Minimum Wage Economics

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Toolsmith
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Minimum Wage Economics

"Zak Ringelstein @RingelsteinME
A new report shows that a Mainer working 40 hours a week would need to make $18.73 an hour to afford a 2-bedroom apartment. Yet our federal minimum wage is $7.25.

We urgently need to raise the minimum wage to $15 an hour. #mepolitics"

So, what happens if the minimum wage is raised to $15/hr?

Does that apartment still cost the same, or does the rent rise to meet the new demand?

Would adding more apartments bring the rental cost down?

The idea that giving every taker the money to rent that apartment will change that and nothing else... seems odd to me.

Economike
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Obviously, Zak Ringlestein is

Obviously, Zak Ringelstein is half-hearted and conflicted in his concern for Mainers.

Were he truly sincere, he'd propose $18.73 as the minimum wage.

He sounds phony to me.

mainemom
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The Long-run Effects of Anti

The Long-run Effects of Anti-Poverty Policies on Disadvantaged Neighborhoods

In this new study, economists David Neumark and Brittany Bass of the University of California, Irvine, and Brian Asquith of the National Bureau of Economic research, measure the longrun effects of minimum wages, the Earned Income Tax Credit (EITC), and welfare programs on reducing poverty in disadvantaged areas.

This research is necessary because, according to Neumark et al., debates about these anti-poverty policies focus on short-term effects of individuals and their families instead of disadvantaged areas more broadly. The researchers simultaneously study four effects of minimum wages, EITC, and welfare programs: earnings, employment, poverty, and reliance on public assistance. The resulting data are used to estimate the effects of these policies on disadvantaged neighborhoods over the past three decades, which offers insight into how policy influences their long-run success or failure.

The researchers’ most notable conclusion is that neither a higher minimum wage nor more-generous welfare benefits have reduced poverty rates in the country’s most-disadvantaged neighborhoods. In fact, the authors find some evidence that poverty rates and the share of residents on public assistance have increased alongside a rising minimum wage. (They also find some evidence that, for disadvantaged neighborhoods, the long-run effect of more-generous welfare benefits has been to increase poverty and receipt of public assistance.)

I'm waiting for the Press Herald to write about this research.
I'm waiting for the Maine People's Alliance to admit error.
I'm waiting for Maine Democrats to acknowledge they might be wrong.

But I'm not holding my breath.

Melvin Udall
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Could you get THEM to hold

Could you get THEM to hold their breath instead? Oh wait; they already do it regularly. Hence the lack of oxygen to the brain.

Toolsmith
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Another part of the reason:
anonymous_coward
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There's an article going

There's an article going around about the how the minimum wage could not afford you a 2BR apartment, which is unfortunately getting a ton of traction, even though every aspect of the article is poorly written/thought out.

Sigh.

mainemom
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Collateral damage?

Collateral damage?

Higher Minimum Wages Blamed for Closure of Iconic NYC Coffee Shop Where Alexandria Ocasio-Cortez Worked
Reason

What Ocasio-Cortez failed to note is that the Coffee Shop is shutting its doors for the last time, at least in part, because of New York City's rising minimum wage.

"The times have changed in our industry," Coffee Shop owner Charles Milite told the New York Post last month. "The rents are very high and now the minimum wage is going up and we have a huge number of employees."

In other words, one of the very progressive policies that Ocasio-Cortez is riding towards a seat in Congress—she has called for a $15 federal minimum wage, up from $7.25 currently—has had very real consequences for people she probably knows fairly well. Unlike Ocasio-Cortez, it's a safe bet that most of the roughly 150 people who work at the Coffee Shop won't land a job in public office when they lose their current jobs in October.

Ugenetoo
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Without downtrodden victims,

Without downtrodden victims, socialism gains no traction in a capitalist economy.
She is happy to have all those "victims" to support her.
In reality, Trumps gains in the job market pretty much guarantee them a job. (If they want it).

Matt
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Again, forest, trees...

Again, forest, trees...

Manhattan—places that were $75 a foot under old leases a decade ago are now on the market for $375. That means a 2500 sq ft diner—huge for that market—sees its rent go up by 2/3 of a million dollars a year. And lots of commercial retail space is empty, sometimes for years, with no apparent downside to the building owners. Next level real estate investment and finance.

It’s curious that I’ve never seen a thread on AMG about job killing capitalists...

Economike
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It's fascinating that an idea

It's fascinating that an idea as silly as the minimum wage gets so much traction among - how shall I express this? - unsophisticated progressives.

Of course, the more intelligent and cynical politicians who favor it like minimum wage as cheap virtue-signalling. And it doesn't require raising taxes.

My experience in discussing minimum wage with progressives reveals an interesting frame of mind. "What if," I ask, "minimum wage throws and keeps unskilled laborers out of work?"

The inevitable answer is "That would only prove how greedy employers are." The moral of this story is that progressives (and, I suppose, most people) would rather have their opinions validated than deal with actual consequences.

Economike
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Matt -

Matt -

No one's stopping you from starting a thread about job-killing capitalists.

I'm sure your effort would be interesting.

By the way, job-killing capitalism has been often been discussed on
AMG, as a word search for "creative destruction" will reveal.

Matt
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Here’s where Egomike composes

Here’s where Egomike composes a witticism in which Mainemom ignores the $50 dollar bill under her nose and instead runs across the street to pick up a fve.

