"We Got Some Folks Fired": Minimum Wage Is Going Up In These 18 States Today

Minimum wage workers in 18 states will receive a pay raise today, not necessarily because they exhibited exemplary work ethic resulting in a promotion or merit-based salary boost, but because politicians in their states randomly decided that their services are worth more money today than they were yesterday.  

While the efforts of our ill-informed ruling class in state capitols all around the country to artificially raise the cost of labor will result in pay raises for some, as we discuss frequently here it will also result in job losses for others. 

Be that as it may, here are the 18 states where hundreds or thousands of minimum wage workers are about to get fired just because it's now officially 2018...Happy New Year (table courtesy of Forbes):

Min Wage Hikes

Of course, anyone who has a basic understanding of elementary-level arithmetic and some common sense can easily explain why raising the minimum wage is bad for employment levels.  In a nutshell, higher labor costs simply improve the payback profile of capital investments in technology thus accelerating job losses.

In fact, we recently shared the following illustrative example of how the return profile of a $1mm capital investment in California would change in light of a minimum wage hike from $10 per hour to $15.  At $10 per hour and a 10-year payback, employers may be reluctant to invest in new technology.  But, at $15 per hour and a 6-years payback, that investment become a no-brainer.

Payback Example 

To put the potential impact of the 2018 minimum wage hikes into perspective, a study from the American Action Forum (AAF) recently found that each 10% increase in wages results in a 0.3% - 0.5% decline in the net job growth rate. 

While proposals to raise the minimum wage are well intended, it is important to consider the negative labor market consequences. Meer & West (2015) find that raising the minimum wage reduces job creation. Specifically, they find that a 10 percent increase in the real minimum wage is associated with a 0.3 to 0.5 percentage-point decline in the net job growth rate. As a result, three years later employment becomes 0.7 percent lower than it would have been absent the minimum wage increase.

 

While the Meer & West (2015) findings may not seem very problematic, when taking into account the magnitude of the minimum wage increases and the number of states implementing new laws, the negative labor market consequences add up. Let’s first examine the minimum wage hikes of 2017 in isolation, without considering previous or future minimum wage increases under the new state laws.

Minimum Wage

Unfortunately, while these concepts are somewhat simplistic for most us, they have confounded left-leaning economists and politicians pretty much since the beginning of time...all which results in the following conclusion:

Min Wage

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Comments

karenm Mon, 01/01/2018 - 17:16 Permalink

Standard knowledge in economics: Raise minimum wage in a currently balanced system, means guaranteed layoffs. Some of you think the govt doesn't know this. 

 

LOL! Yeah, of course they know it. They're not nearly as stupid as you are, or as you think they are. 

A Sentinel Four Star Mon, 01/01/2018 - 17:37 Permalink

The ignorance of political “leaders” is dangerous and easily exploited by those who wish to harm the USA.

Central problem: lack of economic education. A fundamental understanding of microeconomics is foundational for understanding business decisions. If they had the bearest grounding in even Keynesian macroeconomics would make these stupid ideas impossible without willfully wishing harm on the poorer 90%.

In reply to by Four Star

Beam Me Up Scotty Jibe Ho Mon, 01/01/2018 - 18:20 Permalink

The minimum wage debate is nothing more than a huge waste of time.  If $15 is good, why not $20, or $50 or $100??  Answer??  If you work a minimum wage job, you will live a minimum wage lifestyle.  Prices reset to reflect the new minimum wage.  If you are a 40 year old working at McDonalds for minimum wage, thats YOUR problem, not mine.

In reply to by Jibe Ho

Endgame Napoleon Beam Me Up Scotty Mon, 01/01/2018 - 19:34 Permalink

The [minimum] wage levels in that list are right at or several dollars per hour lower than the typical pay in the following  non-food services / non-cashier jobs: 

