How high is too high for a minimum wage?

[Yo_Mama_Been_Loggin]

By Justin Fox / Bloomberg Opinion ·

Among the 10 ballot proposals that Californians will vote on next week is one that would raise the state’s minimum hourly wage at employers with more than 25 employees to $17 immediately — which would be the highest state minimum in the U.S. — and $18 in January, with annual inflation adjustments after that. The minimum wage for smaller employers would rise to $17 in January and $18 in 2026. (Washington state has the current highest minimum wage at $16.28 per hour, increasing to $16.66 as of Jan. 1, 2025.)

This would not constitute what you could call a radical change for California, whose minimum wage is already $16 an hour with annual cost-of-living increases, and many coastal communities have higher minimums. What’s more, the state added a $20 minimum wage for fast-food chains with more than 60 outlets that don’t happen to be Panera Bread in April and imposed a $23 minimum wage on very large health-care employers on Oct. 16. Though support for Proposition 32 appears to be fading, meaning some of the calculations below could prove academic, it still seems timely to explore the possible consequences of the state’s minimum wage campaign of the past decade or so.

A quarter century ago, the consensus among economists was that raising minimum wages destroyed jobs as employers figured out ways to do without suddenly more-expensive workers. Since then, a flood of empirical studies — summed up nicely in the forthcoming Handbook of Labor Economics by Arindrajit Dube of the University of Massachusetts Amherst and Attila S. Lindner of University College London — have shown job losses after most minimum-wage increases to be modest to nonexistent and the benefits for lower-income workers great. Minimum wage increases seem to represent, according to this new consensus, the supposedly nonexistent free lunch.

Even the enthusiasts among economists still believe, though, that at some level of minimum wage the lunch starts to get expensive. How high is too high? It’s a good question, and it hasn’t really been answered. Future research, Dube and Lindner wrote near the end of their review, “should focus on determining the appropriate levels of the minimum wage, rather than debating the existence of the policy itself.”

https://www.heraldnet.com/opinion/comment-how-high-is-too-high-for-a-minimum-wage/

How high is too high for executive compensation? You never hear that question. Yet many make an excessive wage while doing little for the company they run.

Minimum wage should be a livable wage. It's that simple.

[Basso8vb]

1. How much money do billionaires need?

THAT should be the question. Everyone deserves a thriving wage.

Disingenuous article.

[duncang]

2. The mega company I worked for

Had some slick work arounds to increase the boards pay without making it look like they did.

1. Company paid club memberships across the world.

2. Corporate jets.

3. Cut rate stock buys every quarter. They could buy stock at a discounted price in the morning and sell them that day at a profit. The biggest trade I saw allowed the board member to pick up a extra quarter million in one day.

4. Not being what I would call a full time employee. Some of the board members also were board members at a different company.

[MichMan]

3. Barbara Lee thought the Federal Minimum wage should be $50 per hour when she was running for the Senate

For someone working 40 hours per week, that would be $104,000 per year.

[Basso8vb]

4. You still can't but a house in Silicon Valley for $50 an hour.

Not even close.

[MichMan]

5. If $50 per hour isn't close to being adequate, how much should it be?

[Igel]

8. You'd get a starter house--maybe--in Holmby Hills if you made $90/hr.

Probably need closer to $110 or $120 for it to be respectable.

Make that minimum wage and a lot of surgeons and every teacher west of the International Date Line would be applying for easier minimum wage jobs. (And then live in Bakersfield.)

But not everybody could live in Holmby Hills, and if that was the minimum wage the housing prices would really show a lot of "inflation".

[Metaphorical]

6. I like to counter the argument with this

There are a lot of businesses out there that are only profitable because they pay subpar wages, while still clearing a healthy profit for their owners. Many of these are franchises, where the franchiser provides (frequently subpar) equipment, signage, and the use of related marketing material while taking a significant percentage of the profits. This gives them all of the benefits of having a store while incurring almost none of the costs, including labour, health care, or other benefits. If the franchise fails, they can even take a loss in taxes without actually losing money.

A minimum wage probably does kill barely profitable businesses, but that's the point. If a company is barely profitable by taking money that could go to paying workers a living wage, it shouldn''t be in business in the first place. Making a profit is not a guaranteed right, even though there are all too many people who believe wholeheartedly that it is.

[MichMan]

12. What about manufacturing plants that will be outbid by competitors in China and Mexico?

Causing many of their customers to pull their business and outsource to overseas competitors. I worked for an auto supplier that made parts for the car manufacturers (Tier II) Every single job that was awarded required beating out a competitor in another part of the world, making profit margins pretty minimal. Can't raise prices because your customers won't accept it and will take their tooling and move it to another country. They paid above minimum wage, but not the wages people are advocating.

I guess they all deserve to go out of business

[Metaphorical]

13. Ask yourself this

Why are manufacturers buying from overseas in the first place?

I've watched this same phenomenon in tech. Corporate managers looked for ways to goose profits, and one key way was to use foreign labor in a form of arbitrage. Had the money they saved gone into R&D, to develop more efficient engines, better drive trains, etc., this may almost have been a worthwhile trade-off. Instead, the money went into dividends, and from there into luxury homes, high end cars, expensive trips, and so forth. It hollowed out the expertise of American companies, and made them in turn vulnerable to foreign takeover.

Many "American" companies are now majority-owned by foreign shareholders, especially in tech and healthcare, but manufacturing and finance is not far from the top. They really don't care if American consumers or workers are getting hurt - indeed, in many cases they are happier if they are getting hurt.

[LoisB]

7. A 40-hour @ $23 job in CA is barely enough to pay for a one-bedroom apartment in Los Angeles County.

[Skittles]

9. strange how they always talke about minimum wage

not maximum wage

[justaprogressive]

10. That minimum better be enough to survive on...

$26+ near any city!

[milestogo]

11. If you raise the minimum wage, other jobs compensation has to adjust.

If a job requires a college degree but pays only $18 an hour, how does it make sense for someone working a low skill, minimum wage job to earn $23 an hour. Maybe the college degree jobs need to adjusting, but that is a long, slow process.

[Elessar Zappa]

14. But

minimum wage for lower skilled workers shouldn’t be held back just because some college requiring jobs are paying less than they should. It’s up to those businesses to raise their compensation accordingly.

[milestogo]

15. Agreed.

But people on the next rung are going to complain if they are suddenly equal to the bottom rung. And businesses won't raise the compensation if they don't have to.