Raising The Minumum Wage (And My Blood Pressure)

OurPeerless Leader recycled yet another timeless classic fromthe liberal playbook in his State of the Union address, exhorting Congress to spend some more of other people's money by raising the minimum wage.

The Times will never tire of this idea, so let's check their reporting. This nugget defies credulity, but is presented uncritically:

The White House said that the move would have profoundly positive effects for low-income families without unduly burdening businesses or raising the unemployment rate. It cited research showing “no detectable employment losses from the kind of minimum wage increases we have seen in the United States.” The White House also pointed to companies like Costco, the retail discount chain, and Stride Rite, a children’s shoe seller, that have previously supported increasing the minimum wage as a way to reduce employee turnover and improve workers’ productivity.

Now wait - surely they can't mean that CostCo thinks that paying a higher wage to its own workers would reduce turnover but only if other firms were also obliged to raise wages? Even a Times reporter might be able to guess that CostCo would have an even easier time retaining good employees if it paid above the current minimum wage.

In fact, the CostCo CEO in question has the classic corporatist view of using government as a way of imposing costs on his competitors while extracting benefits for his own firm. Here is the WaPo, describing their strategy during the 2006/07 minimum wage scuffle. CostCo already pays above the minimum but woul dlike to burden its competitors and see more money in the pockets of their customers who keep their jobs (my emphasis):

Jim Sinegal, a maverick entrepreneur who founded Costco in 1983 and has resisted Wall Street pressure to cut wages and benefits for his 130,000 employees, said he signed onto the effort because he thinks a higher minimum wage would be good for the nation's economy as well as its workers.

"The more people make, the better lives they're going to have and the better consumers they're going to be," Sinegal said in an interview. "It's going to provide better jobs and better wages."

...

Sinegal is one of dozens of business owners and executives [that]... are lending their voices to an effort called Business for a Fair Minimum Wage, a project of Business for Shared Prosperity, an organization of "forward-thinking business owners, executives and investors committed to building enduring economic progress on a strong foundation of opportunity, equity and innovation," according to the organization's Web site.

Chuck Collins, the organization's director, described the group as "high-road businesses" that are already "paying well over the minimum wage" to their employees and must compete with companies that pay less. The group, Collins said, is "as nonpartisan as it gets." However, in its maiden campaign, Business for Shared Prosperity has teamed with Let Justice Roll, a coalition of church and community groups that also includes the AFL-CIO, the big labor federation.

Costco, of Issaquah, Wash., would suffer no direct impact from a higher minimum wage because its lowest-paid employees now make about $11 an hour, Sinegal said, adding that the average worker in the company's 504 stores in the United States makes $17 an hour.

"In my view, some of these industries that pay minimum wage are constantly turning their people," Sinegal said. "They spend more on turnover than they would in paying the additional wages."

I have no doubt the White House backgrounders parrotted the CostCo agenda to the Times, but is it too much to ask to expect the Times to poke at that assertion a bit? Maybe a subscription to Google (or Bing!) would be a helpful enhancement to their new effort, and would allow them to move beyoned mere White House stenography.  Ahh, what am I saying?

Jared Bernstein, a former economics advisor to Joe Biden, love the idea of raising the minimum wage, so we don't expect much critical thinking from him in recounting the White House fact sheet. Still, I love this:

From the WH fact sheet:

Raising the minimum wage mostly benefits adults, and especially working women: Around 60 percent of workers benefiting from a higher minimum wage are women, and few are teenagers – less than 20 percent.

Yeah, yeah. But what about college kids and recent graduates? Based on 2010 data, the Current Population Survey shows that,of 4.3 million workers at (or below, if they have tip-based income) the minimum wage, 2.1 million are aged 16-24 and 2.2 million are 25 or older. At a guess, roughly 20% are 16-19 (teenagers), 30% are 20-24 and 50% are 25 and up.

And as an anti-poverty program, raising the minmum wage is hunting with a shotgun (Sorry, Times readers, that must be a baffling metaphor - a shotgun fires pellets over a broad area; a rifle fires one bullet at the target). Let's go back to the the Times coverage of his speech:

“Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong,” Mr. Obama said in his State of the Union address Tuesday night. “Let’s declare that in the wealthiest nation on earth, no one who works full time should have to live in poverty.”