  • Multi-licensed insurance agent and/or licensed CSRs ~ some of whom likewise have bachelor’s degrees and some of whom lack the state-required licenses. Many unlicensed moms service and sell the product, anyway, due to employers who prefer a low-wage workforce with spousal income or access to monthly welfare and refundable child tax credits, as their unearned income covers their major household bills, making it easier for them to accept the low pay, which is between $9 and $12 per hour. Many men work these jobs, too, mostly the straight commission pyramid-style positions, with twice-as-high SS tax, multiple expenses and zero benefits; 
  • Insurance underwriters ~ the vast majority of whom make between $9 and $11 per hour. Unlike the licensed employees, they have benefits. These low-wage jobs are staffed with nearly 100% moms, specifically moms with unearned income from spouses, ex spouses or welfare and child-tax-credit welfare, covering their major household bills; 
  • Credit processors ~ a $10-per-hour job, which, like insurance, involves extensive handling of extremely sensitive information, right down to the last bank transaction of the wealthiest people in town. This is a job, like underwriting, where none of the mom-gang employees that I saw had college degrees or licenses, but some of the moms had worked in real estate offices; 

There are many other corporate office jobs in this low, low, retail cashier-low wage category, like medical billing and coding, for instance. My state has a lot of medical industry back-office work, almost all of which is done by mom-gang workers, making what is the minimum wage on that list.

Do the mom-gang employees work hard? 

Well, umm, employers do not prefer hard workers. In all but a few of the places where I worked, moms were allowed to take whole mornings, whole afternoons, whole days and whole weeks off from work in excess of their pregnancy leaves and PTO. 

So, no, most of the moms they keep in these jobs do not work hard, nor do mom managers encourage it. They are busy planning the next baby-mommy-look-alike-bulletin-board-decorating contest or Halloween dress-up day.

Most of the managers, too, who are invariably parents, take off a lot of time for kids, so the argument that people who do not work hard should be paid little should apply across the board. 

Not only does hard work not pay in most of these jobs; it often hurts you. In sales jobs, the managers churn the people who do all the dogged work to keep their numbers up, bumping up their bonuses, and then replacing them with another dime-a-dozen quota meeter. They keep the fellow babyvacationers.

Most workplaces are back-watching cliques, where high sales generation and account-retention backfire on you. 

It’ll always be this way. Because, congress just keeps piling unearned income on working moms who stay below the earned-income limit for welfare by not working hard. 

Even worse, they rig the workforce through the tax code, so when you work your can off, coming to work every day and staying all day, so that you meet the quotas every month, you make less than the mom in the next cubicle who is not in her cubicle half the time, citing baby, and who is posting baby pics on FB when at work.

Thanks to the “progressive” tax code, her checks are bigger than yours. Your paltry tax return will not cover one bill, but, in addition to her subsidized rent and groceries, her $6,444 maximum, refundable child tax credit sure does fund a lot of trips to copulate with boyfriends, while rent takes more than half of your pay. 

In reply to by Beam Me Up Scotty

Harry Dong Beam Me Up Scotty Mon, 01/01/2018 - 20:25 Permalink

Min wage should be a enough to take care of you. Try pulling yourself up by the bootstraps and tell me this isn't a problem. No problem for you my silver spoon imbecile. Problem for others starting out, yes..yes it is.

Min wage at Australia McDonald's? Or "Maccas"  Is like 18/hr. Are they shuttering stores? No, in fact they are a bright spot in McDonald's worldwide growth. So I can safely say you don't know what you are talking about. 

Teen at home? Then set a lower min wage for them. How about 1/2 of min wage? I'd think that's fair.

 

In reply to by Beam Me Up Scotty

yarpos Harry Dong Mon, 01/01/2018 - 20:58 Permalink

You are really comparing apples and oranges by citing overseas examples.   The minimum wage is just one setting.  Like a poster upthread mentioned ,  when a system is in balance then changing one parameter can have unintended effects.

You mention Australia's high minimum wage but dont mention that people in Australia also bleat about the "Australia Tax".  Their way of complaining about why things are more expensive in Australia than a comparable item in say the US.  The local high wage base is a good chunk of that but people prefer to think they are being "ripped orf!"

In reply to by Harry Dong

JesseL Harry Dong Mon, 01/01/2018 - 21:26 Permalink

Minimum wage in the past has always been targeted at teens with part time jobs.  Only recently have the uneducated morons been pushing for higher wage to raise a family of six.  It they double the minimum wage you demean the middle tier employees who actually have some marketable skill and you will have to raise their wages proportionally.

