New York Times Admits "Higher Minimum Wage May Have Losers"

Tyler Durden's picture

The New York Times would like for you to know that, after attending the annual meeting of the American Economic Association where they sat in on multiple presentations on the economic impacts of minimum wage, they can now confirm what most of us have known for most of our adult lives, namely that basic economic supply/demand models actually work.

Apparently, the NYT was pleasantly surprised when the first presentation suggested that higher minimum wage didn't actually result in job losses, just lower hours, but then quickly realized it's basically the same thing.

At first glance, the findings were consistent with the growing body of work on the minimum wage: While the workers saw their wages rise, there was little decline in hiring. But other results suggested that the minimum wage was having large effects. Most important, the hours a given worker spent on a given job fell substantially for jobs that typically pay a low wage — say, answering customer emails.

 

Mr. Horton concluded that when forced to pay more in wages, many employers were hiring more productive workers, so that the overall amount they spent on each job changed far less than the minimum-wage increase would have suggested. The more productive workers appeared to finish similar work more quickly.

Unfortunately, the second study left a bit less to the imagination.  After studying "tens of thousands of restaurants in the San Francisco area," researchers
Michael Luca of Harvard Business School and Dara Lee Luca of Mathematica Policy Research found that many lower rated restaurants have a unique way of dealing with minimum wage hikes: they simply go out of business.

A second study presented at the conference suggests another way that employers may respond to a rising minimum wage: simply going out of business.

 

The husband-and-wife research team of Michael Luca of Harvard Business School and Dara Lee Luca of Mathematica Policy Research identified the ratings of tens of thousands of restaurants in the San Francisco area on the website Yelp and found that many poorly rated restaurants tend to go out of business after a minimum-wage increase takes effect.

Finally, confirming what we've noted multiple times (and basic common sense for that matter), Zane Tankel, an owner of several dozen Applebee’s restaurants in the New York City area, informed the startled New York Times that higher minimum wage simply improves the ROIC profile of capital investments thereby speeding up employee replacement projects....shocking.

Zane Tankel, chief executive and equity partner in a group that owns and operates several dozen Applebee’s restaurants in the New York City area, said replacing low-skilled workers with higher-skilled ones after the state’s recent minimum-wage increases is “not something that we try to do.”

 

Mr. Tankel argued that differences in the productivity of low-level workers in his industry are not very big. “It’s just a lot more money for the exact same job description,” he said. He is accelerating automation in his restaurants, including tablet devices for ordering certain items and payment, to offset the costs of the higher minimum.

With that, here are some charts illustrating where the most minimum wage workers will lose their jobs over the coming years:

Min Wage

Min Wage

 

And while California and Washington DC have already won their "Fight for $15", here's where all the other states stand in their efforts to crush low-income workers.

Min Wage

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xythras's picture

By the map, I see that we don't need to worry. Will happen only in snowflake territory.

Meanwhile in  HERO land:

Armed Civilian becomes a Hero after saving Ambushed Arizona Trooper and Killing Attacker

http://dailywesterner.com/news/2017-01-13/civilian-hero-saves-ambushed-a...

zorba THE GREEK's picture

I hope Trump will address the gold suppression issue. We need to send some bitches to the can.   If you do the crime, you should do the time.

Nemontel's picture

Trump won't address anything, the US will do everything possible to not have to return to the Gold Standard.

http://www.truthjustice.net/economy/the-u-s-empire-would-have-collapsed-...

FireBrander's picture

The problem isn't low wages, it's high prices.

When a 2 car garage sized shack/home in a bad part of town is $100,000 (in a town with a median income of $23k)...THE RENT IS TOO FUCKING HIGH!

Just wait until all of these people with $15hr minimum wage jobs discover that ~$30k a year makes them "Rich" in the eyes of the welfare state and instead of "free" medicaid, they have to pay $15,000 a year in health insurance premiums or go without coverage...whining about that in 3..2..1...

philipat's picture

Krugman NYT OpEd refuting all this in 3..2..1..His view will probably be that we just haven't increased the minimum wage by enough. If only we had done more, everything would have been good....;-)

drendebe10's picture

Stoopud fukn progressive liberal democraps are never accountable for the outcomes of their bullsht progressive liberal democrap policies. Wutta buncha imbecilic miscreants.

