Minimum Wages Might Mean Fewer Benefits, So Let's Not #Fightfor15

Authored by Art Carden via Forbes.com,

A recent working paper from the National Bureau of Economic Research by the economists Jeffrey Clemens, Lisa B. Kahn, and Jonathan Meer should make us pause and question the wisdom of higher minimum wages. The economists explore how minimum wages affect the probability of employer-provided health coverage and find that a chunk of the increased earnings for workers who get higher wages will be offset by a reduction in employer-provided health coverage.

There are a lot of ways minimum wages can hurt the people they’re supposed to help. By raising the price of something in a competitive market, people will demand less of it. And while there is some mixed evidence, it does appear to be the case that minimum wages reduce employment.

In the simplest versions of the labor market, we assume that workers work for one thing and one thing only: wages. We know this isn’t strictly true, but it’s a good enough approximation that brings us some important insights into how labor markets work.

Of course, there’s a lot more to a job than wages. People want work that is meaningful or enjoyable. They might especially value safety, comfort, or flexibility. People can also get a lot of non-wage benefits like health coverage, scholarship opportunities, and paid vacation. Workers can (and do) “buy” these perks by accepting lower wages than they would require if the job weren’t as pleasant, meaningful, or safe or if the fringe benefits weren’t as good.

In short, workers don’t live on wages alone, and minimum wages might not change what workers get paid but rather how they get paid. Minimum wages mandate that cash wages take up a bigger part of employee compensation.

The mandated higher wages won’t be a free lunch. Consider someone who earns $12 per hour in total compensation but only $8 per hour in wages (the rest is things like health benefits and things like pleasantness of the job, safety of the workplace, flexibility, and so on). A minimum wage of $10 per hour doesn’t cost her her job, but it changes how she is compensated: instead of $8 in cash wages and $4 in benefits, she gets $10 in cash wages and $2 in benefits.

The effect doesn’t show up in fewer hours worked or a lost job, but she is worse off. It goes in other directions, too: if she is required to take part of her compensation in health insurance, she then gets lower wages or adjustment on some other margin.

Clemens, Kahn, and Meer are limited by available data, so they can’t measure everything comprehensively. They narrow their focus to the relationship between minimum wages and employer-provided health coverage and find that for Very Low wage workers (e.g. food service), about 9% of increase in earnings due to a $1 per hour increase in the minimum wage is offset by the lower probability of employer-provided health coverage. For Low Wage workers (e.g. retail sales), its 16%. For Modest Wage workers ( clerks and food service supervisors), it’s 57%—which is unsurprising since workers with higher wages get a smaller bump from minimum wage increases.

Henry Hazlitt, author of Economics in one Lesson, wrote that

“The art of economics consists in not merely looking at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”

In the case of the minimum wage, the art of economics also consists in identifying all of the important effects and not just those that are most politically salient. In this case, we would do well to try to measure all of the important effects on things like insurance coverage, job quality, fringe benefits, schedule flexibility, and so on before we decide that it’s wise to “#FightFor15.”

Tags

Comments

Stu Elsample ???ö? Mon, 06/18/2018 - 19:35 Permalink

...they regulate wages while they regulate everything else to make it all cost more. Regulations will only hurt businesses, their employees, and consumers..

The people that bitch for a $15 min. wage have no clue about basic economics.

 

In reply to by ???ö?

Beam Me Up Scotty Stu Elsample Mon, 06/18/2018 - 19:40 Permalink

Here's how it works:

It doesn't matter if the minimum wage is $1, $5, $15, $100, or $5000.  Prices will CLIMB to reflect that wage.  IN ONE SENTENCE:  IF YOU WORK A MINIMUM WAGE JOB, YOU WILL LIVE A MINIMUM WAGE LIFESTYLE!!

So all of you morons(politicians) sitting around desks talking about it day after day wasting time, can go home.  Politicians are part of the welfare class---they like to feed the welfare class, because it keeps their paycheck coming in the mail every month too.  Fire them all!!

