USA Today: Seattle's $15 minimum wage may be hurting workers


MadeTheSwitch

macrumors 6502a
Apr 20, 2009
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well, I think that this was kinda expected.
From a liberal leaning newspaper:

Seattle's $15 minimum wage may be hurting workers, report finds - USA TODAY
https://apple.news/AkscrhphuTmq37UnEvEtMSg
I don't buy stories like this. Why? Because either you need people to work in your business or you don't. If you need 20 people on staff in your store or restaurant at any one time, you are still going to need that same number of people at an increased wage unless business slacks off which I did not see this article mention.

If you cut people's hours, but business is the same, what isn't getting done?

And if you take the inverse argument then employee hours could be massively increased if we would just lower the minimum wage to $1 an hour, right? Of course no one will be able to afford a living, but hey they'll have more hours!
 

appleisking

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May 24, 2013
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I don't buy stories like this. Why? Because either you need people to work in your business or you don't. If you need 20 people on staff in your store or restaurant at any one time, you are still going to need that same number of people at an increased wage unless business slacks off which I did not see this article mention.

If you cut people's hours, but business is the same, what isn't getting done?

And if you take the inverse argument then employee hours could be massively increased if we would just lower the minimum wage to $1 an hour, right? Of course no one will be able to afford a living, but hey they'll have more hours!
As Yaxo pointed out, you cut everything you don't need immediately and in the long term accelerate the process of automating work. There could even be a point where producing less is actually more profitable for your business because of lower hours and lower costs due to a higher min wage.
 

yaxomoxay

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Mar 3, 2010
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Everything would still be done. The workload would be consolidated to fewer people.
Precisely. It's basic economics.
[doublepost=1498606908][/doublepost]
The USA Today headline says may be. Your thread title omits that qualifier.
Fair enough (*). Added.

(*) I was trying to delay the inevitable: higher speed on the treadmill.
 

chown33

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FrankieTDouglas

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Mar 10, 2005
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Precisely. It's basic economics.
And I'd imagine the workload would tip toward the person with a bigger skillset. As in, the person who assembles the burgers won't add on managing duties due to the smaller staff. Instead, the manager will be picking up that slack. The less qualified person, while perfect for the smaller roles when salary is adjusted for those duties, is simply expendable.

The tragedy being, that expendable person, through experience and training, may eventually grow into a managerial role. But they can't start that journey if the entry level position no longer exists.
 

ActionableMango

macrumors G3
Sep 21, 2010
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I don't buy stories like this. Why? Because either you need people to work in your business or you don't. If you need 20 people on staff in your store or restaurant at any one time, you are still going to need that same number of people at an increased wage unless business slacks off which I did not see this article mention.
That's not how it works. I've worked in multiple restaurants for years. We always had high turnover and wildly random staffing levels.

If you cut people's hours, but business is the same, what isn't getting done?
When we had low staffing levels, shortcuts are taken, long term work is deferred, workers bust their asses, injuries go up, food quality goes down, service gets worse, and management even gets out of the office to chip in with the grunt work. You can absolutely operate understaffed, but it hellish for everyone.

Your rigid theory of matching staffing levels to the workload with absolute precision sounds good on paper but doesn't match reality at all.
 

MadeTheSwitch

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Apr 20, 2009
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Not really because non essential services could be cut, and part of the work can be reassigned.
There is no such thing as "non essential" service. Either it's needed for the business model or it's not. If it's not, then it's not part of the business model in the first place, so why do it?
[doublepost=1498613689][/doublepost]
Everything would still be done. The workload would be consolidated to fewer people.
Then that could be done in the first place. Either you need X number of people to do something or you don't. And if you don't, then why have that person there?
[doublepost=1498613984][/doublepost]
When we had low staffing levels, shortcuts are taken, long term work is deferred, workers bust their asses, injuries go up, food quality goes down, service gets worse, and management even gets out of the office to chip in with the grunt work. You can absolutely operate understaffed, but it hellish for everyone.

Your rigid theory of matching staffing levels to the workload with absolute precision sounds good on paper but doesn't match reality at all.
Yeah it does (I know this because I am familiar with the restaurant industry). Sure you can do things like that short term. But that's not what we are talking about here. This is a permanent ongoing situation. You cannot defer work forever. You cannot burn out your people forever with low quality food and not have it jeopardize the business at some point. Customers won't put up with lousy food and service forever when there are other alternatives out there.
 

JayMysterio

macrumors 6502a
Apr 24, 2010
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There already is push back to findings...

http://www.latimes.com/business/hiltzik/la-fi-hiltzik-minimum-20170627-story.html

"It may be impossible to solve the mystery until the UW study is peer-reviewed and its underlying data scrutinized more widely, if then. But a few points certainly are true. One is that its findings are out of line with almost all other studies of the minimum wage employment effect. That doesn’t make them suspect, exactly, but it does warrant a close examination of the methodology to see whether the researchers missed or misinterpreted something. Another issue is that Seattle’s unusually, and perhaps uniquely, strong economy may be warping the findings.

Then there are the limitations that even the UW researchers acknowledge. One is that their study left out multisite employers such as fast-food and retail chains because they simply don’t have sufficient data to include them. This group is among the biggest employers of low-wage workers, accounting for about 38% of the workforce, so its absence leaves a big gap. The study’s critics say it’s an especially important gap because chain employers have an easier time adjusting to higher hourly wages and can move workers from one place to another, so UW may have overstated the job losses.
"
 
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Herdfan

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Apr 11, 2011
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I think the biggest point here is being missed. I have owned a franchised QSR's restaurant and let me just say that the quality of the employee matters. A lot.