First of all, we have anti-poverty programs, including the Earned Income Tax Credit, for those rare cases of people stuck year after year in a minimum wage job with a stay-at-home spouse.

Here is the CBO from 2006 on poverty and the minimum wage. Their gist - roughly 14% of the workers who would be immediately affected by the proposed increase in the minimum wage had family incomes below the poverty line after adjusting for transfers and anti-poverty programs. And roughly 15% of the wage increases due to raising the minimum would go to these families. Raising the minimum wage is not a targeted response to a problem of low-skilled, low-paid workers who can't manage an occasional merit raise.

But we don't expect logic or evidence to play into this debate. Democrats live to spend other people's money and raising the minimum wage lets them do so without even needing to pretend to worry about the deficit.

MORE: The Bureau of Labor Statistics prepares an annual report on the Characteristics of Minimum Wage Workers with lots of demographic data. Here is 2011. Here is their first bullet point:

Minimum wage workers tend to be young. Although workers under age 25 represented only about one-fifth of hourly-paid workers, they made up about half of those paid the Federal minimum wage or less. Among employed teenagers paid by the hour, about 23 percent earned the minimum wage or less, compared with about 3 percent of workers age 25 and over.

 

 

Comments

[Sue]

What I said on the tail end of the other thread...

...I wonder if anyone that supports a $9 minimum wage noticed that the last time they raised the minimum wage everything I buy went up thereby negating the rise in minimum wage?

[matt]

It's the "Let's close Mom & Pop" Coalition.

Costco is especially noted for their "not deal" deals, but hey, I bought 40 of them so it has to be cheaper. We used to buy our meat there, but found that "Choice" can be defined a lot of ways.Buying based on the cut of meat was always an adventure.

[Sue]

We need Fred Thompson and his buckets. And a reminder that corporations do not pay taxes or eat the cost of raising minimum wage.

[NK]

Costco can run its business anyway they please-- especially the wages and benefits they pay. However, Crony Sinegal's objective is to gain advantage over his competitors who have a different business model. He wants the BIG GOV'T to give him a big competitive advantage, that his business model is failing to give him. I disagree with TomM about giving Sinegal's custonmers more cash-- no way min wage hike does that (if anything the hike hurts Cosco's small restaurant operator customers)--- FOODSTAMPs and EITC fraud put money in Costco customer's pockets.

[Ignatz Ratzkywatzky]

--It cited research showing “no detectable employment losses from the kind of minimum wage increases we have seen in the United States.”--

And there we have the new normal of Barry world; we may be experiencing no job growth, but hey we're not detecting any more losses so it's all good.
It's kind of like flying your plane at a mountain with one engine on fire and rejoicing that your altimeter isn't spinning backwards; you're still going to die in a ball of fire but there's still time for one last bag of complimentary peanuts.

[Jim Eagle]

Waiting in the doctor's office I finally caught up with speech thread. What a terrific job you guys did with the SOTU coverage. As I read the comments and started to laugh from time to time, I got a lot of questioning stares from others in the waiting room. One man asked if I was reading a humorous book and I said no but reading the coverage of Obama's SOTU speech. He told me, "why bother?" and I said because he's not funny but the comments are:)

[centralcal]

O/T - but past threads have passed me by. Just a little sanity from Sarah Palin's Facebook commentary on last night's SOTU:

Our country didn’t weather a Revolution, two World Wars, a Civil War, a Great Depression, and countless other political and economic storms, just to be sunk by the dangerous policies of this current administration. We’re stronger than this. As President Reagan said, “I do not believe in a fate that will fall on us no matter what we do. I do believe in a fate that will fall on us if we do nothing.”

So, do something. 2014 is just around the corner. Get motivated! Get organized. America, don’t retreat. In the words of yet another White House program, “Let’s move.”

- Sarah Palin

[bgates]

Raising the minimum wage mostly benefits adults,

How on earth can they tell that wages rise mostly for those older than 26?