Bloodstock's picture

Yep, it's a fucking scam that the uneducated have no clue about. I remember back in the mid-70's. The old man set me up with a summer time union job for $11.20 I think an hour. With lower taxes I cleared $400 a week. That was damned good money in the mid-70's. Yeah it's high prices that are the problem thanks to the big shots that call the shots in which they make a killing and the rest of us get fucked. That money wouldn't get me very far now at all. 

Ranger Rick's picture

Theyz b rich now! And finding out Uncle Sugar wants some too.

A Nanny Moose's picture

This is exactly the point that these communists miss.

"Inflation is, always and everywhere, a monetary phenom" - Uncle Milt

Usually, this is the point where Communists point out the Freidman-Pinochet straw-man.

NurseRatched's picture

But, but they mean well. And that should count for something.

Byte Me's picture

Yeah, it means they are congenitally deranged and qualify for 'winnowing.'

VWAndy's picture

 Maybe they ran the idea by payroll?

MASTER OF UNIVERSE's picture

A wise Jew from Bar Elan University in Israel once told me to never work for wages, Baron Rothschild.

 

 

GRDguy's picture

So how do jewish people start their careers?

MASTER OF UNIVERSE's picture

They graduate university with careers obtained via connections & networks. Most people find work through connections rather than classified ads and a job search process.

Kyddyl's picture

So now all we old farts who got shafted on the Social Security COLA and rising cost of Medicare will have to take those jobs...just to make up for the income loss. You want that burger in about 45 minutes? What was I doing? Aw shit...

Cabreado's picture

Things getting a little feisty, eh NYT?

Desperately looking for a comfy place to land, I suppose.

rudyspeaks's picture

I love the AynRand Gloating! See! You stupid liberals all thought Capitalism can be made to work for the average person. But every time you try to improve people's lives...the System will step in and screw them again! Well, you're Right! I guess any humane person can only detest Capitalism...You've sure convinced Me!  POINT: If we can't afford to pay our workers a minimum wage that meets their needs, then they are, essentially, Slaves. Or, as with Walmart, subsidized by OTHER modest income workers. This system is evil.

January Jones's picture

Liberals stunned!  1+1-1 still equals 1

They'll just cross their fingers, make a wish and hope the same arithmetic will be better tomorrow and everything will be better.

RightLineBacker's picture

Unicorn logic is magical.

In a make believe world.

g'kar's picture

These minimum wage workers will probably still be receiving free shit even after the raise.

Shed Boy's picture

Yes, yes they will. Their hours will be cut down to where their take home pay will be the same. They will still be considered low income and eligible for assitance. They might make $15 an hour, but only work 10 hours a week.

Wantoknow's picture

Why is everyone running to defend the lower minimum wage?  Are workers being shafted?  Of course they are, but so what?  If some workers, say, double their wage and others lose their jobs then perhaps it is a wash.  Consider the total wage bill.  If X workers are paid $7.50 an hour to do the minimum wage job and after the wage  boost they are paid $15.00 per hour but X/2 of the workers are fired the total wage bill is the same.  Treated as a form of toothpaste without personal differentiation minimum wage workers are still paid the same overall.  Some of them are twice as better off as before.

The participation rate has been dropping for years.  What else is new?  Lots of people out there would like to have a job but can't find one.  The X/2 without a job can and will join them sooner or later.  It changes very little.

Sure, some businesses will go out of business because of inefficiency but that is just the same as unemployment for workers.  It happens all the time.  Why care?  This is not a special issue of any importance as such.

I see crocodile tears being spilt here.  The real issue is the power relationships involved.  The state is exercising its authority against business to force a particular outcome.  It certainly is not the outcome advertised of course but so what again.  The issue is in some people's self interest.  More competant workers gain, better run businesses gain with the closure of competitors, robot manufacturers gain.  Less competant workers lose.  What is so strange or special about that?  This is an income distribution shift with losers and winners.

