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asdf32 posted:This is why I've been stressing that you need to consider the dollar impact of a minimum wage increase. That amount is what gets absorbed by the economy and there are actually only a few places it can hide over the long run: prices, or profits (theoretically it could come from non minimum wages but that's unlikeely, it can also be blunted by build in saving like lower turnover or higher productivity, though don't forget that those "savings" come from someone's pocket. Also reminder: all expenses become some other company's profit or wage). According to the paper that VitalSigns posted, ~20% of the increased labor costs in fast-food restaurants which happen due to raising the minimum wage to $15 would be absorbed by lower turnover. Qualitatively, it makes sense that higher paying jobs have less turnover. The authors extrapolated the results of two studies regarding the cost of turnover of fast-food employees and how turnover is a function of wages of fast-food employees to arrive at that conclusion. If I am understanding the table correctly, the remaining 80% of the increased labor costs are paid for by 3% price increases per year and by a projected increase in fast food sales. Regarding using the wages of employees paid above the minimum wage to pay for the minimum wage employees' new salaries, the calculation in VitalSign's paper assumes the opposite. Fast food employees who make larger than the minimum wage are also given raises, although their raises are "compressed," i.e. their wages are increased at a lower percentage than the employees making less than minimum wage, in accordance with previous data that economists collected earlier.
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Jun 17, 2015 22:46
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silence_kit posted:According to the paper that VitalSigns posted, ~20% of the increased labor costs in fast-food restaurants which happen due to raising the minimum wage to $15 would be absorbed by lower turnover. Qualitatively, it makes sense that higher paying jobs have less turnover. The authors extrapolated the results of two studies regarding the cost of turnover of fast-food employees and how turnover is a function of wages of fast-food employees to arrive at that conclusion. Note how nice and specific that example is but how it immediately runs into possible different interpretations. For example they use surplus from sales increases to pay for minimum wage. But if you assumed the same constraints (no change in profit or employment) while removing the wage increase prices would have gone down. So did sales increases pay for part of it or did price increases pay for all of it? It could be interpreted either way. Similarly the hypothetical assumed zero change in employment over 4 years. Is that "no increased unemployment" or not. We know jobs need to grow just for unemployment to stay the same. So the answer may be no. So it's a good highlight of what I said to archangel, when costs increase for a business there are really only a couple buckets it can come from. With wages constrained and assuming employment is as well it's going to come from profit or price. archangelwar posted:The absolute amount is only informative when presented as a ratio of the total, so that we can actually measure impact on economy. This is why people use percentages. For instance it might sound big if I were to say wage increases would result in $130 BILLION additional dollars, but that is like only 1% of total wages, which represent only a portion of the total cost of a good, so would only impact prices across the entire economy less than 1%. Obviously and this is exactly what "absorbed by the economy" implies. quote:Yet empirical study of minimum wage has not revealed a correlation with price increase... so perhaps your understanding of history is flawed? You seem very intent on pushing a narrative rather than looking for actual empirical relationships. No, there is consensus on price increases. Go back and look at the studies that have been posted again. Second, if you want to stick to pure empiricism go find studies showing where the increased costs do come from. Since you won't accept its employment and are trying to imply it's not prices then it has to be somewhere else. Go find it or I can claim you don't care about empiricism either. But you won't find it because past minimum wage increases have been too small to completely track at the systemic level (which is why claimed benefits like decreased poverty or wealth transfer don't show up either). So we're both left relying on theory a certain amount. The important thing I'm saying: the new wages don't come from nowhere.
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Jun 17, 2015 23:44
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I'm surprised that with all this rebuttal of GI over the poverty line, no one has brought up the problems inherent in it's calculation. Each new poverty threshold is determined based on the cost of food in the current year and the proportion of the average household budgets spent on food in 1955. Only food has become proportionally much cheaper since 1955, while rent, healthcare and other necessities have become proportionally more expensive or stayed the same. This causes the poverty threshold to come in at a much lower figure than if the calculation used the modern proportion of household budgets spent on food, or an entirely separate variable. So yes, many if not all fulltime workers at the minimum wage will be above the poverty line (if they have no dependents), but the line was set in a deficient manner and isn't much use beyond telling us about the worst of the worst.
