It seems that at this point, a higher minimum wage is an idea whose time has come. As a liberal who has advocated this for a long time I'm happy to see it.
Scott Sumner isn't happy and would like to see what breakthroughs in economic theory justify it.
http://www.themoneyillusion.com/?p=31590
The answer to this is very simple: it's got nothing to do with Neoclassical economic theory and its armchair debates over what theory says will happen. It's that wages are stagnant and workers are hurting.
Historically the minimum wage was never about what economists said-in the thirties the were unanimous that it was a bad idea that would kill jobs and do more harm than good.
Whether it's a good idea or not there is a need to do something about stagnating wages and the most obvious cure is raising the MW, though by itself this can't solve the problem it seems to be a step.
Matt Yglesias has a very intersting piece on the impact of the $15 MW in California-it's also coming to my home state of NY in a slightly more incremental form-some areas will get to $15 quicker than others.
Some anti minimum wage pundits complain that the MW will lead to higher automation and lower employment for workers at the bottom.
Yglesias has a very interesting take on this: we ought to hope that the MW will lead to higher automation.
"Will minimum wage hikes lead to a huge boost in automation? Only if we're lucky."
"As states like California and cities like Seattle boost their minimum wages up to $15 an hour, critics warn that job losses will be inevitable. In particular, one major line of criticism from outlets like the Wall Street Journal editorial page and Forbes's Tim Worstall is that big increases in pay floors only lead to job loss via automation. Both critics point to initiatives at McDonald's and Wendy's to automate more of the service process, and warn that robots, rather than workers, will be the real winners if liberals succeed in boosting minimum pay."
"This is doubly wrong. On the one hand, there's little guarantee that increased minimum wages really will increase the pace at which labor-saving technology is developed. On the other hand, there's no reason to think this would be a bad scenario. California's minimum wage hike pushes the issue beyond the terrain in which it's been studied."
"If minimum wage hikes really do spur the creation and adoption of high-quality new equipment to automate elements of, say, the food service industry, then that would be a very positive outcome that implies minimum wage hikes are a great idea. Productivity-enhancing technology, after all, is a crucial pillar of social and economic progress. The problem in recent years is that we haven't had nearly enough of it."
Given that, a huge increase in automation is really the optimistic outcome. The thing to worry about is that this won't happen, not that it will.
http://www.vox.com/2016/4/2/11348148/minimum-wage-robots
Yglesias has argued that the real problem for our stagnant wages is not first and foremost, inequality, but a major productivity slowdown that goes back to 1973.
"The 2015 Economic Report of the President calculated that if productivity growth had continued at its 1948–1973 pace for the past 40 years, the average household's income would be $30,000 higher today. By contrast, had inequality stayed at its 1973 level for the same period, Obama's Council of Economic Advisers calculates that the average household's income would be only $9,000 higher."
"The productivity issue is bigger than inequality, in other words. And yet it's much less discussed."
http://www.vox.com/2015/7/27/9038829/automation-myth
But again, this is politics. There's no question that there has been a slowdown in wages. Problems don't happen in a vacuum where we don't try to solve them. What is the solution to stagnant wages?
This is why we see a surge in things like:
1. The push for a higher minimum wage
2. A backlash against trade deals
3. A backlash against the one percent.
Is this report is right, it would mean that Bernie's 'billionaire class' are not the chief culprits. But again-nature abhors a vacuum.
Here's another problem. Raising the MW is probably the most simplest thing for us to do. If the problem is driven mostly by a historical productivity slowdown it's not obvious what we can do about it.
Yglesias does seem to think that somehow we can do something about lower productivity which certainly is good news if true though he doesn't' say how-which makes you skeptical that we relay can.
Scott Sumner isn't happy and would like to see what breakthroughs in economic theory justify it.
http://www.themoneyillusion.com/?p=31590
The answer to this is very simple: it's got nothing to do with Neoclassical economic theory and its armchair debates over what theory says will happen. It's that wages are stagnant and workers are hurting.
Historically the minimum wage was never about what economists said-in the thirties the were unanimous that it was a bad idea that would kill jobs and do more harm than good.
Whether it's a good idea or not there is a need to do something about stagnating wages and the most obvious cure is raising the MW, though by itself this can't solve the problem it seems to be a step.
Matt Yglesias has a very intersting piece on the impact of the $15 MW in California-it's also coming to my home state of NY in a slightly more incremental form-some areas will get to $15 quicker than others.
Some anti minimum wage pundits complain that the MW will lead to higher automation and lower employment for workers at the bottom.
Yglesias has a very interesting take on this: we ought to hope that the MW will lead to higher automation.
"Will minimum wage hikes lead to a huge boost in automation? Only if we're lucky."
"As states like California and cities like Seattle boost their minimum wages up to $15 an hour, critics warn that job losses will be inevitable. In particular, one major line of criticism from outlets like the Wall Street Journal editorial page and Forbes's Tim Worstall is that big increases in pay floors only lead to job loss via automation. Both critics point to initiatives at McDonald's and Wendy's to automate more of the service process, and warn that robots, rather than workers, will be the real winners if liberals succeed in boosting minimum pay."
"This is doubly wrong. On the one hand, there's little guarantee that increased minimum wages really will increase the pace at which labor-saving technology is developed. On the other hand, there's no reason to think this would be a bad scenario. California's minimum wage hike pushes the issue beyond the terrain in which it's been studied."
"If minimum wage hikes really do spur the creation and adoption of high-quality new equipment to automate elements of, say, the food service industry, then that would be a very positive outcome that implies minimum wage hikes are a great idea. Productivity-enhancing technology, after all, is a crucial pillar of social and economic progress. The problem in recent years is that we haven't had nearly enough of it."
Given that, a huge increase in automation is really the optimistic outcome. The thing to worry about is that this won't happen, not that it will.
http://www.vox.com/2016/4/2/11348148/minimum-wage-robots
Yglesias has argued that the real problem for our stagnant wages is not first and foremost, inequality, but a major productivity slowdown that goes back to 1973.
"The 2015 Economic Report of the President calculated that if productivity growth had continued at its 1948–1973 pace for the past 40 years, the average household's income would be $30,000 higher today. By contrast, had inequality stayed at its 1973 level for the same period, Obama's Council of Economic Advisers calculates that the average household's income would be only $9,000 higher."
"The productivity issue is bigger than inequality, in other words. And yet it's much less discussed."
http://www.vox.com/2015/7/27/9038829/automation-myth
But again, this is politics. There's no question that there has been a slowdown in wages. Problems don't happen in a vacuum where we don't try to solve them. What is the solution to stagnant wages?
This is why we see a surge in things like:
1. The push for a higher minimum wage
2. A backlash against trade deals
3. A backlash against the one percent.
Is this report is right, it would mean that Bernie's 'billionaire class' are not the chief culprits. But again-nature abhors a vacuum.
Here's another problem. Raising the MW is probably the most simplest thing for us to do. If the problem is driven mostly by a historical productivity slowdown it's not obvious what we can do about it.
Yglesias does seem to think that somehow we can do something about lower productivity which certainly is good news if true though he doesn't' say how-which makes you skeptical that we relay can.
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