[bgates]

we may be experiencing no job growth, but hey we're not detecting any more losses

Surely you don't expect them to try to quantify some phantom statistic like "jobs prevented or lost".

[Sue]

How on earth can they tell that wages rise mostly for those older than 26?

Because the unemployment rate for teenagers is over 23%.

[Ignatz Ratzkywatzky]

Bgates was commenting on Barrycare's new definition of a child as anyone 26 or under, Sue.

[Sue]

I actually think they use the term "youth" but I can't readily find what age the unemployment statistics consider youth.

[Sue]

I was trying to make the point that anyone under 26 isn't working which is why they can claim the wage rise would mostly be for those older than 26.

[bgates]

a family with two kids that earns the minimum wage still lives below the poverty line

-for certain values of "family", I guess. The HHS guidelines for poverty levels says that for a family of four in the contiguous US, the poverty line is $23,050. Minimum wage is $7.25 an hour; earn that for 40 hours a week, 50 weeks a year (the poor deserve a 2 week vacation like everybody else) and you get $14,500, so if your family of four is the retrograde patriarchal kind with a working mother and father - or even if it's the family of the future with two working mommies - your little unit pulls in $29 grand, six thousand over the poverty threshold.

It turns out you don't fall below the poverty threshold unless you're either a single parent with two kids earning the minimum wage, or you and your spouse both have the hours at your minimum wage jobs cut below 33 a week for some reason. But why on earth would that happen?

[narciso]

No idea, bgates, in other brilliant mindthoughts;

http://drewmusings.wordpress.com/2013/02/13/avik-roy-reinterprets-the-buckley-rule-to-argue-for-nelson-rockefeller/

[AliceH]

Which Poverty Line is the president referring to here? "Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line."

Minimum wage of $7.25/hr * 2000 hrs/year * 2 adults = $29,000.

2012 HHS Poverty line for family of 4 = $23,050.

[AliceH]

errr...what bgates said.

[Rick Ballard]

bgates,

No fair. You used arithmetic and logic. True consensus can only be achieved by monitoring emotions and using empathy to generate an appropriate response. Don't you have any sympathy at all for those forced to live upon the bare minimum? You're missing the whole point of renaming the base wage rate "minimum wage".

[hit and run]

Raising the minimum wage mostly benefits adults...

Because Democrats hate children. It's like legislating that Menendez should be able to stiff the underage hookers.

[hit and run]

...and especially working women

There's no qualifier on "adults" to specify that it only benefits those working -- but mention women and, well, they go all sexist.

Democrats: misogynist child-haters.

[Rob Crawford]

Raising the minimum wage raises the income of union thugs who have their contracts tied to the minimum wage.

He's desperately trying to keep them on his side.

[Frau Mistgabel]

Welcome to Barry World

[Sue]

Rob,

Gawd! I didn't even think of that. Of course that is why they continue to want the minimum wage raised. They don't care about the poor, except for their votes. Their lack of caring is reflected in the amount of their own money they give to charities.

[Rob Crawford]

And if union fees are a percentage of the member's income, and not a flat fee, then raising the minimum wage increases the Democrats' war chest.

[glasater]

Costco must have moved its headquarters from Kirkland WA where real estate prices have thrived to Issaquah WA where there's more open land and lower land prices.

Anyway, I saw that idiot Senegal on Squawk this AM and what he said made my blood pressure rise also.
He's the co-founder of Costco so someone must be smart in that crew 'cause he certainly isn't.

[jimmyk]

Unions love the minimum wage for the same reason Costco does--it helps keep the competition (in this case non-union businesses) from undercutting the unionized ones and justly driving them out of business.

[NK]

jimmyk@12:55 spot on. you can also probably enlighten our host with the academic studies 1980-2000 or so that demonstrated conclusively (IMO), that minimum wage hikes are jobs killers.

[matt]

So, as the minimum wage has risen we have lost more jobs. I get it.....

[narciso]

It's probably a perfect inverse corollation, matt,

[AliceH]

Isn't there also something built-in that ties Unemployment insurance and payments to minimum wage rates?