And that is true as you move up the income tiers...Raises for everyone and companies eventually start culling the herd and firing their marginal employees.  

In reply to by Harry Dong

renaissance2008 Beam Me Up Scotty Mon, 01/01/2018 - 22:38 Permalink

Those minimum wage jobs are subsidized by you the taxpayer. The money those corporations save by not paying a livable wage goes straight into their coffers. You end up picking the tab through your taxes  to pay for all the social wellfare that those workers qualify for( section 8, medicaid, food stamps...). Those compnies could pay more, they just don't have to, thanks to you and me.

The Walton family wishes you a mery christmas

In reply to by Beam Me Up Scotty

SheHunter renaissance2008 Tue, 01/02/2018 - 00:36 Permalink

I get damn tired of all the self righteous jargon. The 49 year old woman I know who puts in 30 hours a week at my small town liquor store is a do-er.  She'd work twice as many hours if the owner would OK it.  When it is quiet she is cleaning shelves and arranging bottles and doing whatever she can to make the store look brighter and better.  She makes $10 an hour.  She works her ass off, is friendly and professional.  She deserves more than 10 an hour.  She has no health insurance and needs a dentist.  She is where she is in life because those were the cards dealt.  She is no less than any of you self righteous posters on this damn blog. 

In reply to by renaissance2008

renaissance2008 Beam Me Up Scotty Mon, 01/01/2018 - 23:11 Permalink

Those minimum wage jobs are subsidized by you the taxpayer. The money that those corporations save by not paying a livable wage goes directly in their coffers. All the social benefits that they qualify for ( section 8, medicaid, food stamps..), YOU end up picking up the tab through your taxes. Those companies could pay more, they just don't have to, thanks to YOU and me.

It really is your problem !

Best regards,

The Walton family 

In reply to by Beam Me Up Scotty

Lordflin A Sentinel Mon, 01/01/2018 - 18:33 Permalink

Seriously folks...

We are concerned about the consequences of raising the wages of the serfs a few pennies? And one of the arguments is that it will be cheaper to replace them with machines??

I suppose the machines will purchase the products as well...

My God folks...  when did the point to life cease to be people and somehow get replaced with this notion of production? The point of production is that it serves people, not the other way around.

There is a very grim problem here... doesn't get talked about much... but the truth is that the whole point to everything is getting lost. People cannot exist without purpose. Once upon a time this purpose was thought to be spiritual growth... overtime we grew as spiritual beings. The reward was wisdom. Wisdom was the gift that elder generations bestowed on their youth.

Now what are we living for? The lack of production is not what is killing the human race.

Well... hardly matters anyway, as this is the year for another world war, I think. A worthy end to so much production...

And Happy New Year! Sorry for the moribund post... I will get happier as the year progresses... I promise...

 

 

In reply to by A Sentinel

RedBaron616 Lordflin Mon, 01/01/2018 - 19:02 Permalink

You are supposed to progress in your work career, not flip burgers for the rest of your life. Not to mention, when a meal at McDonald's costs $10 or more, there will less people willing to pay it. Then, guess what? Your serfs are now unemployed. Economics is somehow beyond your imagination.

In reply to by Lordflin

SheHunter RedBaron616 Tue, 01/02/2018 - 00:43 Permalink

Screw you.  In your next life I wish you land a Mcdonald's job.  The kid I met in a WY Mcdonald's is proud tat at 22 he was promoted to manager.  He works his ass off to keep the place clean and friendly.  His grandma works across the road at a walmart.  Each day he makes sure she comes over at lunchtime and he feeds her a warm meal.  He is America.  He is working hard and doing the best he can with the hand he was dealt in a rural Wyoming town.  Screw all of you assholes on here who think you are better than a kid working a full time job and feeling pride in taking care of his grandmother.

In reply to by RedBaron616

Endgame Napoleon Lordflin Mon, 01/01/2018 - 20:08 Permalink

No, I see your point. Not only will automation kill off its customer base, but it also leaves much of the human race idle and bereft of meaningful work. Idleness has bad historical outcomes in cultures.

But you missed my point: childrearing is work.

