10 replies to this topic

[The Average Joe]

From the "we told you so" department.

 

Seattle votes in socialist city board, declares the fight for 15 won, and raises the minimum wage to 15 dollars an hour. What do you think happened next? Socialist utopia? Nope.

 

...between April and December last year, Seattle saw the biggest employment drop in any nine-month period since 2009 — a full year into the Great Recession.

The city unemployment rate rose a full percentage point.

Before the minimum-wage hikes begin, Seattle employment tracked the rest of the nation — slowly rising from the 2008-09 bottom. But it started to plunge last spring, as the new law began to kick in.

Furthermore, Seattle’s loss of 10,000 jobs in just the three months of September, October and November was a record for any three-month period dating back to 1990....

 

Meanwhile, employment outside the city limits ... was soaring by 57,000 and set a new record high that November.

 

I would say they deserve what they get, but it's the stupid sheeple at the low rungs of the ladder that are hurt the worst. Yo know, the ones progressives claim to help. I do feel for them somewhat, but they were fools to think anybody gets something for nothing. Want more money? Make yourself worth more money....

 

I really feel bad for those that invested their hard earned money into starting a business who were then forced to lay off people or close. Progressives tend to paint business owners as evil and greedy, but I have found them far from that. Most I know take the laying off of people very personally. More like a failure of themselves. I know when I have had to let good people go, it has been a painful experience. I question whether I could have hustled more or cut something else. I know one business owner that nearly drove himself into depression when the slowdown hit and he had to call his employees and tell them there was no work. It aged him tremendously trying to keep everyone (including himself) solvent.

 

 

 

 

[GrumpyOldGuy]

Joe,  two quick comments...

 

1)  I don't think there should be a minimum wage at all.  I love meritocracy.  It works extremely well for me and I've done nothing special.  Others can do it too.

 

2)  That said, the relationship between a city's minimum wage and their unemployment rate is far too complex to draw a stark conclusion that one affects the other on a "simple terms" level.  Look at San Francisco.  One of the highest minimum wages in the country...$12.25 per hour.  One of the lowest unemployment rates in the country...3.2%.  Polar opposite of Seattle.  The differences between the two cities are complicated.  In fact, so complicated, I don't understand them.

[bordercolliefan]

Basic economics would tell us that if the price of something (in this case, labor) goes up, the demand for it goes down. It would be good if people proposing new policies had some understanding of economics. Incidentally, this isn't a problem unique to the left. No credible economist endorses "trickle down economics" or the Laffer curve, yet you still hear versions of it from Republicans.

That said, I am curious about your source, Joe. Everything I've read says it's too early to tell the overall impact of these recent hikes in the minimum wage.

An essential piece of data, as I'm sure you realize, is the elasticity of the price of the end-products or services. In other words, if Starbucks can raise its latte price from $4.50 to $5.00 without losing business, then the minimum wage hike shouldn't cause more unemployment.

Additionally, we need to understand the effect on the economy of putting more $$ in the hands of people who are likely to spend it. In other words, a minimum wage worker will spend every penny of earnings--thus creating jobs--while a McDonald's owner might have enough money to save it for a rainy day. Of course, the latter can create jobs through investment, but it's murkier.

In short, there are a lot of factors here. I agree with you it's an important area for study.

[2 Aces]

Again, leftist ideology damages or destroys damn near everything it touches...how many examples do you want? This Seattle thing is no different. In fact, things have gotten so out of hand, that I am now glad when I hear stories like this. It's about time that educationally-challenged liberals and progressives (there's that cute, misleading word again) realize there ain't no Santa Claus...that there's no free lunch. I guess people need to get hurt economically for them to realize that liberalism is NOT your friend. OK, fine with me.

To repeat, I do NOT feel bad or sorry for the liberals who are negatively affected by this. In reality, it should be a teachable moment. Hopefully those people have the curiosity to ask questions and seek out the reason for the large employment drop and why they lost their jobs. They will then learn the lessons of leftist ideology and why to reject it. At that point they will have a chance to become good, productive, decent citizens.

[GrumpyOldGuy]

Aces,  why do you ignore the example of San Francisco?  Ultra-leftist city government, ultra high minimum wage, ultra low unemployment rate.  It's a huge problem in San Fran.  Everyone's working!  A simplistic view doesn't explain it.

[The Average Joe]

I wonder why you don't believe in the laffer curve? All evidence points to its accuracy. At zero tax rate the government collects zero dollars. At 100% tax rate, the government collects zero dollars. So yes, there is a curve. The only possible argument against it is where the sweet spot is. Based on government data, that spot is slightly less than 19%  Despite wildly fluctuating tax rates, the government almost always collects slightly less than 19%. Tax rate 90%, they collect 19%. Tax rate 35%, they collect 19%. Unfortunately, for the past 15 years they have SPENT 22-24%, hence the deficits.

http://mercatus.org/...rates-5-PDF.pdf

 

 

I believe the source on Seattle was the NY Post, although I bounce around so many sites, I can't be sure. I usually link the source. The data came from the Bureau of Labor Statistics monthly data.

