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You are correct it's $12.55. But you did understand the point I was making, right? There is really no evidence that the Oakland store closed because of a $12.55 wage. I know someone who works for Regional Walmart security and they said the theft at that store was insane. But the thing that points to the fact that it wasn't just about the minimum wage is the fact that at the same time they closed that store, 153 other Walmart stores closed, most of them in parts of the country where the minimum wage is still $7.25 List of the 154 U.S. stores Walmart is closing
I guess we will never know... I did buy the computer I'm using right now at that very same store.
My Law Enforcement friends did acknowledge the parking lot was a problem... many people with rental cars leaving the Oakland airport and stopping to pick up supplies... sometimes finding their luggage gone when they got back to the car... apparently the store was a money maker per one of the managers?
The minimum wage debate is playing out in real life in the SF East Bay led by Oakland CA... but then Oakland is also imposing offset fees for new homes to go into a affordable housing fund with fees projected to be as much as 30k for home and then rents are now frozen with a moratorium on increases presently...
Very interesting times we live...
The more I think about it the more a few acres in the country sounds more appealing all the time...
Article I just read about a woman living in the Bay Area that was making $30 hour but was priced out and moved to Portland
She spoke of gentrification and rising prices , but said that the
"I’m grateful I had the option to move when things got too tough for me in California, but most people aren’t so lucky. I’m not sure what the solution is, but I know it begins with raising the minimum wage to $15 an hour, so that people who don’t make extravagant tech salaries can at least have a shot at making a living"
This is the illogical mentality of this group . She couldn't survive on $30 hr living frugally , , but others will be able to survive on $15?
Also I don't get the continually repeated statement that the poor " can't move" ?
Ah, but she's likely not working 8 hr days/40 hour weeks @ $30/hr. Her pay is somewhat neutered by her choice of profession that often involves pay gaps between writing gigs. Full time work @ $15/hr (of course, if available) might net her a better month for at least parts of a full year. YMMV.
Really though, $15/hr minimum pay isn't really intended to help her particular demographic. Knowing what she knew regarding the housing market and cost of living, she (and the also modestly paid documentary filmmaker) should have left the Bay area long ago. They should not have waited until the rug was completely pulled from under their feet.
OTOH, people with less resources/double income/kids in school/entrenched in an inner-city neighborhood most certainly *do* have a much more difficult time moving *anywhere*.
Article I just read about a woman living in the Bay Area that was making $30 hour but was priced out and moved to Portland
She spoke of gentrification and rising prices , but said that the
"I’m grateful I had the option to move when things got too tough for me in California, but most people aren’t so lucky. I’m not sure what the solution is, but I know it begins with raising the minimum wage to $15 an hour, so that people who don’t make extravagant tech salaries can at least have a shot at making a living"
This is the illogical mentality of this group . She couldn't survive on $30 hr living frugally , , but others will be able to survive on $15?
Also I don't get the continually repeated statement that the poor " can't move" ?
Do you really think that's true about it being impossible for poor people to move?
Think of back in the day or even now how poor people have moved across the world to come to America.
I would think that moving from the other side of the world would be a lot harder than already being in the U.S and moving within the U.S.
How many possessions do the poor usually have and what would be the realistic estimate to move them?
I think it's more a psychological obstacle versus an economic one.
If you are poor and living in a 1bedroom apartment in the bay area , how much stuff could there be?
Yes if people have kids then there is the issue of schools, but they could probably find a place that's cheaper and has better schools too.
I truly believe for many a move could be life changing.
In many parts of the country poor people can afford to buy a home and build equity in an asset instead of having all their money go to rent.
Yes moving is a pain for anyone, but it seems the trade off of short term 'pain' would be worth it if it means less struggling in the long term.
Limiting growth to a higher compensation rate by means of a higher minimum wage means that the same number of jobs added at minimum wage gets you a higher growth in GDP per capita.
Once you move from static to longitudinal analysis, the math gets more complicated, as does the analysis. GDP does not grow faster. At the end of the day, there will be fewer people employed, fewer new businesses formed, distortions in the efficient allocation of capital, and as a result both GDP and GDP per capita will be lower than they otherwise would be absent the tax on the employers of minimum wage workers and the direct subsidy of those same MW workers.
Quote:
Originally Posted by ContrarianEcon
But they benefit from higher growth in GDP per capita.
No, GDP does not grow faster; it grows more slowly. There will be fewer people employed, fewer new businesses formed, distortions in the efficient allocation of capital, and as a result both GDP and GDP per capita will be lower than they otherwise would be absent the tax on the employers of minimum wage workers and the direct subsidy of those same MW workers.