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Jun 18, 2015 00:56
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GhostofJohnMuir posted:Only food has become proportionally much cheaper since 1955, while rent, healthcare and other necessities have become proportionally more expensive or stayed the same. This causes the poverty threshold to come in at a much lower figure than if the calculation used the modern proportion of household budgets spent on food, or an entirely separate variable. So yes, many if not all fulltime workers at the minimum wage will be above the poverty line (if they have no dependents), but the line was set in a deficient manner and isn't much use beyond telling us about the worst of the worst. Elizabeth Warren specifically was doing work on this stuff before she got into politics. We spend less on food and clothing than we used to, but healthcare and rent have more than taken up the slack.
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Jun 18, 2015 02:23
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GhostofJohnMuir posted:I'm surprised that with all this rebuttal of GI over the poverty line, no one has brought up the problems inherent in it's calculation. Each new poverty threshold is determined based on the cost of food in the current year and the proportion of the average household budgets spent on food in 1955. That's actually incorrect. The poverty threshold was calculated once based on food, and then updated yearly based on inflation only since then. In terms of the original goal of the poverty line ("can a family feed itself"), modern families on the poverty line are technically better off because food is now a smaller proportion of their budget.
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Jun 18, 2015 03:50
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I know you don't understand ratios, but just because food is a smaller proportion of my budget does not mean I'm better off. If, for example, the increase in medical costs and housing costs exceeded my savings on food, then I am less able to afford necessities, not more. And if the definition of poor is "assume total necessities cost three times food" when they now cost five times food, then the poverty line is a less accurate metric for estimating who can afford necessities, not more accurate. VitalSigns fucked around with this message at 03:57 on Jun 18, 2015 |
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Jun 18, 2015 03:54
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asdf32 posted:For example they use surplus from sales increases to pay for minimum wage. But if you assumed the same constraints (no change in profit or employment) while removing the wage increase prices would have gone down. So did sales increases pay for part of it or did price increases pay for all of it? It could be interpreted either way. I'm not really getting what you are trying to say here. I don't think that it is up to interpretation--you'd have to carefully look at the paper to see the assumptions in their calculation regarding what proportion the sales increases and what proportion price increases pay for the increased cost of labor. In their calculation, they assume sales growth will slow somewhat due to price increases. asdf32 posted:Similarly the hypothetical assumed zero change in employment over 4 years. Is that "no increased unemployment" or not. We know jobs need to grow just for unemployment to stay the same. So the answer may be no. You maybe could take issue with their numbers, but they did assume that the employment growth in the fast food industry would slow from the current 2% trend to 1% per year when making their prediction.
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Jun 18, 2015 06:12
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I love this thread.
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Jun 18, 2015 06:28
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asdf32 posted:But if you assumed the same constraints (no change in profit or employment) while removing the wage increase prices would have gone down.
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Jun 18, 2015 15:19
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i am harry posted:Why? When do prices go down? I've never seen prices go down on anything. First, that paper is purely hypothetical. A price decrease would fall straight out of their numbers (since price was the only output, if surpluses didn't go towards new wages it would have come out of price). Second, tons of things? Where do you live? Technology, synthetic materials, specific drugs and medical procedures. It goes on and on. Tons of things go down in price or up in quality for the same price. As an aside the consumer price index is known to not completely account for this (it doesn't pretend your laptop is equal to a $1 billion dollar 1967 mainframe, even though it is). silence_kit posted:I'm not really getting what you are trying to say here. I don't think that it is up to interpretation--you'd have to carefully look at the paper to see the assumptions in their calculation regarding what proportion the sales increases and what proportion price increases pay for the increased cost of labor. In their calculation, they assume sales growth will slow somewhat due to price increases. I'm saying the assumed sales growth is external to the minimum wage variable. As I said above prices, would have decreased (given their assumptions) had the min wage not been increased. I'm not taking issue with their numbers, I'm saying they can be interpreted differently. "No job losses"/"increased unemployment" can both be concluded from the same thing. asdf32 fucked around with this message at 16:20 on Jun 18, 2015 |
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Jun 18, 2015 16:16
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Here, go read this: http://dollarsandsense.org/archives/2014/0714macewan.html
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Jun 18, 2015 16:21
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asdf32 posted:I'm saying the assumed sales growth is external to the minimum wage variable. As I said above prices, would have decreased (given their assumptions) had the min wage not been increased. I'm not taking issue with their numbers, I'm saying they can be interpreted differently. Why would the business decrease prices rather than taking those extra sales as profit. Is this one of those times when businesses selectively don't actually want profit.
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Jun 18, 2015 16:27
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Competition drives prices down, not reduced costs for the people selling the thing.
