Federal Reserve Says State Minimum Wage Hikes Have Cost Up to 200,000 Jobs

a reply to: Vector99

I don't quite understand where you're coming from. You don't seem to be suggesting that what currently exists is actually a free market, no one would be that stupid, so I'm not sure where your first statement comes from. I'm not claiming to be highly educated in regards to business, I just know that the current system is not a "free market."

Raising the minimum wage isn't the answer. The problem is we gave our jobs to China India and Mexico. Middle class jobs have been outsourced to other countries. America can't compete with slave wages. Over a billion cell phones in the world and not one of them is made in America. Are you telling me Americans are too stupid to put pieces of plastic together? No you have greedy companies making things in over seas markets for pennies on the dollar then selling them at over inflated prices.

originally posted by: Eilasvaleleyn
a reply to: Vector99

I don't quite understand where you're coming from. You don't seem to be suggesting that what currently exists is actually a free market, no one would be that stupid, so I'm not sure where your first statement comes from. I'm not claiming to be highly educated in regards to business, I just know that the current system is not a "free market."

It is a free-market for those that can afford it. There are loop-holes everywhere. Free-trade agreements cover the gaps that the "free-market" doesn't allow. Such as sweatshop labor, it isn't available to you or I on the "free-market", but to a large corporation it is.

a reply to: Vector99

Back when real unemployment rate went below 5% due to worker shortage wages generally rose in response. Only folks at minimum were starting employees.

Where is labor oversupply from? Why is domestic economy not making new skilled jobs?

The answer is quite simple.

a reply to: Vector99

Right. I guess I just assumed you were contradicting something since you mentioned my lack of Business education.

A true free market doesn't have loopholes, because a true free market has no regulations whatsoever.

There are many pieces to this puzzle;

Lets say the jobs are there at minimum wage and look at an average scenario;

Current minimum wage $7.25 = $14,500/yr @ 40hrs - $420.00 tax = $14,080 in pocket

Enter the ACA/Obamacare which declared 30hrs/wk full time prompting many small businesses to cap the work week at 29hrs/wk;

Current minimum wage $7.25 = $10,513/yr @ 29hrs - $21.00 tax = $10,492 in pocket
ACA Bronze $257.68/mo = $3,092/yr
$10,492 in pocket - $3,092 ACA = $7,400 in pocket

With just the implementation of ACA/Obamacare the Government has lost $400.00/yr/individual in taxes and the individual has lost $6,680 out of pocket - damn near 50% out of pocket with one law passed.

Now the government knows this won't fly, that's why ACA get implemented in waves - boiling frog in pot

So they push for minimum wage increase- ever wonder about the timing of the push for $15.00/hr?

Now we are looking at the following;

New minimum wage $15.00/hr = $21,750/yr @ 29hrs/wk - $1256.00 tax = $20,494 in pocket
ACA Bronze $257.68/mo = $3,092/yr
$20,494 in pocket - $3,092 ACA = $17,402 in pocket

So with ACA & new minimum wage here's what we have;
Individual from $14,080 to $17,402 in pocket = $3322.00 = $1.66/hr wage increase (at initial 40hrs/wk) = 24% increase
Government from $420.00 to $1256.00 tax = $836 tax increase = 199% increase
Insurance companies get their money

I'd like include that the individual get's insurance but living on minimum wage and having a deductible of $5731.00 it's pretty much useless, even with subsidies.

But unfortunately the scenario only holds water if the jobs are there & (as mentioned many times) most small businesses cannot support the increased minimum wage & will layoff workers and raise prices until eventually closing their doors, resulting in more people out of work.

a reply to: Eilasvaleleyn

When you can avoid the regulations of a regulated market because you can afford to how is it not a free market then?

originally posted by: CranialSponge
I wonder how many jobs, homes, businesses, etc etc the Federal Reserve has cost the country over the decades...?
Kind of ironic how the very entity that controls and causes economic woes.... is pointing out economic woes.