There are real benefits to this.  Some are back handed.  Automation is promoted and I do think the future of the world lies with robotic production which is in principle infinitely expandable.  Robots don't breathe so they can be sent to other planets to produce and the goods can be shipped back.  People can in the long run live totally idle lives (if they wish) on the backs of robot labor.  Then the employment problem will be permanently solved.

In one of the previous comments there is the post: "A wise Jew from Bar Elan University in Israel once told me to never work for wages, Baron Rothschild."

 So true.  Higher minimum wages are the way to see that it happens.  The work force will be priced out of the market.  Robots will take over.  The population will eventually have to rebel to secure an income. One way or another they will have to join the struggle to possess capital.  Privately, for some, and through state action by others.  

Essentially we are all capitalists now.  The struggle for power over the means of production will be rejoined with a vengeance.  The spirit of this fight will no longer be sapped through the offer of employment for it cannot be.

Anyone for a $30 minimum wage?

dchang0's picture

Half the workers for some jobs is not a good thing.

I've mentioned this in responses to other comments: my local grocery store got rid of its self-check-out lanes to go back to (union) human check-out stations.

But the store management purposefully limits the number of humans working the check-out lanes. The result is that the lines of shoppers waiting to check-out are much longer. Just today I went in there to buy a sandwich for lunch, and they had 1 checkout lane and 1 express lane open for a store full of customers. They used to have 4 self-check-out lanes. That's half the bandwidth (and slower throughput, because the human workers are slower than self-check-out).

Your example is the same: if a fast-food restaurant (one that has very "bursty" traffic--a ton of customers in a short amount of time, then no customers) cut its scheduled workforce in half, it dramatically limits their throughput, which then limits the store's revenue. The store might need to hire 10 workers to properly handle the lunch rush without customers complaining but can't afford to pay 10 workers to stand around for 3-7 hours after the lunch rush doing nothing but waiting for the dinner rush. The store really only needs 10 workers to come in for 1 hour at lunch and 1 hour at dinner and 2 workers for the hours in between.

Raise the minimum wage to $15/hr., and that same fast-food restaurant will certainly respond by cutting back on the number of workers at lunch and dinner, angering customers, losing some revenue, but saving enough on wages to make up for the lost revenue. They can't dramatically raise prices to pass the wages on, so the customers will have to suffer.

whatamaroon's picture

The solution is to work for the company that makes robots.

drendebe10's picture

In Japan, many small restaurants have no wait people. You buy your meal selection from a vending machine that spits out a ticket that you give to the cook. The cook then gives u ur food.   Another restaurant you make ypur menu choices on a touch screen and the food is delivered on a model train.  

BustainMovealota's picture

I once had a job where they paid me $1.50/hr and all I could steal.  A month later they raised my wage to $16.00/hr but I had to stop stealing.

Bloodstock's picture

If not for NAFTA and other bullshit free trade agreements then our millions of lost good paying jobs would still be here. Our economy would be doing well and those minumum wage jobs that were meant for high school kids and peeps seeking a second income wouldn't be an issue. A better economy through basic supply and demand would have provided a better wage if needed. Pretty fucking simple but true.

Shed Boy's picture

Yup. NAFTA was the kiss of death for America. The day that first factory slipped over the border to Mexico, that was the beginning of the end.

Mini-Me's picture

The minimum wage is $0.  It's called unemployment.

konadog's picture

The hypocrite libtards love to prattle about how great the minimum wage is - that is, except when it affects them. Only then can they suddenly see that it's a problem. March 2015 headline: "Ed Asner Tells Union Actors: Just Say No To Equity’s Minimum-Wage Plan".  In other words, it's ok if entry level burger flippers lose their jobs because the skill doesn't support the price, but it's not ok if entry level actors lose their jobs because the skill doesn't support the price.  Actors therefore deserve an exemption from the law they so fervently lobbied to enact.  Just like Michael Moore - I should have 5 armed body guards to protect me, but you shouldn't be allowed to have a gun. Fascist libtard logic.