In reply to by Stu Elsample

brushhog Al Gophilia Mon, 06/18/2018 - 20:32 Permalink

Think about this; the average income in 1920 was about 3k per year or 57 dollars a week. Gold was 20 dollars per ounce, so the weekly average wage for a worker was the equivalent of 3 ounces of gold per week. Gold has maintained it's purchasing power and what you could buy with an ounce of gold then, pretty much matches what it can buy now. So the average employee wuld have to be paid about 3,600 dollars per week or about 187, 000 dollars to have the same purchasing power.

https://www.irs.gov/pub/irs-soi/20soirepar.pdf

In reply to by Al Gophilia

dirty fingernails Stu Elsample Mon, 06/18/2018 - 19:59 Permalink

Bullshit. God forbid the tightwad employers who would pay you in pig shit and stale bread sandwiches if they could actually pay a living wage. Instead we get Republican pricks in DC who have complained for decades that the poor are overpaid and then agree with the Dems to give themselves a raise. The push for a higher minimum wage is because the gov has been lying their asses off about inflation for 46 years. If employers had kept wages in line with inflation, and the feds had been honest about inflation, then it would balance out. Doing it now just prices in a big jump in costs because no employer wants to take home less than they already do amd many can't afford to. Blame this shit on the Feds and the employers. This is typical conservative boilerplate thinking: blame the victim. Just so I'm not beating up on only the rightarded snowflakes, the leftards blame everyone excpet themselves. Peas in a pod.

In reply to by Stu Elsample

Billy the Poet dirty fingernails Mon, 06/18/2018 - 20:22 Permalink

Businesses pay for what a service is worth just as you do. You can't pay too little because those who trade value for value will not take less for their labor than the value they provide. For example, you can't get someone to wash your windows for half the going rate because the job is worth more than that.

You could pay too much for a service if you chose to do so by giving someone double the going rate to wash your windows but I doubt that you would. Is it any surprise that businesses are no more likely than you are to willingly overpay for a service?

In reply to by dirty fingernails

dirty fingernails Billy the Poet Mon, 06/18/2018 - 20:52 Permalink

Yep, that's it. You got me. The industrial revolution never happened. Robber barons are a myth. Coal miners fought and dies because life was too good.

https://en.m.wikipedia.org/wiki/Coal_and_Iron_Police

https://en.m.wikipedia.org/wiki/Ludlow_Massacre

https://en.m.wikipedia.org/wiki/Battle_of_Blair_Mountain

http://www.ohiohistorycentral.org/w/Great_Hocking_Valley_Coal_Strike_of_1884-1885

Go.fuck.yourself.

Take your disinformation someplace else

 

I will *always* side with labor because I know where I come from.

In reply to by Billy the Poet

Billy the Poet dirty fingernails Mon, 06/18/2018 - 21:05 Permalink

If you think that the Industrial Revolution never happened then you're in deeper trouble than I thought.

My German ancestors were brought to this country by Captain Ford to work in his Pittsburgh Plate Glass works because of the kind of union problems you mentioned. They were experience industrial workers from the Ruhr Valley who had no problem doing an honest day's work for an honest day's pay. My German ancestors wrote home to their relatives in Stolberg, Germany which was then being socialized under the leadership of Bismarck and said, "Our dog gets more meat in a day than you do in a week." Soon the rest of the family followed.

See:

Captain Ford sent agents to glass making towns all across Europe. From existing European glass enterprises, Captain Ford’s agents quietly recruited experienced glass workers. Offering a fair day’s wage and affordable housing, Ford’s agents were highly successful in getting the workers Ford needed. They were so successful, in fact, that some towns in Europe were left nearly emptied of male adult glassworkers. An excellent example of this took place in Stolberg, Germany from which Ford recruited a large number of Ford City’s first glassworking immigrants.