In the era of fake feminism, government has come up with elaborate welfare structures, tax-welfare systems and workplace-absenteeism mandates to make sure that moms can work part time, dominating many job categories with this low-productivity arrangement—both at the low end of the job spectrum and the high end.

At the top, assortative mates concentrate wealth in fewer households and cut the number of middle class households in half, and at the bottom, wages are suppressed by a government that pays the rent and groceries of moms who stay below the earned-income limit for welfare, adding a refundable child tax credit up to $6,444 to reward part-time work.

Congress likewise accommodates the married moms with spousal income in working part time via child tax credits.

All the while, the meaningful work of rearing their children is done by $9-per-hour daycare workers, babysitters with NannyCams or grandparents.

We do not have the jobs for it, especially with automation, and this arrangement is not producing high productivity in the USA.

Maybe, it is because most of those moms would be engaged in more meaningful work if they raised their own children.

It would also free up jobs for people who have no unearned income for womb productivity from spouses or government.

The robots are likely to force this issue of excess human workers into the debate, but they will fight it tooth and nail. Employers like a welfare-boosted and frequently absentee workforce that they can pay beans. 

In reply to by Lordflin

Lordflin Endgame Napoleon Tue, 01/02/2018 - 00:03 Permalink

Child rearing is the greatest of all human occupation. That it has been foisted off on 9$ an hour day care workers is symptomatic of a diseased culture. It is indicative of such a culture, one that values stuff over people, that children have been reduced to the level of a parasitic growth.

I have a friend, a psychologist, who is about to retire, and he asked me 'what is it about the world that leaves me feeling so sad.' And I said to him, the world was a better place when we came into it than it is now. It leaves one questioning ones life's work. No decent man wants to leave the world a worse place than he found it. And he said, your right... that's it.

I am glad that I am getting old. I don't want to see the end result of this most recent human experiment. The Bible says it best, it most generally does... 'Man cannot live on bread alone, but by every word that proceeds from the mouth of God. In other words, without a moral foundation man will destroy himself. 

You are correct that this system is broken from top to bottom. It is symptomatic of a generation that has lost all direction right at the moment that it is faced with its trial. It should be an interesting year...

In reply to by Endgame Napoleon

Peanut Butter … Endgame Napoleon Mon, 01/01/2018 - 20:16 Permalink

The best ' incentives to discourage the creation of so many human workers' is to incentive men to have vasectomy so that any sexual activity that they have won't result in more brats being born to this world. 

and of course welfare mothers need to have the same thing if they want to keep their welfare kicking. 

Sounds like you need to be the first in line for vasectomy. 

 

In reply to by Endgame Napoleon

bkboy Lordflin Mon, 01/01/2018 - 20:17 Permalink

Agreed, but even if you accept the premise that production should be the main objective, it is interesting to see so few people here apply the same "basic high school math" to the effect of interest rates on capital-dependent wages.

In the author's example, a 50% increase in wages lowers the payback period of a the hypothetical capital investment from 10 to 6 years.  Well, even though nobody is suggesting such a dramatic raise, I will let that go.  Instead, let's substitute a 50% drop in interest rates for the 50% rise in wages.  If the business in the author's example borrows the $1 million for the equipment at 10%, the payback period with $10/hr wages is not 10 years, it is more like 14.5 years.  Drop interest rates by 50% (from 10% to 5%) and the payback period drops to about 12 years, or a savings of 2.5 years.  If the author assumes that the owner will elect to buy the equipment for a 3 year difference in the payback period, then I think it is safe to assume that the jobs will be lost from 50% lower interst rates even if wages remain the same.

Gee, and that is exactly what we have been witnessing for these many years.  Lower interest rates increase the real return on capital, accelerate job loses, increase workers' dependency on government and debt, and hasten the day when all economic activity useful to the governing classes will no longer be dependent on keeping all citizens alive.  Indeed, from the evidence of rising opiod deaths, I suggest that day has already arrived.

