Minimum wage

[rustled]

Rustled, I used $2 because the $3.5 increase is being done incrementally over 4 years, so I went roughly in the middle to highlight the relatively minor impact incremental increases in wages have on choosing the optimal number of employees.

I also appreciate the numbers you just posted because even those indicate that increases to the minimum wage needed to be dramatically adjusted.

Per your numbers there's been a $1 per hour increase in the last 5 years, roughly the same as there was in the 5 years between 1967 and 1972. The difference however is that in 67-72 the 90 cents represented an 81% raise over 5 years, where as the $1 increase in the last 5 years represents only an 8.8% raise. That's a pretty significant difference, almost 10 times different, it's also a pretty good indictator that something needed to be done to bring the minimum wage increases in line with what history has shown to be sufficient.

The OP presented this topic as a discussion about Ontario's leap to $15, and various posters are discussing the need to follow suit, sometimes based on their belief the minimum wage should be enough for a single person to live on. As we've discussed, this does not strike me as a sensible policy, since there are many people who wish to work but do not expect to fully support themselves for any length of time solely on the wages they'd earn as a starting-out employee. It seems practical to consider all aspects of what will happen if we do push all wages to what is considered "sufficient". Therein lies the problem.

Percent increases are part of the picture, as are the "basket of goods" inflation figures which seem to show our dollar goes further than it did. This doesn't seem likely to me, and we are missing the "housing" part of the equation. However we slice this and dice it, we won't be able to make everyone happy. IMO, we need to focus on finding the most effective solution to the problem. If the problem is simply defined as "some people can't live on what they earn", it's simplistic to support a minimum wage increase as "the solution". If we don't look at the whole picture, we stand to cause even more trouble for people who already can't live on what they earn, and for others.

I made a spreadsheet showing the minimum wage, the number of days (then years) since the previous increase, the increase as a dollar figure and then as a percentage, and what that percentage translates to per year:

Date Minimum Wage Days Years Increase as % per year
15-Sep-17 $11.25 365 1.000000 $0.40 4% 0.037
15-Sep-16 $10.85 366 1.002740 $0.40 4% 0.011
15-Sep-15 $10.45 1232 3.375342 $0.20 2% 0.039
1-May-12 $10.25 182 0.498630 $0.75 8% 0.157
1-Nov-11 $9.50 184 0.504110 $0.75 9% 0.009
1-May-11 $8.75 3468 9.501370 $0.75 9% 0.094
1-Nov-01 $8.00 365 1.000000 $0.40 5% 0.020
1-Nov-00 $7.60 945 2.589041 $0.45 6% 0.025
1-Apr-98 $7.15 913 2.501370 $0.15 2% 0.037
1-Oct-95 $7.00 214 0.586301 $0.50 8% 0.040
1-Mar-95 $6.50 699 1.915068 $0.50 8% 0.072
1-Apr-93 $6.00 425 1.164384 $0.50 9% 0.049
1-Feb-92 $5.50 671 1.838356 $0.50 10% 0.201
1-Apr-90 $5.00 182 0.498630 $0.25 5% 0.042
1-Oct-89 $4.75 457 1.252055 $0.25 6% 0.007
1-Jul-88 $4.50 2769 7.586301 $0.85 23% 0.556
1-Dec-80 $3.65 153 0.419178 $0.25 7% 0.016
1-Jul-80 $3.40 1643 4.501370 $0.40 13% 1.570
1-Jan-76 $3.00 31 0.084932 $0.25 9% 0.061
1-Dec-75 $2.75 546 1.495890 $0.25 10% 0.201
3-Jun-74 $2.50 182 0.498630 $0.25 11% 0.111
3-Dec-73 $2.25 364 0.997260 $0.25 13% 0.048
4-Dec-72 $2.00 945 2.589041 $0.50 33% 0.133
4-May-70 $1.50 915 2.506849 $0.25 20% 0.397
1-Nov-67 $1.25 184 0.504110 $0.15 14% 0.059
(If you quote this post, the mess might sort into columns. This works on my screen.)
It would be interesting to correlate this with job opportunities available to inexperienced workers.

ETA: I have to say, I do appreciate that the current government is taking a measured approach to this issue. The consultation and implementation periods should allow us to learn from the experiences of other provinces.

[Queen K]

Can't find workers, raises wages offered, in the USA.

http://money.cnn.com/2018/01/17/news/ec ... index.html

[Omnitheo]

Can't find workers, raises wages offered, in the USA.

http://money.cnn.com/2018/01/17/news/ec ... index.html

Or they could always let people immigrate to the country to fill jobs...