[AliceH]

Sorry, JiB. I'm going to have to narcisolate you to get rid of that pic. At least, until we get to a new page.

That is just too much.

[Frau Mistgabel]

Just want to send some love to kat for her post on the SOTU thread

Re: minimum wage increase. I am in such mean spirit since November that I actually hope they go for it. I always worried about impact of bad policies on the poor- now I don't care. Let them eat obamaphones.

[NK]

JiB-- don't ever do that again without fair warning.

[narciso]

What did we ever do to deserve that, as a remedy, this is the LUN

[centralcal]

Uh yeah, not gonna check in again until the page turns.

[NK]

Narc-- the hurdler-- much better, a fine remedy that was.

[narciso]

And I must repeat 'these goggles do nothin'

[rse]

henry & ch-

In light of our discussion this morning of how integrated higher ed gets in this corporatist visions of regional devt, thought you'd appreciate this story--

http://blogs.edweek.org/edweek/marketplacek12/2013/02/project_seeks_to_spawn_high-tech_startups_through_colleges.html?cmp=ENL-EU-NEWS2

No oppo for abuse or favoritism there. And it's a chance to get businesses to locate where politicians say if they want start-up funding in areas without significant presence.

[henry]

rse, to the extent a community college provides training in trades (programming, accounting, and welding here in WI) taught by people who do these things for a living (our VP Development teaches programming at the local CC) this makes more sense than a University based incubator (there to get profs extra cash for "consulting"). I assume the paid internships are for project based staffing to get new products off the ground (I get asked about this from our local schools). In these cases the staff experience from the private sector actually is helpful to the start-up -- and it comes along with low cost labor from the student interns. Favoritism? They don't break it out, but my guess is most of these start-ups are "green" technology related and ultimately doomed. YMMV

[Jim Eagle]

Sorry:)

BTW, that photo was sent to me by a friend without warning and I opened it while drinking hot coffee.

[Captain Hate]

Nothing says "entrepreneurship" like colleges and universities.

[jimmyk]

NK (or anyone else), for min wage research google (or google scholar) "David Neumark minimum wage" (without the quotes of course). The brief history is that Card & Kruger did a study purporting to show the min wage had no effect on employment. Neumark pointed out that their data were full of c**p, but they stuck to their guns, and all the Dem politicians and policy gurus stuck their fingers in their ears and continued to cite the Card-Kruger study as the final word. Neumark's done a bunch of studies showing that, for example, hours of employment get adversely affected, so that on balance min wage employees lose out. Meanwhile, Kruger gets to be head of Barry's Council of Economic Advisers.

[maryrose]

JIB:
Once again I am getting weird looks by people in the library because I am laughing so hard at that pic of Hillary that you posted. Did any of your coffee spill on you?
The responses have been quite funny. I needed a laugh today.

[NK]

JimmyK-- thanks, in a debate over something like Min Wage knock on effects, that can't be proven empirically, the data rule. Neumark's data analysis is the winner for me, because correlation (while not conclusive) is the best evidence.

[NK]

the data = raw data. Not the massaged data that scammers like Card & Kruger use.

[Jim Eagle]

GOP drops a dime on Obama - 58 trillion of them.

This is devastating but probably won't get any traction among the MSM.

[GUS]

Did someone say something about MENENDEZ....."STIFFING" teenage hookers??

Menendez..Corzine...WHAT'S THE DIFFERENCE???

[Jim Miller]

Whether Costco is paying way more than the minimum wage depends on where those Costco workers are. Here in Washington state, the minimum wage is now $9.19. (Except for 14 and 15-year olds, who can be paid $7.81 an hour.)

$11 an hour is more than $9.19, but it isn't a lot more.

And the minimum wage here is indexed for inflation.

Incidentally, I have my doubts that many Wall Streeters have put pressure on Sinegal to cut pay and benefits. I'm not saying none have, but I doubt that very many have.

And one more thing: Sinegal and the Obama campaign timed the fund raiser they did here last year, perfectly -- if they were trying to maximize delays for ordinary communters. If you suppose that those commuters put reasonable values on their time, that one fund raiser imposed millions of dollars in costs on this area.