It sure is because they don't want to take the blame for it.

originally posted by: Eilasvaleleyn
a reply to: Vector99

A true free market doesn't have loopholes, because a true free market has no regulations whatsoever.

I would also like to point out that your idea of a free market and the actual definition of a free market don't coincide. Under your definition of a free market, I could sell someone rattlesnake venom as a cure for cancer and not be punished.

a reply to: xuenchen

Did you or anyone else actually read the Federal Reserve source?

The S.F. Fed didn't really do much research; what they did was a literature review (or maybe just a 'survey,' but I'll give them the benefit of 'review'). They went around and looked at studies, then pulled the 200,000 job rabbit out of a hat.

So there's an effect...

The earliest studies of the employment effects of minimum wages used only national variation in the U.S. minimum wage. They found elasticities between −0.1 and −0.3 for teens ages 16–19, and between −0.1 and −0.2 for young adults ages 16–24. An elasticity of −0.1 for teens, for example, means that a 10% increase in the wage floor reduces teen employment by 1%.
...
An extensive survey by Neumark and Wascher (2007) concluded that nearly two-thirds of the more than 100 newer minimum wage studies, and 85% of the most convincing ones, found consistent evidence of job loss effects on low-skilled workers.

...or maybe there isn't...

Research since 2007, however, has reported conflicting findings. Some studies use “meta-analysis,” averaging across a set of studies to draw conclusions. For example, Doucouliagos and Stanley (2009) report an average elasticity across studies of −0.19, consistent with earlier conclusions, but argue that the true effect is closer to zero; they suggest that the biases of authors and journal editors make it more likely that studies with negative estimates will be published.
...
A second strand of recent research that conflicts with earlier conclusions argues that geography matters. In other words, the only valid conclusions come from studies that compare changes among close or contiguous states or subareas of states (for example, Dube, Lester, and Reich 2010). A number of studies using narrow geographic comparisons find employment effects that are closer to zero and not statistically significant for both teenagers and restaurant workers.

...or maybe there is...

Some follow-up studies, however, suggest that limiting comparisons to geographically proximate areas generates misleading evidence of no job loss effects from minimum wages. Pointing to evidence that minimum wages tend to be raised when labor markets are tight, this research suggests that, among nearby states that are similar in other respects, minimum wage increases are more likely to be associated with positive shocks, obscuring the actual negative effects of minimum wages. Using better methods to pick appropriate comparison states, this research finds negative elasticities in the range of −0.1 to −0.2 for teenagers, and smaller elasticities for restaurant workers (see Neumark, Salas, and Wascher 2014a,b, and Allegretto et al. 2015 for a rebuttal).

So, what did the Fed decide from all of this conflicting information? Well, that's probably obvious:

How do we summarize this evidence? Many studies over the years find that higher minimum wages reduce employment of teens and low-skilled workers more generally. Recent exceptions that find no employment effects typically use a particular version of estimation methods with close geographic controls that may obscure job losses. Recent research using a wider variety of methods to address the problem of comparison states tends to confirm earlier findings of job loss. Coupled with critiques of the methods that generate little evidence of job loss, the overall body of recent evidence suggests that the most credible conclusion is a higher minimum wage results in some job loss for the least-skilled workers—with possibly larger adverse effects than earlier research suggested.

Majority research wins, just like with climate change. Okay, whatever. How do they get their numbers?

Using a −0.1 elasticity and applying it only to teenagers implies that higher minimum wages have reduced employment opportunities by about 18,600 jobs. An elasticity of −0.2 doubles this number to around 37,300. If we instead use the larger 16–24 age group and apply the smaller elasticity to reflect that a smaller share of this group is affected, the crude estimate of missing jobs rises to about 75,600. Moreover, if some very low-skilled older adults also are affected (as suggested by Clemens and Wither 2014), the number could easily be twice as high, although there is much less evidence on older workers.

Thus, allowing for the possibility of larger job loss effects, based on other studies, and possible job losses among older low-skilled adults, a reasonable estimate based on the evidence is that current minimum wages have directly reduced the number of jobs nationally by about 100,000 to 200,000, relative to the period just before the Great Recession.

