The UW Study on $15 an Hour Does Not Reflect My Life as a Minimum Wage Worker(thestranger.com)
thestranger.com
The UW Study on $15 an Hour Does Not Reflect My Life as a Minimum Wage Worker
http://www.thestranger.com/slog/2017/07/20/25299657/guest-editorial-the-uw-study-on-15-does-not-reflect-my-life-as-a-minimum-wage-worker
22 comments
The Weeds podcast by Vox had a recent episode that talked about this and the study in detail if anyone is interested.
https://www.vox.com/2017/7/14/15964284/the-weeds-seattle-min...
Much less contradictory evidence is needed than positive evidence. Arguably you only need one observation to invalidate the hypothesis.
Excluding chains likely made the study unfairly favorable to minimum wage increases.
"My single data point disproves a rigorously-conducted study spanning millions of workers and thousands of employers."
Come on.
Come on.
https://evans.uw.edu/sites/default/files/NBER%20Working%20Pa...
While I don't doubt the veracity of some of the conclusions (more cost per hour means hours get cut) there does seem to be a few what I'd consider "contortions" to get the desired result. I say "desired result" because sometimes people who fund these things, yes, even (especially?) at universities have compelling interest.
For instance, they exclude all "multi-site" businesses from the study (Dominos for instance so study doesn't even apply to author in the first place). One has to wonder what the results would have looked like had they not done that.
Not arguing for against state/city minimum wages, don't have an opinion either way. Just skeptical.
While I don't doubt the veracity of some of the conclusions (more cost per hour means hours get cut) there does seem to be a few what I'd consider "contortions" to get the desired result. I say "desired result" because sometimes people who fund these things, yes, even (especially?) at universities have compelling interest.
For instance, they exclude all "multi-site" businesses from the study (Dominos for instance so study doesn't even apply to author in the first place). One has to wonder what the results would have looked like had they not done that.
Not arguing for against state/city minimum wages, don't have an opinion either way. Just skeptical.
The study was commissioned by the city of Seattle after the passage of its MW ordinance - there is every reason to believe that the "desired result" was "the MW raise is good and justified and has no net negatives". That's a part of the reason that the results of this study are so surprising.
The exclusion of multi-site businesses was because of the inability to distinguish a business's physical location from its account location, which would have confounded the results:
> The data identify business entities as UI account holders. Firms with multiple locations have the option of establishing a separate account for each location, or a common account. Geographic identification in the data is at the account level. As such, we can uniquely identify business location only for single-site firms and those multi-site firms opting for separate accounts by location. We therefore exclude multi-site single-account businesses from the analysis, referring henceforth to the remaining firms as “single-site” businesses.
(This suggests that a locally owned and operated Domino's franchise would be classed as a single-site business and included in the study, while a non-franchised Walmart would be classed as a multi-site business and excluded.)
Furthermore, survey evidence suggests that multi-site businesses may be more likely to contribute to the "negative" effects:
> Survey evidence, discussed below, indicates that multi-site employers were if anything more likely to report staffing reductions in the wake of the minimum wage increase...survey evidence collected in Seattle at the time of the first minimum wage increase, and again one year later, increase suggests that multi-location firms were in fact more likely to plan and implement staff reductions.
Skepticism is good, but let's give the researchers credit here: they've done a pretty stellar job of mitigating confounding variables and justifying why they've made the choices they have in which data they chose to study.
The exclusion of multi-site businesses was because of the inability to distinguish a business's physical location from its account location, which would have confounded the results:
> The data identify business entities as UI account holders. Firms with multiple locations have the option of establishing a separate account for each location, or a common account. Geographic identification in the data is at the account level. As such, we can uniquely identify business location only for single-site firms and those multi-site firms opting for separate accounts by location. We therefore exclude multi-site single-account businesses from the analysis, referring henceforth to the remaining firms as “single-site” businesses.
(This suggests that a locally owned and operated Domino's franchise would be classed as a single-site business and included in the study, while a non-franchised Walmart would be classed as a multi-site business and excluded.)