[Sue]

Look how much better she looks (her face) than she does now. If we see her hair and makeup start looking like that again she's running. I

[BB Key]

OT, For daddy and anybody else interested in the Duke -Carolina rivalary LUN

[Rob Crawford]

Oh, God, that was just horrible. HOW DARE YOU POST AN IMAGE LIKE THAT?!!!!

[GUS]

Rob, call that image. OLD GLORY.....

[daddy]

Re: BB Key's 03:46

Duke mascot head stolen, placed above UNC campus store

.

The Daily Tar Heel, is reporting the mascot head is “safe.”
“The Duke Blue Devil head is safe inside the UNC Student Stores for now. The manager is holding it to return it.”

Fire the Manager.

[matt]

it's in protective custody, daddy. It will be punted across the floor at the next meetup between their respective teams.

[NK]

"Mascot head?"... is that only the mask?, or is that like, you know, the student mascot's head IN THE MASK?

[Jim Eagle]

Can't link it but Foreign Policy is reporting that the Russian Foreign Minister is not returning John F**king Kerry's phone calls:)

Obviously Kerry's reset button isn't flexible enough.

[BB Key]

NK@4:22 What Difference does it Make :)

[NK]

BBKey-- heh. Good snark.

But you know what --the disgraceful use of those words by that cow, forever stop me from seeing the humor in even mocking those words.

[Frau Mistgabel]

"If we see her hair and makeup start looking like that again she's running."

At this point, I think Hillary! is going for the Golda Meir look. Actually, Golda has more oomph--and everything else--than Bubba's first wife.

[Kat]

Thank you Frau M ...I need love....

[GUS]

Golda Meir was from Milwaukee. She looked WAY better in a bikini than Rodham.

OR so I am told.

[jimmyk]

Golda was a babe in her younger days:

[GUS]

Jimmy, if you only had any ideo how many hundreds of hours I spent in that Library. The Library is now named for Hilary Rodham!!
Errrrr, I mean it's named for Golda Meir.
She was quite a woman, Mrs Meir, that is.

[squaredance]

Well let us get one things straight: a great many union contract, including most government union contract have all workers pay tied to minimum wage. When the minimum wage goes up, then they all go up.

This is what they are not telling you.

This is shameful politics on the part of Obama. We will heve no end of this sort of thing the next two year. He is after one thing: the House in 2014.

The opposition better figure this out and start fighting--and they better not cave.

Seriously, I feel I am in a time warp. I cannot believe that in this day and age we are having such stupid discussions; it is amazing how stupid the population is. It is like it is 1955.

One does not really have to have run a small business to figure out how ruinous this stuff. Just a little common sense should be enough.

They are out to destroy the (white) middle class on every level and at every point.

[AliceH]

squaredance - it brings to mind one of my favorite P.J. O'Rourke's observations: "Ignorance is a renewable resource".

[cathyf]

Well let us get one things straight: a great many union contract, including most government union contract have all workers pay tied to minimum wage. When the minimum wage goes up, then they all go up.

This is not really about contracts, but about natural processes. Take the example of a guy with a warehouse. He has one forklift and one forklift operator. Sometimes he gets busy and has a lot of stuff to move, and so he has the practice of going to a nearby day-laborer gathering site and hiring a bunch of guys to schlep the boxes for a day or two at a time.

His other choice is to buy a second forklift and hire a second forklift operator. Calculating the break-even between the bunch of guys with strong backs and the one guy and the piece of equipment, you need to know the cost of the forklift, both purchasing it and operating it. The wages/benefits of the forklift operator. How much you pay the day laborers. If you force the wages of the day laborers up far enough, the forklift and one guy becomes more economical.

And the day laborers end up homeless.

(Remember that the next time you hear the phrase "preferential option for the poor.")

[Chelsea Smith]

I watched the SOTA and I was surprised to hear the minimum wage thing. I was excited to hear it but I get to think also how will the government will able to implement it.

[mri shoulder coil]

I thought it was MRI technician but thats the person who actually gives the MRI. I think its biomedical equipment technician but on the course descriptions from the schools it doesnt say mri. Does anyone have suggestions on how to get into this field?