[rustled]

Can't find workers, raises wages offered, in the USA.

http://money.cnn.com/2018/01/17/news/ec ... index.html

Good news. More job options for skilled workers (and more opportunities for workers to become skilled!) which means those requiring unskilled workers will have to offer more, too. (Which drives up cost, but hopefully not at a rate that makes the increased wages moot. I don't think anyone wants to return to a runaway inflation "wage and price controls" scenario.)

It's good to see the U.S. economy is improving.

[Poindexter]

rustled:However we slice this and dice it, we won't be able to make everyone happy. IMO, we need to focus on finding the most effective solution to the problem. If the problem is simply defined as "some people can't live on what they earn", it's simplistic to support a minimum wage increase as "the solution". If we don't look at the whole picture, we stand to cause even more trouble for people who already can't live on what they earn, and for others.

Have you been reading my procrastinaters guide to solving problems?

There is no better way than to put off fixing problems then waiting until you can fix everything at once. Like any complex issue, there are plenty of excuses to promote inaction, many of which have been highlighted by you and others on this thread but that wouldn't start the ball rolling in the right direction, and that is what we need to be doing.

As I've shown in my two previous posts, mrp=mrc proves that incremental wage increases have very little effect on calculating the optimal number of employees firms hire, and that the numbers you provided indicate we've fallen behind historically tested norms for minimum wage increases. To hold off on fixing this issue simply because there are other issues to fix regarding labour is a good way to solve nothing. The reason I know this very well is because it's the same method of reasoning I like to use when my wife says it's time to organize the garage.

[rustled]

The MRP=MRC demo was interesting, but failed to take all costs into account. Oversimplification for the sake of illustration?

I wouldn't say cautiously phasing in larger rate increases, while monitoring the effects those same increases are having in other provinces, is procrastination. Rather, that it's prudence.

Just as you would find it more sensible to take the time to figure out what you need in your garage to organize your garage efficiently, rather than spending the money to buy a bunch of plastic bins and shelving and hoping it will all work out for the best. You'll likely need some plastic bins and some shelving, but you'll want to make sure the bins and shelves are not too big and not too small to be effective, and you might want to save some of your budget for pegboard, right? Or you might find you need only a few of those plastic bins, because your best investment for a truly efficient space would be a rolling toolbox with a work surface.
http://www.canadiantire.ca/en/pdp/inter ... p.html#srp (Don't tell your wife I suggested it.) Meanwhile, if you've jumped the gun to keep the wife happy, you're trying to work around all those less-helpful plastic bins and shelving.

Point being, there's no benefit in the government investing in a pile of bins and shelving, if that's not going to properly address the issue and will instead cause other ones.

It will be interesting to watch what happens in Ontario and Alberta.

[Poindexter]

Unfortunately you are still not understanding mrp=mrc so obviously I'm not over simplifying. The formula shows that incremental hikes in wages have less of an impact on calculating the optimum number employees one should hire, than one would expect. I highlighted 'incremental' because that's the part you're missing. The payroll taxes, benefits, current wage and everything else are already included in what determined the number of employees the firm had prior to the wage increase. You need to isolate the impact of the increase in labour costs, or the change to the mrc side of the formula (which would include all increases in labour costs, payroll taxes, etc), to calculate if there needs to be a change in the number employees required after the increase. If its still equal to or under the mrp after the wage increase, then there will be is no change to the optimal number of employees a firm requires.

Your ability to muddy the waters is truly a strength of yours, and as it turns out, so is organizing garages which I appreciate the advice on.

[rustled]

Unfortunately you are still not understanding mrp=mrc so obviously I'm not over simplifying. The formula shows that incremental hikes in wages have less of an impact on calculating the optimum number employees one should hire, than one would expect. I highlighted 'incremental' because that's the part you're missing. The payroll taxes, benefits, current wage and everything else are already included in what determined the number of employees the firm had prior to the wage increase. You need to isolate the impact of the increase in labour costs, or the change to the mrc side of the formula (which would include all increases in labour costs, payroll taxes, etc), to calculate if there needs to be a change in the number employees required after the increase. If its still equal to or under the mrp after the wage increase, then there will be is no change to the optimal number of employees a firm requires.

Your ability to muddy the waters is truly a strength of yours, and as it turns out, so is organizing garages which I appreciate the advice on.

Hm. Well, I looked again, and again I have to say: he seems to be oversimplifying to explain a concept. Let's leave aside that he has underlined how his scenario requires both a perfectly competitive labour market and a perfectly competitive product market. He specifically says each new worker will work for $20 an hour, so no payroll costs built in there. Is it in the output side? Well, he has figured out how many pizzas a team of 2, 3,4 or 5 can produce together in an hour: total output of unit numbers, not cost. Total pizzas. I double checked this, and yes, the additional output generated by each worker added to the team is a unit number. He specifically says they will sell each unit of pizza for $10 each. So this formula isn't even taking into account the cost to produce the pizza. (Regardless, I don't think he intended it to be used for what you're using it for, here.)