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Jun 18, 2015 16:48
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BI NOW GAY LATER posted:Here, go read this: http://dollarsandsense.org/archives/2014/0714macewan.html A lot of things are true in the short term but not in the long term. It's obvious businesses won't react instantly to cost changes and will therefore take the hit. But over the long run I don't think minimum wage would cause overall profit decrease. Do you? OwlFancier posted:Competition drives prices down, not reduced costs for the people selling the thing. And assuming competition exists costs then change prices. As evidenced by the history of market economics. VitalSigns posted:Why would the business decrease prices rather than taking those extra sales as profit. Is this one of those times when businesses selectively don't actually want profit. Please make an attempt to follow along. I said multiple times that profit is a place it could come from. It's one of two main places actually with price being the other. It's price here because this paper assumed "no change in profit". In real life most businesses would try and keep the profit if they could.
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Jun 18, 2015 17:50
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asdf32 posted:I'm saying the assumed sales growth is external to the minimum wage variable. As I said above prices, would have decreased (given their assumptions) had the min wage not been increased. I'm not taking issue with their numbers, I'm saying they can be interpreted differently. I still don't really get what you are trying to say. Are you just saying that a consequence of their assumption of 1% instead of 2% employment growth, is that they are assuming that unemployment will increase in their calculation? Yeah, it's not a surprise that VitalSigns did not emphasize that aspect of their calculation. OwlFancier posted:Competition drives prices down, not reduced costs for the people selling the thing. Yeah, but the reduced costs are needed for the price lowering to be sustainable, obviously. VitalSigns posted:Why would the business decrease prices rather than taking those extra sales as profit. Is this one of those times when businesses selectively don't actually want profit. You aren't getting what asdf32 is saying. He, like the authors of the paper you posted, is assuming a constant profit rate. Yes, businesses, in the absence of competition from other businesses, would prefer to increase profits instead of lowering prices. I don't think anybody is questioning that.
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Jun 18, 2015 18:04
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silence_kit posted:You aren't getting what asdf32 is saying. He, like the authors of the paper you posted, is assuming a constant profit rate. That's because they're trying to calculate the maximum that prices would increase, assuming businesses don't want to decrease profit if they can avoid it. Asdf32's analysis now assumes the opposite: that given a choice between prices and earning more profit, businesses will choose to forgo profit, which is funny given how strenuously he maintains the opposite whenever anyone suggests some part of cost increases will be borne by reductions in profit.
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Jun 18, 2015 18:09
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silence_kit posted:Yeah, but the reduced costs are needed for the price lowering to be sustainable, obviously. True, but the argument that reduced cost leads to reduced prices isn't true, reduced cost alone simply means increased profit. I happen to know that my local supermarket for example sells cosmetics at about two or three times the price they pay for them. Cosmetics are a high loss product in some ways of course because people steal them, but even then, given that there are lots of competing brands, one would expect the price to be lower? Sometimes, people can and will simply charge more for a product because people will pay for it, regardless of how low the costs are.
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Jun 18, 2015 18:12
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silence_kit posted:I still don't really get what you are trying to say. Oh are you saying they assumed employment growth? If so I missed that. I thought employment was also assumed constant. So my statement about employment interpretation stands in general but isn't applocable to this example then.
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Jun 18, 2015 18:14
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VitalSigns posted:That's because they're trying to calculate the maximum that prices would increase, assuming businesses don't want to decrease profit if they can avoid it. I don't really understand his point, but I am sure that that is not what he is saying. Read his most recent post. asdf32 posted:It's price here because this paper assumed "no change in profit". In real life most businesses would try and keep the profit if they could. Edit: OwlFancier posted:True, but the argument that reduced cost leads to reduced prices isn't true, reduced cost alone simply means increased profit. I don't think that anybody in this thread would argue with this or propose something otherwise. silence_kit fucked around with this message at 18:27 on Jun 18, 2015 |
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Jun 18, 2015 18:16
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silence_kit posted:I don't really understand his point, but I am sure that that is not what he is saying. Read his most recent post. Except that is what he is saying. He's claiming that because some of the minimum wage would be paid for by growth in sales, that in the absence of the minimum wage prices would have decreased so therefore that portion minimum wage was "really" paid for by price increases. But in order to decrease prices, businesses would have to be willing to reduce profits, something he has repeatedly claimed they're never willing to do and always able to avoid. In reality, businesses would just take the extra profits from a growth in demand, not reduce prices for funsies. Therefore, if the minimum wage ate that increase in profit then part of that money did indeed come from profits. Unless I'm supposed to believe that hamburgers are a strange commodity that decrease in price in response to increasing demand?