Things that make you go hmmmmmm.

a reply to: Xtrozero

The answer isn't raising min wage though.

The answer is education. And as a people we need to be on our politicians to get education into the hands of more people.

a reply to: Eilasvaleleyn

Well said. It should be noted that data and studies are aligning with what you are saying and the millennial generation is actually turning out to be one of the hardest working generations in a long time. I've heard some sources starting to refer to our generation as the next greatest generation.

Millennials: The Next Greatest Generation?
Millennials Looking Like the Next ‘Greatest Generation’
Millennials: Are We “The Next Greatest Generation?”
Why Millennials are the New Greatest Generation
The new ‘Greatest Generation’ — Millennials

originally posted by: Vector99

originally posted by: Eilasvaleleyn
a reply to: Vector99

A true free market doesn't have loopholes, because a true free market has no regulations whatsoever.

I would also like to point out that your idea of a free market and the actual definition of a free market don't coincide. Under your definition of a free market, I could sell someone rattlesnake venom as a cure for cancer and not be punished.

Exactly. That's a free market. Plus that was a market that actually existed back in the day. It is where the term "snake-oil salesman" comes from. Then we realized that was a recipe for disaster so we regulated the pharmaceutical market. Hence no more free market. Just because you happen to AGREE with the regulations doesn't mean you are operating in a free market.

originally posted by: grey580

The answer isn't raising min wage though.

The answer is education. And as a people we need to be on our politicians to get education into the hands of more people.

Yep, the answer is to create jobs that pay more, and for people who find themselves past 25 with no skill/education other than what minimum wage jobs need should to re-evaluate themselves as to where they going in life and where they want to be, then work on it. I was listening to a guy on TV who was in a gang, did time etc and the news guy asked him what advice would he give to younger kids. He said to stay in school and do not get into the gang life and really think about your future. All great stuff, but then he said I wish I did that but it is too late for me...he is 25, so really? Too late..lol

For many they just need to look in the mirror for who is at fault as to where they are and even more importantly where they will be.

originally posted by: Krazysh0t
Just because you happen to AGREE with the regulations doesn't mean you are operating in a free market.

Lets talk free market and my wife's tits...

A few years back my wife decided she would like some improvements in the breast area and so went to a doctor highly recommended. After all said and done my wife breasts were not just good they were perfect, this doctor is Rembrandt reborn.

So what did it cost me for the full surgery in a hospital with months of followups and then yearly followups by Rembrandt himself?... $6,000 ding! Why so little? Hmm. Just maybe it cost that because plastic surgery is a free market where doctors need to compete with both skill and price against each other. This doctor drives a 150k car so I do not think he is hurting because he isn't charging 30k instead.

A friend of mine was over weight and borderline diabetic at 44, so he wanted to do something about it and decided to get his stomach reduced and lose the weight. The insurance said nope since he wasn't full blown diabetic and so it would cost him 35k. Well he went to Mexico to a great doctor and hospital and had it done there. The whole thing including the flight, week stay at a resort and the surgery was 7k out of pocket and the doctor did an excellent job so once again free market with doctors competing in price and performance.

This is what America has lost so long ago and it is truly killing us in the real sense with crappy docs that do not need to perform for your business and also making us all go broke in the process with the insurance umbrella that sets the inflated cost. It's always been a scam and Obama fed right into it. You better get insurance or that doc visit that would cost 30 bucks at a clinic outside the insurance umbrella will cost you 600 out of pocket. Funny how co-pays are 30 bucks too..the actual true cost of the visit...lol Or you will be fined 1,000 if you do not enroll in Obamacare where you will need to pay 200 per month to not be sick with a 6,000 cost before it kicks in, but the good news is it would lonely be a few doctor visits before it kicked in.

