My response to "A $20 an hour minimum wage really would cost a lot of people their jobs"
by Matthew Yglesias, in Vox, October 28, 2014
If average Walmart nonsupervisory pay were raised to $100 an hour, the price of $10 items rise to $15. Walmart labor costs are 7%. Nonsupervisory workers average $12 an hour. $12 X 8 = almost $100. One of the $12s is included already. 7x7% = 49%.
Double current Walmart nonsupervisory pay to $24 hourly, throw on 25% for benefits to make it $30 and prices rise about 10%.
Somebody challenged me that raising Walmart prices 10% (at $30 -- only 3.5% at $15 min wage) would charge low income consumers $26 billion more a year ($260 billion sales). I pointed out they could take it out of the $560 billion raise they would get from a $15 minimum wage.
A $15 minimum wage would shift about 3.5% of income from the 55 percent of the workforce who garner 90% of income to the 45% who scratch only 10%. $8,000 average raise X 70 million (45% of 140 million + 5% at minimum now) = $560 billion out of $16,000 billion GDP. BTW, 45% of workforce not going to be sent home over a 3 1/2 percent shift in income share.
100,000 out of (my estimate) 200,000 gang age, Chicago males are in street gangs – I say because they wont work for a minimum wage several dollars below LBJ’s 1968 minimum wage ($10.95) after per capita income about doubles. A $15 an hour minimum wage might actually put American born workers back to work at America’s McDonald’s.
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”Denmark has no minimum-wage
law. But Mr. Elofsson’s $20 an hour is the lowest the
fast-food industry can pay under an agreement between
Denmark’s 3F union, the nation’s largest, and the Danish
employers group Horesta, which includes Burger King,
McDonald’s, Starbucks and other restaurant and hotel
What Denmark does have – along with most of continental
Europe and French Canada and Argentina and Indonesia -- is a
labor market setup called centralized bargaining where every
employee doing similar work (e.g., retail clerk) negotiates
one common labor contract with all employers doing similar
business (e.g., Safeway, Best Buy, Walmart).
$20 an hour + benefits: it’s the (centralized bargaining)
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Last breath: our difference with Denmark is not education:
Progressive economist Ha-Joon Chang says that our much
increased education doesn't add much productivity to the
economy. It is just what we have to do to keep up with what
others are doing. He uses highly efficient and productive
Switzerland as an example: going from 15% college to 40%
over two decades.
(2011 book, 23 Things They Don't Tell You about Capitalism)
Berkeley political scientist Martín Sánchez Jankowski spent
nine years on the streets of five NYC and LA poverty
neighborhoods and discovered, among other things, that
ghetto schools don't work because students (and teachers!)
don't see anything remunerative enough in the labor market
when they finish school to make it worth the extra effort.
(2008 book, Cracks in the Pavement: Social Change and Resilience in Poor Neighborhoods)
Some truly free labor market education may be gained
reading: Were You Born on the Wrong Continent?: How the European Model Can Help You Get a Life by Thomas