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Jun 18, 2015 18:25
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Essentially prices generally remain comparatively fixed, if costs reduce then unless the company needs to reduce prices, they enjoy the increased profit. Similarly if expenses go up, they may have to accept reduced profit per-sale in order to keep selling, they can only put the price up if they have a monpoly or if everyone else does it too. The same force that lowers prices also keeps them where they are when costs go down, essentially the viable market price of an item tends towards being relatively stable, and doesn't increase or decrease easily in response to higher/lower costs.
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Jun 18, 2015 18:38
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OwlFancier posted:Essentially prices generally remain comparatively fixed, if costs reduce then unless the company needs to reduce prices, they enjoy the increased profit. It can't be overstated how deeply misguided this is. In the last 60 years corporate profits have stayed within a roughly 8% band while over that same time prices of many things have varied wildly (oil, the transistor). It's profits that are relatively fixed. Prices are not.  Transist prices need to be plotted on a logarithmic scale because prices have plummeted. The tech industry has earned profits that are stable by comparison:  Properly adjusting prices to reflect cost is literally one of the most important things a market economy does and it does it well. A world where this mechanism doesn't work is entirely different from the world we currently live in for many reasons (among other things horizontly integration would disappear as businesses would seek to capture end-to-end profit). asdf32 fucked around with this message at 19:17 on Jun 18, 2015 |
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Jun 18, 2015 19:15
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asdf32 posted:It can't be overstated how deeply misguided this is. In the last 60 years corporate profits have stayed within a roughly 8% band while over that same time prices of many things have varied wildly (oil, the transistor). Hmm corporate profits seem to be well above the historical average, sounds like a good time to increase the minimum wage now that businesses have plenty of room to cut into profit before having to raise prices.
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Jun 18, 2015 19:26
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VitalSigns posted:Hmm corporate profits seem to be well above the historical average, sounds like a good time to increase the minimum wage now that businesses have plenty of room to cut into profit before having to raise prices. It's possible. Now why do you think that will happen?
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Jun 18, 2015 20:59
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asdf32 posted:It's possible. Now why do you think that will happen? I suspect that the current historical low of wages as a percentage of corporate revenue is not unrelated to the historical highs of profits, so it seems a useful place to target. I admittedly can't prove it, but minimum wage increases, even if your predictions are correct, will have a null effect at worst so there's little harm in trying. If minimum wage increases don't do it, I'm open to the idea of moving something more coercive, but I'll give businesses a chance to react to a gentler nudge first.
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Jun 18, 2015 21:29
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asdf32 posted:It's possible. Now why do you think that will happen? Raising prices in an environment of slack demand tends to be counterproductive, and businesses are posting historically high profits and so have plenty of room to absorb increased costs while still earning an acceptable rate of return. It is therefore likely that cost increases will be partially paid for out of profits.
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Jun 18, 2015 21:47
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asdf32 posted:It's profits that are relatively fixed. Prices are not. According to your chart, profits as a fraction of GDP are relatively fixed. GDP tends to grow as a function of time. What does that tell us about profits as a function of time? Furthermore, doesn't the recent massive deviation from the mean in %GDP/time strongly suggest that we're living in a time where corporations are more easily able to swallow a loss in profit, since profitability has never been better? QuarkJets fucked around with this message at 23:36 on Jun 18, 2015 |
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Jun 18, 2015 23:34
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I've taken asdf32's graph and placed red tick marks wherever we were in the middle of rapidly changing the minimum wage (eg whenever there were increases for several years in a row, I used the median year). Let's take a look: I'm seeing a strange coincidence; whenever we increase the minimum wage, corporate profit as a fraction of GDP most often hits an inflection point. This suggests that corporate profits usually decrease whenever there's a minimum wage increase. This could be coincidental. It's difficult to deconvolve the effect of minimum wage from the typical boom/bust cycles that an economy goes through. This is also a measurement of all corporations, most of which don't hire many minimum wage workers, so there's additional noise there.
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Jun 19, 2015 00:06
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QuarkJets posted:According to your chart, profits as a fraction of GDP are relatively fixed. GDP tends to grow as a function of time. What does that tell us about profits as a function of time? Which would be as useful as me pointing out that total wages have steadily grown along with the economy as well (hint: not useful here). Whether they're "able" or not is completely irrelevant (we know they are). What's relevant is to what extent this policy called minimum wage will result in that happening in the real world.