 

The idea that economics is influenced by many things and the wage is just one would be persuasive IF employment hadn't risen substantially outside the city limits.  BTW, I too am against a minimum wage. Your wage is worth whatever value you bring to your job. Period. As for the whole "living wage" claptrap. If your plan is to raise a family on minimum wage, you are not only a poor planner, but a dumbass as well.

 

AND, if you were making 15.00 an hour because you had started at 9.00 and improved your skills, wouldn't you want to make more than some scrub just starting out? Of course. Which means more costs for the employer. And don't forget, every dollar in increased wages means about an extra 1.50 in increased costs for the business. Most businesses that employ introductory labor have thin margins as it is. Fight for 15 is a stupid idea driven by an entitled generation who think they deserve special treatment just for sucking air.

 

On a side topic, ever wonder why any work done by the state is so expensive? Unions drive the wages to astronomical costs. And I don't just mean for union labor. Take a non union contractor. Not the business owner, the guy actually doing the work. Depending on trade and county, he will make 50-80 dollars per hour... now add in the costs for the owner. 10+ dollars/hr withholding, 10-20 dollars/hr workmans comp, 5+ dollars/ hour insurance, money for a union compliance officer (or subcontracting one), contributions to trade apprentice programs (or worse, hiring a union apprentice), vehicle and tool costs 50+ per day and it can easily cost the owner over 1000 dollars per man, per day to do basic contracting work that should cost 300-400 dollars a day. And that does not even factor in profit! All that money comes from mandated union procedures paid for by your tax dollars.  Ain't government grand...

[Chris]

Laffer Curve has proven true many times.........    A theory for sure, but evidence and repetition of results tell me it's pretty dead on.   At least for these recent decades....  I think 19% is the sweet spot for maximum taxation, any more and you get less revenue for the government.....  Bernie should talk to Art Laffer and get some education.  Chris

[bordercolliefan]

Actually Joe, your graph shows nothing about the Laffer curve. What it probably means is that when tax rates are high, top earners make greater use of tax shelters to avoid paying taxes--and thus tax revenue tends to remain constant. We don't know from the graph whether GDP increases or not.

Chris, what "evidence and repetition" are you talking about?

This is enlightening:

http://www.dailykos....e-has-flatlined

Kansas Gov. Sam Brownback brought on Arthur Laffer as an advisor to steer his radical experiment of cutting taxes to the bone under the assumption that the cuts would simply pay for themselves through economic expansion. The results, however, have been absolutely horrific: job growth on the Missouri side of the Kansas City metropolitan area is occurring at four times the rate on the Kansas side. Education is being vastly underfunded. And perhaps most tellingly, the state collected far less money in taxes than it expected in December, even after downgrading expectations. In other words, Laffer was wrong in every single way possible.

In Wisconsin, meanwhile, Republican Gov. Scott Walker has followed a path nearly has extreme as that of Brownback, but is being forced to scale his ambitions back because the theory just isn't working:


Earlier this year, just before enacting the half-billion-dollar tax cut, Walker said it was just the beginning — that he wanted to eliminate income taxes. Now, a representative of Walker, asked about the elimination plan said the governor “has only said that he would explore other areas of tax reform.”
The state has a projected $2.2 billion deficit for the next biennium, 2015 to 2017. There’s also a transportation funding problem.

Now, not even his top allies in the House think new cuts aren’t possible.
The situation is so bad in Wisconsin that to try to balance the budget in anticipation of a possible 2016 presidential campaign, Walker is rumored to be considering selling off public assets as a stopgap measure just to make the numbers look good. The contrast with states like California, which raised taxes to help balance its budget and cover a shortfall in education, couldn't be clearer: California's revenue is surging, while tax-cutting states are figuring out how to mitigate the damage.
The senior GOP leadership aide in Wisconsin may not want to admit it, but the Laffer theory as currently understood—that tax cuts always pay for themselves—is dead. Govs. Brownback and Walker killed it simply by implementing the theory and proving its lack of success. The funny part? The whole other side of the Laffer Curve is never discussed. Supply-side theorists who believe in the Laffer theory always assume that our tax rates are on the prohibitive side of the graph, where cutting taxes will increase the total amount of revenue collected. But the other side of the graph is the one where tax rates are lower than the one that would maximize revenue.

For believers in the Laffer Curve, then, the results from Kansas and Wisconsin don't necessarily disprove the theory. Instead, perhaps Brownback and Walker were simply wrong about what side of the curve their state's tax rates were on. If they were true believers, the sound Laffer theory solution would be to raise taxes as soon as possible.

[The Average Joe]

Not surprisingly, your DailyKos article misstates what the Laffer Curve is:

 

the Laffer theory as currently understood—that tax cuts always pay for themselves—i

 

That is not the theory of the Laffer Curve. The theory is that there is a "sweet spot" for taxes where raising them or lowering them will result in decreased revenue. Not that tax cuts always pay for themselves.

 

And yes, higher taxes result in modified behavior, which results in less taxes collected.

[bordercolliefan]

Joe, if you read the last paragraph of the quoted article, you will see that the writer clearly understands that.

Problem is, Republicans always argue that we are on the side of the Laffer curve where we are taxing too much. Kansas and Wisconsin seem to show otherwise.

[The Average Joe]

Pretty easy to argue that CA taxes too much.