[quote=CA renter][quote=EconProf]We economists are largely in agreement about raising the minimum wage: it will kill jobs.
The recently proposed mild increase in the federal minimum wage would cost about a half-million jobs, according to federal officials.
But the huge jump to $13.09 for San Diego only would have a far more powerful impact on employment within our city limits.[/quote]
Probably getting the 500,000 figure from the CBO, but you’re omitting some things, too:
———-
Effects of the $10.10 Option on Employment and
Income.
Once fully implemented in the second half of
2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects. As with any such estimates, however, the actual losses could be smaller or larger; in CBO’s assessment, there is
about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1.0 million workers (see Ta b l e 1 ).
Many more low-wage workers would see an increase in their earnings. Of those workers who will earn up to $10.10 under current law, most—about 16.5 million, according to CBO’s estimates—would have higher earnings during an average week in the second half of 2016 if the $10.10 option was implemented.1 Some of the people earning slightly more than $10.10 would also have higher earnings under that option, for reasons discussed below. Further, a few higher-wage workers would owe their jobs and increased earnings to the heightened demand for goods and services that would result from the minimum-wage increase.
Thank you, CAR, for buttressing my point about a half-million jobs lost from a higher federal minimum wage by quoting the actual CBO language. But I don’t see it as a net positive.
First, yes, they say the range of job loss could be well under a half-million to over a million. But then they settled on a half-million jobs lost. Where is the positive in that?
Second, yes, some current workers now paid above the minimum wage will get a wage bump. And some of them will also lose their jobs–they are part of the half-million.
It boils down to employers acting rationally and wanting to maximize their profits. If you can put yourself in employers’ shoes, they balance their inputs like capital vs labor in order to be the most efficient. If the government suddenly dictates that they pay more for one of those, they will use less of it wherever possible. And they have the incentive to find all sorts of ingenious ways to do so: automate where possible (e.g. self-checkout counters), hiring two skilled workers to do the work of three unskilled workers, moving their business to a nearby suburb that did not raise the minimum wage to $13.09…the list is endless. And yes, none of this will happen immediately. But over time, the damage will be done.
The minimum wage is one of those emotion-laden terms that sounds good on the surface but underneath does real long term damage. Politicians act accordingly because they can count on the public not digging deep into the real effects. A century and a half ago a french economist, Bastiat, put it well: the seen vs the unseen. We pass laws according to our emotions and gut feelings, without examining the many secondary effects.