These are all fake costs to force everyone under the insurance umbrella since no one can actually afford any of it out of pocket. If it was all run like plastic surgery is then everything would be out of pocket and all you would need is much cheaper catastrophic insurance, but then that would take huge profits from the insurance companies and we can't have that.

a reply to: Xtrozero

That's a great anecdote and all, but you have to take the good with the bad. Regulations aren't all bad. Clearly the regulations preventing unscrupulous businessmen from selling poison branded as medicine is a good regulation. Right?

originally posted by: Krazysh0t
a reply to: Xtrozero

That's a great anecdote and all, but you have to take the good with the bad. Regulations aren't all bad. Clearly the regulations preventing unscrupulous businessmen from selling poison branded as medicine is a good regulation. Right?

We need regulations to ensure quality, but once again plastic surgery is just as regulated as any other medical area, but it is still free market.

a reply to: Xtrozero

The plastic surgery market is regulated too.

Here is the FDA code regulating plastic surgery devices
FDA

Also, we have this.

Cosmetic Surgery Likely To Face Tough Regulation After Review

The booming cosmetic treatments industry is facing a wide-ranging crackdown over an array of dubious practices that exploit, pressurise and pose a danger to often vulnerable patients who are hoping to improve their appearance.

Just like most regulations, you only have the exploiters to blame for them. If it weren't for people abusing a good thing, we'd all have totally free markets. But some people can't play nice with others and ruin it for everyone else.

originally posted by: Xtrozero

originally posted by: Krazysh0t
Just because you happen to AGREE with the regulations doesn't mean you are operating in a free market.

Lets talk free market and my wife's tits...

A few years back my wife decided she would like some improvements in the breast area and so went to a doctor highly recommended. After all said and done my wife breasts were not just good they were perfect, this doctor is Rembrandt reborn.

So what did it cost me for the full surgery in a hospital with months of followups and then yearly followups by Rembrandt himself?... $6,000 ding! Why so little? Hmm. Just maybe it cost that because plastic surgery is a free market where doctors need to compete with both skill and price against each other. This doctor drives a 150k car so I do not think he is hurting because he isn't charging 30k instead.

A friend of mine was over weight and borderline diabetic at 44, so he wanted to do something about it and decided to get his stomach reduced and lose the weight. The insurance said nope since he wasn't full blown diabetic and so it would cost him 35k. Well he went to Mexico to a great doctor and hospital and had it done there. The whole thing including the flight, week stay at a resort and the surgery was 7k out of pocket and the doctor did an excellent job so once again free market with doctors competing in price and performance.

This is what America has lost so long ago and it is truly killing us in the real sense with crappy docs that do not need to perform for your business and also making us all go broke in the process with the insurance umbrella that sets the inflated cost. It's always been a scam and Obama fed right into it. You better get insurance or that doc visit that would cost 30 bucks at a clinic outside the insurance umbrella will cost you 600 out of pocket. Funny how co-pays are 30 bucks too..the actual true cost of the visit...lol Or you will be fined 1,000 if you do not enroll in Obamacare where you will need to pay 200 per month to not be sick with a 6,000 cost before it kicks in, but the good news is it would lonely be a few doctor visits before it kicked in.

These are all fake costs to force everyone under the insurance umbrella since no one can actually afford any of it out of pocket. If it was all run like plastic surgery is then everything would be out of pocket and all you would need is much cheaper catastrophic insurance, but then that would take huge profits from the insurance companies and we can't have that.

Exactly. There is no free market in healthcare or insurance and it causes unnecessary price inflation. I tell this story all the time. A good friend of ours is an orthopedic surgeon. One day we were discussing Obamacare and I asked him what he charges for a hip replacement. He didn't know. I said if I don't have insurance and want you to replace my hip, how much would you charge me. I can pay cash. He had no idea. He was like he just records he did the work and then insurance is billed through the practice.

This is the problem. There is no real competitive market, even for non-urgent care. As such, the purchaser (patient) is disconnected from the payer (insurance).

You see this also being played out with higher education and student loans.

The government has involved themselves so much in the insurance market that there is no price transparency.

a reply to: Edumakated

So you think the "free market" is going to save Baltimore?