Quote:
Originally Posted by ContrarianEcon
But they benefit from high growth in GDP per capita.
No, GDP does not grow faster; it grows more slowly. There will be fewer people employed, fewer new businesses formed, distortions in the efficient allocation of capital, and as a result both GDP and GDP per capita will be lower than they otherwise would be absent the tax on the employers of minimum wage workers and the direct subsidy of those same MW workers.
Quote:
Originally Posted by ContrarianEcon
Wrong. The FED will loan out enough money to get 5% unemployment. So if everyone is making more than $15hr instead of more than $7.25hr GDP will be bigger.
No, GDP does not grow faster; it grows more slowly. There will be fewer people employed, fewer new businesses formed, distortions in the efficient allocation of capital, and as a result both GDP and GDP per capita will be lower than they otherwise would be absent the tax on the employers of minimum wage workers and the direct subsidy of those same MW workers.
Quote:
Originally Posted by ContrarianEcon
The growth rate is higher in GDP per capita with increasing minimum wage.
No, GDP does not grow faster; it grows more slowly. There will be fewer people employed, fewer new businesses formed, distortions in the efficient allocation of capital, and as a result both GDP and GDP per capita will be lower than they otherwise would be absent the tax on the employers of minimum wage workers and the direct subsidy of those same MW workers.
Quote:
Originally Posted by ContrarianEcon
Ya but it can pay its workers more to prosperity.
No. Prosperity comes from growth in the real economy. Every time there is a market intervention such as a minimum wage law, General Equilibrium Theory teaches us that GDP does not grow faster; it grows more slowly. There will be fewer people employed, fewer new businesses formed, distortions in the efficient allocation of capital, and as a result both GDP and GDP per capita will be lower than they otherwise would be absent the tax on the employers of minimum wage workers and the direct subsidy of those same MW workers.
The minimum wage debate is playing out in real life in the SF East Bay led by Oakland CA... but then Oakland is also imposing offset fees for new homes to go into a affordable housing fund with fees projected to be as much as 30k for home and then rents are now frozen with a moratorium on increases presently...
Very interesting times we live...
The desire of elected officials to do something to improve the lives of its residents is certainly understandable. Unfortunately, such interventions are the very definition of distortions to the efficient allocation of capital. At the end of the day, people are worse off than they otherwise would be.
When major cities such as Oakland discern a problem such as a lack of affordable housing, they should look inwardly at the barriers to entry the city itself puts in place via zoning standards, building codes, various builder fees and the like. Yes, some of those builder fees go to fund laudable things such as education and public transit, but it is far better to find the funding or such things in general tax revenue rather than specific builder fees.
At the end of the day, the market will decide the market price for housing. Some people will be priced out. It sux for them, but for some people the best personal choice is to move to a lower cost of living area.
Your ideas really do not fit with the beliefs of those who post on this forum. No one wants to hear facts, economic analysis, and logic. And it is not just on this forum. Look at the political arena. We have Trump and Sanders promising to fix everything. Sanders is all for the minimum wage increase to $15/hr. And that is just the start. He promises free healthcare, free college, and I also seem to remember free day care as well. Wall Street is going to pay for it. I am not exactly sure what that means. I suppose he will tax to death anyone who tries to invest in businesses by buying stocks or bonds. Of course, the Wall Street idea is no more far fetched than the Donald who is going to have Mexico build a 50 foot wall.
People want to believe what they want to believe. Putting facts, analysis and logic in the way is not helping.
Once you move from static to longitudinal analysis, the math gets more complicated, as does the analysis. GDP does not grow faster. At the end of the day, there will be fewer people employed, fewer new businesses formed, distortions in the efficient allocation of capital, and as a result both GDP and GDP per capita will be lower than they otherwise would be absent the tax on the employers of minimum wage workers and the direct subsidy of those same MW workers.
Taxing and paying are two very different things. If it isn't worth $15 an hour we don't do it. As apposed to if it isn't worth $7.25 an hour we don't do it.
If we limit those things that are done to a value above $15hr and we do enough of them to achieve the same unemployment rate as with the limit set at $7.25hr. Then productivity will be higher. Roll that higher productivity over into worker compensation and you get higher growth in GDP per capita.