NoPension's picture

Don't bring logic to an argument with a libtard.

bardot63's picture

There are too many actors now.  To hell with them.  Get a real job.

JailBanksters's picture

The biggest Increase is 1 dollar 95 cents per hour, 78 dollars in a 40 hour week, WOW

We live in a World governed by Corporations where the CEO are getting increases of 10 Million dollars a year.

 

sheikurbootie's picture

Bernie fan losers are just too easy to spot. 

Minimum wage should be a free market problem.  Look up the term  laissez faire.

We are a capitalist nation.  If you want more money make yourself more valuable and business will be glad to pay more.  Going to school majoring in underwater basketweaving, psycology, poly sci, etc. does not make you more valuable. 

Too many parents have failed their children in America. 

Dirtnapper's picture

Raising minimum wage is there to hide the real problem, the dollar isn't worth a damn anymore.  Thanks Federal Reserve, for nothing!

Mediocritas's picture

If workers are in short supply then wages rise, simple. You don't have to mandate a minimum wage at all.

Now that's the problem isn't it? Workers aren't in short supply at all because globalisation has opened the US labor market to foreign competition. Either companies can legally import cheaper labour on work visas, the government can turn a blind eye to illegal immigrants (who are cheaper labor), or companies can move their operations to where the cheaper labor pools are (typically China).

It's totally pointless to mandate a higher minimum wage whilst the above possibilities exist. Companies will simply respond by moving more jobs away from Americans and to the cheaper labor pools.

The solution is so very simple. Trump knows what it is but it remains to be seen whether or not he'll actually act on his rhetoric. Bring production and jobs back to America, boot out illegal immigrants and the minimum wage will start to take care of itself.

It doesn't have to be a total exclusion of foreign labor pools. As I've said in the past, foreign products and services that are made in a way to evade local US standards (eg, labor protection, environmental protection, occupational health and safety, quality control, etc), should be hit with a big tariff so that local production that is compliant (and is more expensive as a result), can actually compete. Instead of pulling US workers down to shitty foreign standards, force foreign producers to lift their standards up to US levels. 

Keep winding up the tariffs until the Current Account stops bleeding out.

lasvegaspersona's picture

ah I finally understand the fuzzy funnie teasers...we are supposed to click through to the article to see if it is presented in readable form in the piece.

Fool me once....

bardot63's picture

You''ll rarely find a piece on ZH that gets to the point in less than 8,000 words.

Scrubbing Bubblez's picture
Scrubbing Bubblez (not verified) bardot63 Jan 13, 2017 3:32 AM

So go read the Huffington Post, you dingleberry!

sheikurbootie's picture

The NYT is actually reporting better in the last week or two.  A return to honest reporting?  Probably not, but it would be nice.

drendebe10's picture

Honest NYT reporting?  Fat fukn chance

roddy6667's picture

Wait until these snowflakes discover that the real minimum wage is zero. Epic whining to follow.

orangegeek's picture

Yep - pushes more of the masses onto a lifetime of "government handouts in place of work" due to automation - the ultimate of socialist utopia.

RightLineBacker's picture

No sweat. No problem. No worry.

This minimum wage BS is only occurring in the Blue (retarded) States.

They are going bankrupt anyway.

We Red State Deplorables are, and will do, just fine.

Great times lie ahead.

MAGA!

Expat's picture

LOL.  First of all, not true.  Second of all, y'all are pregnant teen meth users, so that explains why you minimum wage doesn't affect you.  You're all on welfare.  Check your stats!

roddy6667's picture

You do realize that the Red States take more money from Washington DC than they send in, don't you? The Blue States are supporting you. You can't pay your employees and fix your roads without handouts from those "bankrupt" Blue States. You are all on welfare.

Except Texas. But that is only because they can pump money right out of the ground, not because of any skills in money management.