Furthermore, survey evidence suggests that multi-site businesses may be more likely to contribute to the "negative" effects:
> Survey evidence, discussed below, indicates that multi-site employers were if anything more likely to report staffing reductions in the wake of the minimum wage increase...survey evidence collected in Seattle at the time of the first minimum wage increase, and again one year later, increase suggests that multi-location firms were in fact more likely to plan and implement staff reductions.
Skepticism is good, but let's give the researchers credit here: they've done a pretty stellar job of mitigating confounding variables and justifying why they've made the choices they have in which data they chose to study.
Fair enough.
For the record I'm generally opposed to government induced market distortions (but understand they may sometimes be necessary). Not for ideological reasons but because practical reality and unforeseen side effects and the cure being worse than the disease and all. Municipalities dictating a minimum wage I'd think to be probably a bad idea.
Still, excluding nearly half the workers in question from a specific segment leaves the study much less credible than it could be otherwise.
Most Dominos, WalMarts etc. have been honed for labor efficiency for decades. I suspect they can't cut staff or hours much more while continuing to operate in which case workers are (temporarily at least until wage pain causes someone to invent a pizza store machine) better off. Maybe not so much "looser" mom and pop type businesses who this will cause to tighten up.
A final point is the value of extra time. So workers are $125 less well off at the end of the month. But they are working many less hours and no matter how you slice it they are making more money per hour. With more free hours they can take part time jobs, pursue education or training which increases future value, save money by doing things like cooking and their own childcare etc. etc. So the loss of $125 per month is at least partially offset by a certain amount of value.
For the record I'm generally opposed to government induced market distortions (but understand they may sometimes be necessary). Not for ideological reasons but because practical reality and unforeseen side effects and the cure being worse than the disease and all. Municipalities dictating a minimum wage I'd think to be probably a bad idea.
Still, excluding nearly half the workers in question from a specific segment leaves the study much less credible than it could be otherwise.
Most Dominos, WalMarts etc. have been honed for labor efficiency for decades. I suspect they can't cut staff or hours much more while continuing to operate in which case workers are (temporarily at least until wage pain causes someone to invent a pizza store machine) better off. Maybe not so much "looser" mom and pop type businesses who this will cause to tighten up.
A final point is the value of extra time. So workers are $125 less well off at the end of the month. But they are working many less hours and no matter how you slice it they are making more money per hour. With more free hours they can take part time jobs, pursue education or training which increases future value, save money by doing things like cooking and their own childcare etc. etc. So the loss of $125 per month is at least partially offset by a certain amount of value.
I, for one, am divided on issues like this and all of the other social issues of our time. In my world-view, the cause is the state (don't take that to mean society, I mean literally the state apparatus) so all of these state-sponsored fixes amount to mitigation strategies at best, not solutions.
Even having said that, mitigation is better than continued suffering. To illustrate my point with an extreme example: making it illegal to kill your slave doesn't solve the underlying slavery issue, but hopefully it would stop some slaves from getting murdered, in the meantime.
There is an inherent danger in trying to work within the system to fix it, but we're talking about real people's lives.
I think it's still an open question whether or not raising the minimum wage is the best way to mitigate the problems of the working poor, but I don't think the sky will fall if we get it wrong–it's already wrong, amirite?
Even having said that, mitigation is better than continued suffering. To illustrate my point with an extreme example: making it illegal to kill your slave doesn't solve the underlying slavery issue, but hopefully it would stop some slaves from getting murdered, in the meantime.
There is an inherent danger in trying to work within the system to fix it, but we're talking about real people's lives.
I think it's still an open question whether or not raising the minimum wage is the best way to mitigate the problems of the working poor, but I don't think the sky will fall if we get it wrong–it's already wrong, amirite?
A much better, but politically impossible, solution is basic income. Minimum wage is basically a tax on companies that employ low skill workers to those workers.
There are several problems with this. Why tax only companies that hire lots of workers, regardless of how profitable they are? It punishes those businesses and discourages hiring low skill workers. It also only benefits only those workers and not the unemployed or poor in general.
Basic income taxes all businesses fairly, spreads the benefits fairly, and doesn't create bad incentives. But unfortunately it will always be unpopular on both the left and right. To the right it's socialism. And the left will complain about <Big Business> that isn't paying their employees "fairly" and offloading the cost to the government.