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Jun 19, 2015 00:08
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Absurd Alhazred posted:This thread is getting really bad in terms of the signal/reports great suggestions OR you know, or you could just probate people who unironically make statements like "the working poor do not exist in America" for ~100 pages maybe the reason the discussion sucks so bad is that there aren't any individuals who's purpose it is to moderate the debate doing their job (jk im sure ill catch some heat for this post) pretty much everyone on all sides of the debate should have gotten probated 50 times in this thread if there were any and all standards for D&D posting don't make whiny mod posts about lovely D&D threads when u guys gave up moderating them in the first place
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Jun 19, 2015 01:03
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QuarkJets posted:I've taken asdf32's graph and placed red tick marks wherever we were in the middle of rapidly changing the minimum wage (eg whenever there were increases for several years in a row, I used the median year). Let's take a look: It's not a coincidence at all that minimum wage increases come during good economic times or that good economic times coincide with high profits. It's consistently a major problem when trying to sort out the positive and negative impacts of minimum wage. Generally given the size of increases in the past it's a joke to imply that they're causing anything at the systemic level (for example the financial crisis), as opposed to correlating. asdf32 fucked around with this message at 01:07 on Jun 19, 2015 |
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Jun 19, 2015 01:05
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asdf32 posted:It's not a coincidence at all that minimum wage increases come during good economic times or that good economic times coincide with high profits. It's consistently a major problem when trying to sort out the positive and negative impacts of minimum wage. More importantly, perhaps this indicates that corporations consinstently accept lower profits in the face of higher labor costs
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Jun 19, 2015 02:54
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QuarkJets posted:More importantly, perhaps this indicates that corporations consinstently accept lower profits in the face of higher labor costs No that's the part I called "a joke". Past minimum wage raises have barely registered in overall wage statistics. I.E. this: 
asdf32 fucked around with this message at 03:09 on Jun 19, 2015 |
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Jun 19, 2015 03:04
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down with slavery posted:great suggestions OR you know, or you could just probate people who unironically make statements like "the working poor do not exist in America" for ~100 pages If we started probating everyone who persisted in repeating ignorant statements divorced from reality, there would hardly be anyone posting in D&D. Maybe that's how you would like it, but apparently most of the users in this forum disagree with you.  I don't generally like probating people for mod sass, but I would suggest that if you want to continue this conversation, you do it privately, rather than in-thread.
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Jun 19, 2015 03:49
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asdf32 posted:No that's the part I called "a joke". Past minimum wage raises have barely registered in overall wage statistics. That graph does not diminish what I'm saying
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Jun 19, 2015 18:28
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QuarkJets posted:That graph does not diminish what I'm saying Luckily it does actually because what you were doing was correlating minimum wage to the last 6 recessions (lol). But it turns out minimum wage doesn't even put visible blips on overall wages (because it's been so small). So it can hardly be responsible for economy wide profit decreases (this is a good thing).
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Jun 19, 2015 18:52
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asdf32 posted:Luckily it does actually because what you were doing was correlating minimum wage to the last 6 recessions (lol). Not really; most of the increases aren't anywhere near a recession, or took place at the end of a recession. Three out of ten took place right before a recession, but one of those recessions was clearly caused by the house market exploding. So you have 2 examples  Have you considered getting glasses?
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Jun 19, 2015 19:38
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President Kucinich posted:Agreed. The laffer curve is bogus therefore all of economic study is bogus. The thing is people are just accepting the studies that support their biases, while rejecting any that do not. It's not like people are thoughtfully critiquing each one, in fact I doubt more than a couple posters here actually have the background needed to do so. Zeitgueist posted:Lol the leftists in this thread are the most knowledgeable ones in here. Well they certainly think they are.
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Jun 19, 2015 20:37
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tsa posted:The thing is people are just accepting the studies that support their biases, while rejecting any that do not. It's not like people are thoughtfully critiquing each one, in fact I doubt more than a couple posters here actually have the background needed to do so. What's your background, tsa? Got a master's in avoiding interaction? Bachelor's of bastardy, concentration in sniping comments?
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Jun 19, 2015 21:01
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tsa posted:The thing is people are just accepting the studies that support their biases, while rejecting any that do not. It's not like people are thoughtfully critiquing each one, in fact I doubt more than a couple posters here actually have the background needed to do so. 
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Jun 19, 2015 21:12
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