Melvin Udall
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He shoots, he misses!!

He shoots, he misses!!

mainemom
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Great points, Matt.

Great points, Matt.
I wonder what incentives the greedy capitalists to keep their expensive commercial property vacant?

Economike
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"Here's where Egomike

"Here's where Egomike composes a witticism....."

I think mainemom's priorities are sound. I'd look elsewhere to find someone who missed the point.

Matt
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You should do a little

You should do a little research on projected future rental revenue, real estate valuation and tax breaks, Mainemom.

Or you can just assume that the market knows best, and all the landlords with vacant spaces are simply dummies leaving money on the table.

Melvin Udall
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So how many vacant units do

So how many vacant units do you own? (other than the penthouse at the top of your elevator)

Melvin Udall
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While it has been some years

While it has been some years since I owned "income property," you must know some tricks I never heard of if having space vacant is more advantageous than having it rented and yielding income.

Even with a tax rate of 100%, the best you can do is a push on the rent.

johnw
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The effects of Maine’s

The effects of Maine’s minimum wage increase are already being felt , the price s on everything have moved up. The well to do won’t notice it, the EBT card users will be oblivious to it , only the middle income worker whose wages have not move up as quickly as the minimum wage will suffer from it.
If the idiots in government had tied the minimum wage to the CPI years ago that might have made a little sense their arbitrary increases solve nothing and only increase inflation.
I know that the company I work for will be making some changes downstream that consumers will bitch about and not understand......

Melvin Udall
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The usual theory is that

The usual theory is that unions will demand, as a minimum, "adjustments" equal to the increase in the minimum wage. They are not about to let themselves lose ground to hamburger flippers and "bareestaas."

Ugenetoo
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Bingo on the last three posts

Bingo on the last three posts, MU, but especially the first.

Economike
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Markets don't know best.

Markets don't know best. Markets know nothing. Only individuals can know best because only they possess the information unique to their circumstances with which to make decisions.

Real estate values, projected rental revenues, tax breaks, so what? Every capitalist - that is, every business owner or investor - makes decisions based on an individual mix of facts, estimates, and hunches.

With the topic of "job-killing capitalists" Matt had an opportunity to hit a home run with a compelling zinger of a post. Instead, he responded with an attempted bunt.

mainemom
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Matt, so you’re saying flawed

Matt, so you’re saying flawed public policy is skewing property owners’ decision making?
Who ever would have guessed it?
Let’s skew decision making even more through public policy designed to perfect society.

Matt
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Designed to “perfect” society

Designed to “perfect” society? Lol. Yah, fifteen bucks an hour in a city where a studio apt is $4k—in part because of the “public policy” nonsense I’m referring to—is an attempt to “perfect.”

Mainemom, if you want to start cleaning house when it comes to skewed “public policy,” don’t start with the house cleaners.

johnw
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Portland has a solution to

Portland has a solution to the rising rent situation ,they are pushing the unhip,non millennial crowd to Lewiston ,Rumford and other section eight Mecca’s.There problem solved.OR maybe the benevolent progressive state could start purchasing land and setting up trailer park cities just out of sight of the more affluent for the displaced minimum wage workers ........Hmmm they could call them ghettos.

Melvin Udall
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I remember my first minimum

I remember my first minimum wage job; I was 14, and I was a few years away from having a family and wanting our own place, or even my own place by myself. Even at 17, when I began to make considerably more, I still didn't think that's what I should want, or that my employer owed me enough to pay for it.

How quaint of me. I guess that's why I worked my way up until I could afford these things before I arranged for them on my own terms, with no help from caring and feeling liberals.

anonymous_coward
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@johnw: "The effects of Maine

@johnw: "The effects of Maine’s minimum wage increase are already being felt , the price s on everything have moved up."

There are a lot of other factors that affect prices, including but not restricted to:
1) Tariffs on Canadian goods like timber
2) Energy prices
3) General currency inflation which has been "healthy"
4) Seasonal variability

Unless you can demonstrate that you've eliminated those other factors, I'm going to have to call B.S. on your assertion that price changes are due to minimum wage changes.

Melvin Udall
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As someone who stops in at

As someone who stops in at Tony's Donuts in Portland probably 3 or 4 times a year, I can tell you I was shocked by their increases when I was there today. Single donut now $1.50. Last time I was there was in January, and I swear it was a dollar or less. Itsy bitsy paper cup of coffee is $2 bucks plus tax. None of the old 5 or 10% increase from time to time.

This is a different kind of "inflation" they're "keeping up with."

Economike
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I can get why businesses,

I can get why businesses, like doughnut shops, that depend directly on minimum wage might raise their prices.

But otherwise, anonymous_coward is right to question that minimum wage raises prices in general. Keep in mind that minimum wage isn't inflationary; more money spent to offset the cost of minimum wage is exactly equal to less money spent on something else.

Economike
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I can get why businesses,

duplicate post

Ugenetoo
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A small full care rest home

A small full care rest home near here closes tomorrow, leaving 26 clients and 55 employees to find alternative facilities and jobs.
The owner cites minimum wage increases as one of the problems.
Having some knowledge of the management style, I suspect that issue was only the straw that broke the camels back, but still, an issue.

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