There are several problems with this. Why tax only companies that hire lots of workers, regardless of how profitable they are? It punishes those businesses and discourages hiring low skill workers. It also only benefits only those workers and not the unemployed or poor in general.
Basic income taxes all businesses fairly, spreads the benefits fairly, and doesn't create bad incentives. But unfortunately it will always be unpopular on both the left and right. To the right it's socialism. And the left will complain about <Big Business> that isn't paying their employees "fairly" and offloading the cost to the government.
> In my world-view, the cause is the state
What does this even mean?
> To illustrate my point with an extreme example: making it illegal to kill your slave doesn't solve the underlying slavery issue, but hopefully it would stop some slaves from getting murdered, in the meantime.
The state outlawed slavery.
What does this even mean?
> To illustrate my point with an extreme example: making it illegal to kill your slave doesn't solve the underlying slavery issue, but hopefully it would stop some slaves from getting murdered, in the meantime.
The state outlawed slavery.
You're kind of agreeing with my point here. I'm saying that tempering evil with the state is a legitimate use of the state apparatus. That shouldn't be construed as thinking that the state can actually fix the underlying cause (abolition did not fix the problem of Race in America for instance), but it can mitigate the suffering of some, and shouldn't be totally discounted.
Beyond that, from my perspective, slavery in America was ended despite the best efforts of the government to keep it going. It's probably just semantic differences between us that make this non-obvious, but I would argue that the state made it harder to eradicate slavery than if it wouldn't have existed, or was less all-powerful. At least in North America, slavery was a result of state-sponsored colonization and state-granted charters and monopolies, not private industry. The history of British colonization of North America is not a history of private social movements, but of politics and the expansion of Empire across the globe.
At the base of this disagreement, I feel it is a mistake to conflate law with the state, and that conflation is the reason we see the state as a benefactor or positive force in the world. Because they force their own monopoly in law, they are seen as being the same as law, but law has existed and still exists outside of the modern state.
Beyond that, from my perspective, slavery in America was ended despite the best efforts of the government to keep it going. It's probably just semantic differences between us that make this non-obvious, but I would argue that the state made it harder to eradicate slavery than if it wouldn't have existed, or was less all-powerful. At least in North America, slavery was a result of state-sponsored colonization and state-granted charters and monopolies, not private industry. The history of British colonization of North America is not a history of private social movements, but of politics and the expansion of Empire across the globe.
At the base of this disagreement, I feel it is a mistake to conflate law with the state, and that conflation is the reason we see the state as a benefactor or positive force in the world. Because they force their own monopoly in law, they are seen as being the same as law, but law has existed and still exists outside of the modern state.
I thought the same thing. Private industry made slavery. It took the state to put an end to those abuses.
And the state is also trying to put an end to wage slavery abuses.
But most rebublicans appear to be ok with getting paid nothing and working slave hours.
So I'm happy to let them elect conservatives that cut labor laws, and lower minimum wage.
A nice cheap unregulated labor force in the heartland America will lower my cost of goods and shipping on the coast.
Republicans are like a voluntary slave force for the liberal coasts.
And the state is also trying to put an end to wage slavery abuses.
But most rebublicans appear to be ok with getting paid nothing and working slave hours.
So I'm happy to let them elect conservatives that cut labor laws, and lower minimum wage.
A nice cheap unregulated labor force in the heartland America will lower my cost of goods and shipping on the coast.
Republicans are like a voluntary slave force for the liberal coasts.
I'm not sure why you think that, but private industry did not make slavery in America. Large royal charters and monopolies granted by the crown created huge estates and large tracts of low value farmland that could only become valuable by the use of slave labor. Sure, it was private individuals who were granted this favor and given access to cheap forms of labor, but it was not a natural outgrowth of private industry. At best it was unfortunate side-effect of the state's benevolence, and at worst, a conspiracy by the state to create wealth at the expense of an exploited class of people.
At any rate, I think you misunderstand my stance, I'm not looking to cut labor laws or lower minimum wage. I'm looking to free the worker from the shackles of the system that the state has created for them. In the meantime, if we're looking to ease the pain and suffering of those forced to live and die in that system, I think we should consider it, but think long and hard about how and if it will actually bring relief, or will it have unforeseen consequences that will make the situation even worse? That's what we should focus on.