In reply to by Lordflin

Singelguy Lordflin Mon, 01/01/2018 - 20:29 Permalink

Unfortunately corporate management is very short sighted. They only look out to their next bonus check which is 12 months from now. The objective is to increase sales or cut costs, whichever leads to a higher bottom line and a bigger bonus check. Machine production is just one element. With all the current racist, mysoginist, sexual harrassment BS going on, making the decision to get rid of people and replace them with machines or computers becomes even easier. That solves a lot of problems in the short run, but in the long run, you are correct. Fewer workers mean lower incomes, and less purchasing power and you soon reach the point where there are very few customers to buy anything. That is when the whole system collapses. 

In reply to by Lordflin

Endgame Napoleon Umh Mon, 01/01/2018 - 20:42 Permalink

The US also has too many crony parents in high-paying positions who take a ton of babyvacations—lengthy and frequent ones—just like the babyvacations taken by their 98% mom-gang staffs.

The US also has too many high-paying jobs that involve finely honed “skills,” like planning and orchestrating the following workplace mom-bonding rituals: 

  • Family Day Picnics,
  • Halloween Dress-Up Days,
  • Spin-the-Wheel Contests, 
  • Tacky Christmas Sweater Contests,
  • Baby-Mommy-Look-Alike-Bulletin-Board-Decorating Contest 
  • Adult Cubicle Easter Egg Hunts,
  • Bring Daughter to Work Days,
  • Bring Son to Work Days,
  • Bring Baby to Work Days,
  • Movie Days
  • Bowling Days 
  • Potluck Lunches With Soft-Porn Film (government job)   

This array of often kindergarten-style parties at work are meant to keep the non quota meeting mom-gang staff satisfied with their low wages, while government makes up the difference between the cost of living and wages for the moms by providing  those who lack spousal income subsidized rent, EBT groceries and child tax credits up to $6,444.

Of course, after years of refining their much-high-level skills (see above), the highly paid momma managers do have the arduous task of planning entertainment for fellow momma managers who attend conventions in fancy hotels. It does take many years of training to outdo last year’s entertainment with 

Chippendale dancers, rather than clowns....

Another one of the hard tasks that sets the highly paid apart is the merciless churning of the few people who come to work every day, stay all day and meet the sales generation and account-retention numbers every month so these crony-parent managers  can enjoy their bonuses. 

It does take a lot of imagination to come up with justifications for doing this, while retaining the back-watching moms who take off whole mornings, whole afternoons, whole days and whole weeks beyond pregnancy leaves and PTO. Because, these moms are not usually meeting their quotas, not to mention the fact that they leave work at times when phones are ringing off the hook with PAYING customers, saying it is for kids. 

But they have unearned income for womb productivity from spouses, ex spouses or welfare and child tax credits. They have “somethin’ comin’ in” to augment the low pay, as one of those highly paid hiring managers explained to me, a childless woman who needed for earned income ONLY to cover rent that absorbed half of the wages. 

“Skills.” 

Ya. 

It depends on the industry. If you mean medical people, programmers and other hardcore professions, it is one thing. Skills are not the reason for the pay differential in many industries, NOR is hard work unless sex and reproduction is the work you are talking about, along with frequent absenteeism for kids and avid participation in the baby-mommy-look-alike-bulletin-board-decorating contest.

 

In reply to by Umh

Refuse-Resist Four Star Tue, 01/02/2018 - 07:12 Permalink

When the 'prevailing wage' in much of the US won't pay your health insurance then there have to be other options.

Bubble dwellers advising those outside doesn't go over well.

Prevailing wage hereabouts is 9 per hour for those not in healthcare or government jobs.

If you're not on gov assistance (ie White male) then you can't provide shit with that. So you go to welding school or HVAC school. Now you can make a whopping 30k per year if you work overtime. 

Thank you immigration. Thank you free trade. And thank you non stop deficit spending/money printing for creating a really shitty bed for most of us to lie in .

 

In reply to by Four Star

curbjob Stuck on Zero Mon, 01/01/2018 - 17:27 Permalink

"I know a lot of people who have employees who are lazy and useless but who have never gotten around to firing them because it's a hard thing to do. Now they'll have no excuse."

 

Really ? 

As an employer, I think anyone who considers  firing someone who is lazy and useless, a "hard thing", shouldn't be in business for themselves.

 

In reply to by Stuck on Zero