Quote:
Originally Posted by SportyandMisty
No, GDP does not grow faster; it grows more slowly. There will be fewer people employed, fewer new businesses formed, distortions in the efficient allocation of capital, and as a result both GDP and GDP per capita will be lower than they otherwise would be absent the tax on the employers of minimum wage workers and the direct subsidy of those same MW workers.
You are bumping up against a problem. The problem is this, schools of though in economics start with a political agenda and then make the math fit.
You are talking about the dead weight loss. That and the unemployment rate correlate. The FED targets 5% unemployment. The capital required to achieve the higher productivity will simply be printed.
Quote:
Originally Posted by SportyandMisty
No, GDP does not grow faster; it grows more slowly. There will be fewer people employed, fewer new businesses formed, distortions in the efficient allocation of capital, and as a result both GDP and GDP per capita will be lower than they otherwise would be absent the tax on the employers of minimum wage workers and the direct subsidy of those same MW workers.
Dead weight loss ~ unemployment rate. The FED targets 5% unemployment rate.
Quote:
Originally Posted by SportyandMisty
No, GDP does not grow faster; it grows more slowly. There will be fewer people employed, fewer new businesses formed, distortions in the efficient allocation of capital, and as a result both GDP and GDP per capita will be lower than they otherwise would be absent the tax on the employers of minimum wage workers and the direct subsidy of those same MW workers.
Dead weight loss ~ unemployment rate. The FED targets 5% unemployment rate.
Quote:
Originally Posted by SportyandMisty
No, GDP does not grow faster; it grows more slowly. There will be fewer people employed, fewer new businesses formed, distortions in the efficient allocation of capital, and as a result both GDP and GDP per capita will be lower than they otherwise would be absent the tax on the employers of minimum wage workers and the direct subsidy of those same MW workers.
Dead weight loss ~ unemployment rate. The FED targets 5% unemployment rate.
Quote:
Originally Posted by SportyandMisty
No. Prosperity comes from growth in the real economy. Every time there is a market intervention such as a minimum wage law, General Equilibrium Theory teaches us that GDP does not grow faster; it grows more slowly. There will be fewer people employed, fewer new businesses formed, distortions in the efficient allocation of capital, and as a result both GDP and GDP per capita will be lower than they otherwise would be absent the tax on the employers of minimum wage workers and the direct subsidy of those same MW workers.
I could give a crap about theory.
In the real world the FED will loan out enough money to get a 5% unemployment rate. The working capital required to achieve the higher productivity will simply be printed.
The text book theories do not model the real economy. In the real economy fewer people employed = higher unemployment rate. The FED targets 5% unemployment rate. There is not a dead weight loss from a higher minimum wage, there is a dead weight loss from higher debt load in % of GDP.
The problem with capitalism is that unregulated it leads to one person having 100% of the resources and everyone else having 0%. Rolling gains in worker productivity over into worker compensation gets you higher growth in GDP per capita. You can use the minimum wage law to do this.
Many people in this thread correctly observe that business owners will substitute capital for labor when the price of labor goes up. We see it in the real world, for example, when a fast food restaurant just hands an empty cup to a patron so the patron fills their own cup with a soft drink.
There is another substitution that occurs, and that is the substitution of higher skilled employees for lower skilled employees.
I'm going to do this by analogy, and I hope it makes sense.
Let's say there are two types of beef products available for purchase: Filet Mignon (relatively high quality), and all-beef hot dogs (relatively low quality). These are partial substitutes (that is, consumers can consume either one).
Let's say the free market dictates the price of Filet Mignon is $10 per pound (relatively expensive) and the price of hot dogs is $1 per pound (relatively inexpensive).
Notice the ratio of the prices of the high quality to low quality product is 10:1.
Now, let's say the government says there is a new "minimum price" for hot dogs of $5.
Instead of the ratio of prices being 10:1, it is now 10:5 or 2:1. That is, the price of Filet Mignon is now relatively lower
Consumer behaviour is that people will buy relatively fewer pounds of hot dogs, and substitute Filet Mignon instead. The reason, of course, is the change in relative prices. When the alternative costs a mere 2:1, you buy more of the high quality than when the alternative cost is 10:1.
This same behaviour will occur when there is an increase in the minimum wage law.
In a simple model with "high quality" and "low quality" employees, the ratio of wage rates might be 5:1. When the minimum wage goes up, the new ratio might be 5:4. High quality employees are now relatively less expensive even though the MW law does not directly effect them.
So, we can expect employer behaviour to change. They will substitute. What type of employee benefits? The skilled employee who sees an increase in demand. What type of employee is hurt? The unskilled traditional MW employee who sees a drop in demand.
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