Surely how labour cost impacts output cost per unit sold for various businesses must be quite varied. Some businesses are labour intensive, while others are not.

I get that the current government was initially looking at incremental increases to get the minimum wage to $15/hour by 2021, a $3.65 increase over three years. Each of these incremental increases will be relatively large, both by $ and by %, compared to previous increases. I'm very glad the province is moving relatively slowly on this. I look forward to hearing what the commission finds:
http://www.timescolonist.com/news/local ... 1.23057612
If asking people to look critically at what may turn out to be an oversimplified solution (especially one that could backfire and do more harm than good) can be considered "muddying the waters", consider me guilty as charged.

[Poindexter]

I really do appreciate that you watched the video, it's not often posters are willing to extend the effort to understand theories that are in conflict with thier own. So for that thanks.

The video's intention however, is to explain an economic theory that may take 20 minutes in a university economics course, as well as an assignment meant to have you drill down on the intricacies of the theory. In other words, the fact he attempted to condense it into 60 seconds shouldn't be used as a counter argument about it's simplicity unless as I said, your intention is to muddy the waters.

Hopefully the economic principle itself however, is understandable enough so you can apply it to understanding the true impact incremental minimum wage increases would have on overall job numbers. The reason I did this was because one of your counter arguments is that it will hurt the very people it was intended to help because far fewer jobs would be available. The formula clearly demonstrates that this arguement is greatly exaggerated.

I also hope you can see how you've fallen back into the comfort zone of the procrastinators handbook at the end of your post. Chapter one is that if we don't know for certain it will have the exact impact we desire, to a tee, then it isn't worth doing. The fact is you will never be certain of anything other than death and taxes. Risk will always be a part of change. So to be paralyzed until that prerequisite of certainty is met, means improvements will never be realized because the method of change was predisposed to inaction.

[rustled]

Is that really something you feel that particular video actually shows?

I guess we shall have to agree to disagree, as I very much doubt the formula was intended to be used as you've used it. Perhaps muddying is in the eye of the beholder?

IMO, a lot of people have an incredible blind spot about how larger-than-norm minimum wage hikes impact us.

Fortunately, we have the opportunity to watch how this plays out with our neighbours in Alberta and fellow Canadians in Ontario implement theirs. This will be a truer test theory and formula, more closely resembling what's likely to happen here if we enact similar bigger-increment raises. Perhaps all will be well, with only minor hiccups and no significant harm done, although I'm glad I won't be the one to decide how we ought to rate the negative effects. (Always trying to walk a mile, and all that, and knowing we never really can.)

I'll also be watching as the BC NDP (who have already backed away from their election promise of $15 by 2021) continue to do their due diligence. For once, I'm on side with them studying the issue, although as usual it seems to me they really ought to have done that before they made those promises. Funny how "$15 by 2021" was great in theory, but they weren't so sure they wanted to take responsibility for application once they were in a position to make it so. Ah, the joys of being in the opposition. Heavy lies the head that wears the crown, and all that. But I digress. Still, one person's procrastination is another person's due diligence, and apparently judging by the NDP standing down, I'm not alone in thinking this.

I'm curious. Do you believe we should go to $15 by 2021? Do you believe that incremental raises of more than $1 per year can't have any greater an impact on job availability than the smaller increases we usually experience, or that those impacts will be marginal enough they won't significantly damage marginal employees' opportunities for work? How does the NDP's decision to draw back from this promise affect your beliefs?

NOMDB, of course, just wondering if you're willing to share.

[Poindexter]

Do you believe that incremental raises of more than $1 per year can't have any greater an impact on job availability than the smaller increases we usually experience, or that those impacts will be marginal enough they won't significantly damage marginal employees' opportunities for work?

What I think doesn't matter and just to be clear, I didn't vote ndp but I'm willing to allow the party that won the election to have a shot at fixing some neglected issues before I pass judgment in the next election.

But since your asking, what I'd do is raise the minimum wage a significant enough amount to actually judge the impact. What I wouldn't do is commit to a 4 year plan until I studied the outcome of the original increase. So I'm not in complete agreement with the BC plan but I'm willing to see where it takes us and in 4 years I'll vote on whether I like where we ended up.

[The Green Barbarian]

What I think doesn't matter and just to be clear, I didn't vote ndp but I'm willing to allow the party that won the election to have a shot at fixing some neglected issues before I pass judgment in the next election.
.

It's too bad that the current party in power didn't actually win the election.

[CapitalB]

It's too bad that the current party in power didn't actually win the election.

They never do.

[The Green Barbarian]

They never do.

[CapitalB]

They never do.

Looks like 43% of voters lost on that one. In my opinion thats a pretty good argument for proportional representation, nobody who votes should be voiceless for four years.