Ford City Borough became one of the fastest growing boroughs in the United States, gaining over three thousand in population in only ten years. Drawing workers and their families from over 35 identifiable European ethnic groups, Ford City became the quintessential example of America’s “Melting Pot.” Uniquely, Ford City never experienced racial of ethnic strife-Ford’s glass factory made all men equal.

Through the early Twentieth Century, Ford’s company-Pittsburgh Plate Glass-became the leading manufacturer of glass in the entire World. Producing a better type of glass at a lesser price than their European competitors, PPG’s efficiency and product quality virtually ended the importation of European glass to the United States. As demand increased, the need for more laborers in the Ford City Works also increased. Our town grew daily.

https://books.google.com/books?id=JHsC9Wjwa3cC&pg=PA7&lpg=PA7&dq=capt+f…

 

 

In reply to by dirty fingernails

dirty fingernails Billy the Poet Mon, 06/18/2018 - 21:22 Permalink

Sarcasm @ industrial revolution. If you couldn't pick that up, you are hopeless. 

You see the unions as the problem rather than the reaction to the problem? SMH

That's great that your family benefitted from being the Mexicans of their day "doing the jobs that Americans won't do". It explains your house nigger mentality towards power. My family bled for the rights you think are valueless.

Fucking Pinkertons.

In reply to by Billy the Poet

Billy the Poet dirty fingernails Mon, 06/18/2018 - 21:25 Permalink

I also have Scots-Irish and German ancestors who were here before the Revolution. And if you can't see the difference between experienced and willing workers who help a far sighted entrepreneur create wealth not only for themselves but for entire cities and the kind of people currently sneaking across the border then you are indeed a very troubled individual.

You can continue to insist that economies are more efficient if employers and employs trade blows or threaten each other which acts of government violence and control but history shows otherwise.

 

In reply to by dirty fingernails

Billy the Poet dirty fingernails Mon, 06/18/2018 - 21:54 Permalink

And again you conveniently ignore how workers and businessmen can work together to increase prosperity all around while your union boys are busy bashing in the heads of so-called scabs.

 

 

Who doesn't love company scrip only redeemable at the company store?

Company stores were often established when there was little local infrastructure for the workers' needs. If you're working in a coal mine or logging camp miles from the nearest town then the existence of the company store is literally a life saver.

 

Ever read The Jungle?

Yes, I have but I find Upton Sinclair's later work, The Gnome Mobile, to be a more compelling story about helping the little guy.

The Gnome Mobile (1967)

https://www.youtube.com/watch?v=We-8utU1kHo

In reply to by dirty fingernails

Billy the Poet dirty fingernails Tue, 06/19/2018 - 10:37 Permalink

Asking you to support your arguments and correcting your errors is not trolling. Your insistence that certain events occurred (a store charged a particular price in relation to the cost of goods at other stores) without any supporting documentation is trolling.

You've also failed to explain why you believe that workers in underdeveloped locales should be denied food, clothing and medicine in the name of fairness.

In reply to by dirty fingernails

dirty fingernails Billy the Poet Tue, 06/19/2018 - 16:47 Permalink

It very much is trolling when you knew what I was saying and even understand the conditions I'm railing against, which you seem to think were just peachy if no unions woulda messed up the income stream. You also fail to explain how such a beneficial store didn't charge cash and how since it was part of the same company that was employing the workers to mine the coal also knew at what prices the workers would be going inyo debt slavery. Anyone who supports such as that is a blight on the world.

I've watched your methods and you very much troll by playing stupid and asking for proof of things you say aren't true ratger than being a man and posting  debunking evidence.

Again,

Go.

Fuck.

Yourself.