With my "A" day shift of 8-10 workers I could crank out as much food as the "B" evening shift could with 15. Yes, the "A" shift made more per hour, but not much. I surmise that these restaurants are getting better quality workers at $15/hr so they haven't had to raise prices much.

So while some individuals may be doing better, there are most likely fewer of them working.
 

DearthnVader

macrumors 6502a
Dec 17, 2015
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Red Springs, NC
Companies looking to maximize profits have been using realtime software to update what percentage of sales labor is for decades.

Labor too high, send someone home.

Sure, a $15 minimum wage may clause more companies to start using it, but really, it was just bad business that they were not using it in the first place.
 
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VulchR

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Jun 8, 2009
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Discussing a study that in public before it has been peer reviewed is unethical, particularly when it could influence public policy. We'll have to see what shakes out once the work is properly vetted.
 

elistan

macrumors 6502a
Jun 30, 2007
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Discussing a study that in public before it has been peer reviewed is unethical, particularly when it could influence public policy. We'll have to see what shakes out once the work is properly vetted.
No, discussing something like this is most certainly NOT unethical.


Anyway.
Here's the study itself, for anybody that's a part of the National Bureau of Economic Research and so can download it:
http://www.nber.org/papers/w23532

This is a 'working paper.' Here's Paul Krugman's explanation on what the NBER does and what a working paper is:
https://krugman.blogs.nytimes.com/2013/04/22/understanding-the-nber/

More info on the NBER:
https://en.wikipedia.org/wiki/National_Bureau_of_Economic_Research
 

ActionableMango

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Sep 21, 2010
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This is a permanent ongoing situation. You cannot defer work forever. You cannot burn out your people forever with low quality food and not have it jeopardize the business at some point. Customers won't put up with lousy food and service forever when there are other alternatives out there.
A Harvard study of San Francisco restaurants (SF is also facing a $15/hr minimum wage):

"The impact on exit is concentrated among lower quality restaurants, which are already closer to the margin of exit. This suggests that the ability of firms to adjust to minimum wage changes could differ depending on firm quality," the study found. The higher-rated restaurants can adjust, primarily through working their employees harder.

Higher minimum wages also reduce the rate at which new restaurants open by 4-6 percent per $1 increase in the minimum, the study found.​

There is a rash of San Francisco restaurants closing down, many of which have been around for a very long time.
 

elistan

macrumors 6502a
Jun 30, 2007
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Denver/Boulder, CO
There's ALWAYS a rash of restaurants closing down, even old ones. It's a constant churn, really. The question is, is the rate of closure going up, and if so is it attributable to minimum wage increases?

Anyway, since you bring up restaurants, here's what the co-author interview by Marketplace had to say at one point.

"Long: So Seattle is a booming economy, and you're right, it's actually helping the affluent very well in this city. And so as a result, if you look at the restaurant industry as a whole, which has been what a lot of other studies have done, you find no effect. And we also find no effect for the restaurant industry as a whole. But when you separately look at low-skill jobs, whether it be in the restaurant industry or another industry, that's where you're seeing the reduction in employment opportunities."

Emphasis mine.
 

ActionableMango

macrumors G3
Sep 21, 2010
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There's ALWAYS a rash of restaurants closing down, even old ones. It's a constant churn, really. The question is, is the rate of closure going up, and if so is it attributable to minimum wage increases?
According to the study, yes. "The evidence suggests that higher minimum wages increase overall exit
rates for restaurants."

... Seattle ... And we also find no effect for the restaurant industry as a whole.
I realize the overall topic here is Seattle, but it seems like you were responding specifically to my post, which was about restaurants closing in San Francisco, not Seattle.

I would be surprised if there will be much impact to restaurants in Seattle for a while. Three years ago I saw a Burger King hiring sign here that said "starting $12/hr", so wages were getting close to $15/hr anyway, and the Seattle minimum wage is being phased in slowly through 2018, so it's not even fully in effect yet.
 

elistan

macrumors 6502a
Jun 30, 2007
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441
Denver/Boulder, CO
I realize the overall topic here is Seattle, but it seems like you were responding specifically to my post, which was about restaurants closing in San Francisco, not Seattle.
Yes, I saw that. The study mentioned at the beginning of this thread is based in Seattle, however, so I thought it would be interesting to note the study's findings on Seattle restaurants, to go along with the Harvard study's information on San Francisco restaurants.
 

yaxomoxay

macrumors 68040
Original poster
Mar 3, 2010
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A more balanced take on this study vs. the Berkeley study. The take from business owners at the end of the article shows some potential unintended consequences: relocation of future growth.

http://money.cnn.com/2017/06/26/news/seattle-minimum-wage-15/index.html
This article is missing a very important question on the issue from a worker's point of view.
The article celebrates that "
Seattle locals have their own take on how the $15 wage is working out.
Crystal Johnson, a 36-year-old Domino's worker and single mother of three, says she can pay the bills now without working 55 hours or more per week."

The question is: if the policy was on when Crystal Johnson joined the workforce (and being a 36yo single mother of three minimum wage worker my guess is that she didn't join a long time ago, probably due to a big change in her life) would she have a job at all? Or restaurants would've hired more qualified/experienced workers?
 
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Altis

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Sep 10, 2013
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Labor is worth whatever people are willing to pay for it.

I'd far sooner address the reasons why wages have become so dismally low, as well as why the cost of living has increased so much, and why taxes are so high (at least in Canada).