BTW, definitely not a republican, so I think the rest of your comment can be fairly ignored by me. :)
At any rate, I think you misunderstand my stance, I'm not looking to cut labor laws or lower minimum wage. I'm looking to free the worker from the shackles of the system that the state has created for them. In the meantime, if we're looking to ease the pain and suffering of those forced to live and die in that system, I think we should consider it, but think long and hard about how and if it will actually bring relief, or will it have unforeseen consequences that will make the situation even worse? That's what we should focus on.
BTW, definitely not a republican, so I think the rest of your comment can be fairly ignored by me. :)
It's a complex issue but I think one of the main points from the opposition is that with increased wages will come decreased rates of employment.
I think this point really becomes an issue for people who believe that "if you work hard, you will get what you deserve (e.g., a middle to high wage)".
For them, the tradeoff is raising the wage is for a lazy worker vs. having a lazy worker be unemployed.
The point becomes less of an issue if you believe that there are hard working people making the best of their abilities who can only obtain low wage jobs.
Then it becomes an issue of whether you believe $15 should be the minimum for someone who works just as hard as you.
I think this point really becomes an issue for people who believe that "if you work hard, you will get what you deserve (e.g., a middle to high wage)".
For them, the tradeoff is raising the wage is for a lazy worker vs. having a lazy worker be unemployed.
The point becomes less of an issue if you believe that there are hard working people making the best of their abilities who can only obtain low wage jobs.
Then it becomes an issue of whether you believe $15 should be the minimum for someone who works just as hard as you.
It's important to keep in mind that Amazon's presence has raised the average income in the city to over $90k/year. Even making $15/hour, this individual relies heavily on public assistance.
I didn't read the study so I'm not sure if this outlier was included in the overall analysis.
I didn't read the study so I'm not sure if this outlier was included in the overall analysis.
Minimum wage raises are great, if basic living expenses don't inflate to match it.
As the author states, $15 an hour isn't even enough to get her + kids off of Section 8 and Foodstamps. Minimum wage is supposed to be the minimum to afford basic living expenses, which clearly it is not.
The fix is not in continually raising the minimum wage. The fix will only come by putting a cap on rental prices, utilities, and food staples.
Universal income is a better step the right direction, but again it will only work if there is a cap on how much housing/utilities/food is raised.
As the author states, $15 an hour isn't even enough to get her + kids off of Section 8 and Foodstamps. Minimum wage is supposed to be the minimum to afford basic living expenses, which clearly it is not.
The fix is not in continually raising the minimum wage. The fix will only come by putting a cap on rental prices, utilities, and food staples.
Universal income is a better step the right direction, but again it will only work if there is a cap on how much housing/utilities/food is raised.
Price caps can't work. If the cost of an item is greater than the price, people will stop producing it. There will be no incentive to increase the supply. You get shortages and bread lines. Other factors instead of money determine what you can buy (are you a friend or family of the landlord?) Some economists theorize that price caps lead to the decline of the Roman empire.
Instead just let the market work. We can build much denser and cheaper than we currently do, and housing will become much more affordable. The price of food has fallen drastically over the last century and is only getting cheaper. Utilities are monopolies with no competition at all.
Instead just let the market work. We can build much denser and cheaper than we currently do, and housing will become much more affordable. The price of food has fallen drastically over the last century and is only getting cheaper. Utilities are monopolies with no competition at all.
Caps sound like a very good way to get less food, utilities and housing in general.
Until such a time when the robot overlords are put in charge of distribution freeing us from the tyranny of inefficient and cruel markets.
Until such a time when the robot overlords are put in charge of distribution freeing us from the tyranny of inefficient and cruel markets.
And lo and behold, it turns out that one of the main criticisms of this study is that they excluded most large employers and chains (on the theory that if a chain restaurant in Seattle hires people or fires people, it's more likely to be caused by some external effect than by the wage hike). And since OP brought it up, it does seem like the chains that this study excluded would be likely to be exactly the sorts of employers who would see more benefit than cost. That's not evidence that the study is wrong, period, end of story, but it is intriguing, and I can't find any suggestion on the study's website that they attempted to account for this.
It's easy and satisfying to dismiss things out of hand for being anecdata, but sometimes you miss interesting perspectives in so doing.