In reply to by Billy the Poet

Al Gophilia dirty fingernails Mon, 06/18/2018 - 20:22 Permalink

"Sound money is the hallmark of a prosperous society. Fraudulent money impoverishes and enslaves societies, and history teaches that it commonly rips them apart in blood-soaked wars. Sound money not only imposes fiscal discipline upon government, impeding reckless federal spending and imprudent warfare, but it also provides a stable unit of account, store of value, and medium of exchange for entrepreneurs, businesses, and individuals."

https://seekingalpha.com/article/182913-the-importance-of-sound-money

In reply to by dirty fingernails

dirty fingernails Al Gophilia Mon, 06/18/2018 - 20:33 Permalink

And which class has had their wealth shoot up like a rocket when the feds started really lying about inflation (decoupling from gold standard)? Wages stagnated as our purchasing power was erroded and yet far too many here think that there shoild be no social safety net and no mandated minimum wage so that we can all underbid each other to feed our kids. Who benefits from depressed wages: workers or owners?

In reply to by Al Gophilia

dirty fingernails Billy the Poet Tue, 06/19/2018 - 02:09 Permalink

Gee, funny how you gloss over my stating that you need a happy medium between free markets and gov regulations. Way to troll me AGAIN. You must be one of those dipshits who believe that all gov regulations are just there because of commies trying to control your life, right? That there has never been a need for a legal force to step in and prevent you from needing to butcher the rich prick who sells garbage and burns out any competition. Yep, no grasp at all about how accumulated capital allows the system to be bent to the will of whoever controls said capital. Fuck off with your trolling.

In reply to by Billy the Poet

nekten dirty fingernails Mon, 06/18/2018 - 21:48 Permalink

Particularly in the very competitive food service industry, a rise to $15, from $9 or $10 (still above the minimum). Will accelerate robotic replacements, which we're already seeing as kiosks. It's time to let go with the nonsense that a mandated higher wage raises workers prosperity. It does that only for the workers not let go. And those not get go must face the probability of being replaced in the medium term with machines capable of doing their work.

You're not doing anyone any favors by sticking to the socialist bullshit that there's no such thing as market effect, or that building skills doesn't matter.

The effect of a mandated $15 is to remove the lowest rung on the career ladder.

In reply to by dirty fingernails

dirty fingernails nekten Tue, 06/19/2018 - 02:14 Permalink

So back when a minimum wage would support a family things were a tad cheaper. The minimum wage didn't increase partly because Repukes like Jessie fucking Helms kept insisting it was too high at $4.25/hr. Had it kept increasing in step with the insane printing of Reagan and thereafter $15/hr wouldn't be a huge shock to the system. If that has escaped you, do somw reading. Lots of info our there. Then go work for minimum wage for a month and tell me it's acceptable and see how many of your coworkers aren't low skill kids. Boilerplate douchebag cuntservative idiots. Never had a fucking original thought in your lives

In reply to by nekten

ChaoKrungThep Stu Elsample Tue, 06/19/2018 - 00:21 Permalink

Strange how advanced OECD economies can pay high minimum wages, over (almost) free medical services, pensions, etc and not go broke broke. Australia's min wage is AUD 18.29/hr, min weekly wage is AUD 694.90. Admittedly only enough to get by, but no-one's eating dog food or dumpster leftovers. Denmark pays USD 43.00 /hr. How come the "Greatest country in the universe" can't manage it?  

In reply to by Stu Elsample

MozartIII Mon, 06/18/2018 - 19:29 Permalink

Loose the minimum wage. Employers will pay for the value of an employee! Loose the federal employment tax while you are at it. Business production and growth would explode.

 

I know, it's complicated! Or not!!

cankles' server MozartIII Mon, 06/18/2018 - 19:37 Permalink

Loose the federal employment tax while you are at it. Business production and growth would explode.

Embedded taxes.  People don't know what the fuck they are and how much they make up a product's cost.

 

To expound on your idea. Eliminate all corporate taxes and business would explode as the US would become the world's corporate tax haven.  That would be FAIR, especially if we offset the savings with a sales tax, which would be an individuals only tax.

In reply to by MozartIII