jobs. Not less.

  • by SmaryJerry ( 2759091 ) on Monday November 25, 2019 @04:54PM (#59453606)
    Even if they raise the minimum wage to $15 per hour it doesn't matter if that's what they were paying already. Atleast where I live most restaurants and retail advertise jobs above that already thanks to the good economy and low unemployment. If anyone makes less it might be those that make tips on top but they actually make more than $15 per hour if you count that.
  • Captain Obvious Research Institute.

    Of course higher minimum wage boosts the economy. That in turn keeps the demand for labor high. The minimum wagers spend their money. Unlike the super rich. Anyone with more that two braincells knows this.

    • So, if we were to raise minimum wage to $1000 per hour, that would do wonders for our economy, right?

      If not, why not?

      And if not, where is the tipping point between "higher minimum wage good" and "higher minimum wage bad"?

  • Comment removed based on user account deletion
  • by virtig01 ( 414328 ) on Monday November 25, 2019 @05:31PM (#59453868)

    Just looking at the number of jobs isn't enough to tell you about the minimum wage increase being beneficial or not.

    1. How many jobs that would have been created at the previous minimum wage weren't increased? It's hard to count something that doesn't exist.

    2. Of those workers subject to the minimum wage, how many had their hours cut? Are workers at the minimum wage rate actually seeing higher weekly take-home incomes?

  • by twocows ( 1216842 ) on Tuesday November 26, 2019 @10:57AM (#59456974)
    Moving is expensive and work still need to get done. You might see a few plants shut down here or there as businesses optimize but I imagine those will be rare. That's the thing, though. What you're likely going to see is aggressive optimization. Like the post above states, you'll see shorter but busier hours, fewer incentives, reduced training, etc. Basically, policies that wring more out of what's there.

    The other thing you'll probably see if these changes become widespread enough is some degree of inflation. What degree that might be is a matter of contention, though. Worker wages is one part of the economy, there are lots of other factors at play, and you have intelligent actors (most significantly state actors) working to actively counter inflation.

"When the going gets tough, the tough get empirical." -- Jon Carroll

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