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Raising the Minimum Wage Is Still a Good Idea for Texas

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Another week, another polarizing result from the (nonpartisan) Congressional Budget Office. The new one, which was released yesterday, is about how a minimum-wage increase would affect employment and family income around the country. Like the last report, which had some controversial projections about the Affordable Care Act’s effects on the labor force, it’s given ammunition to both sides in Washington: to Democrats (who have been calling for an increase in the federal minimum wage in recent months) and Republicans (who oppose it). According to the CBO’s projections hiking the federal minimum wage to $10.10 an hour, from the current $7.25, would indeed increase overall compensation to low-wage workers by some $31 billion. But the number of workers who would benefit would, per CBO, decline, as companies reduce the number of workers to contain labor costs; total employment would decline by about 500,000 people.

I wanted to offer a comment on this because I’ve repeatedly argued in favor of raising the minimum wage, specifically in Texas (which is one of the states where the minimum wage is, by default, the same as the federal minimum). I made that argument in my book, and elaborated on it here at Texas Monthly, exactly one year ago. I still think raising the minimum wage would be a good idea–especially in Texas. I’ll explain why after the jump.

Let’s begin with the usual caveat about the CBO’s projections, and similar such endeavors: making projections is a necessarily imprecise practice. With that said, the CBO’s logic is squarely in line with usual arguments for and against the minimum wage. In general, raising the minimum wage means that people who earn that wage will earn more income. That’s generally considered a good thing, at least in the context of the United States circa 2016, where the federal minimum wage is a modest $7.25 an hour. Conversely, minimum wage increases–and, in fact, the minimum wage itself–is generally thought to have adverse effects on employment in general; if companies have a limit on what they can afford to spend on labor, and labor becomes more expensive, they will purchase less labor–in other words, hire fewer people. There are plenty of debates amongst economists about the details–about whether, for example, a minimum-wage increase will cause companies to lay off full-time workers, or to decline to hire extra part-timers, and so on–and the CBO report reflects some of that uncertainty. (The headline figure–500,000 fewer jobs–is actually the office’s central estimate; getting more specific, they predict that there’s a two-thirds chance that the actual figure would fall between “a very slight reduction in employment and a reduction in employment of 1.0 million workers.”) While Democrats have questioned the CBO’s numbers, then, they haven’t really questioned the office’s logic.

Texas, in my assessment, is a state where we could reasonably expect the negative employment effects–the job losses–to be on the low end of the range. I explain my reason in the piece linked above at more length, but the gist of it is that there are a couple of factors about Texas that don’t apply to all states. First of all, Texas has exceeded every other state in creating and preserving jobs. Our unemployment rate has been lower than the national average for more than six years. Our total employment number has steadily grown almost every month for nearly as long. Since the beginning of the century we’ve been creating jobs in every which way–in pretty much every industry, every city, and every wage quartile. And many of those jobs have been minimum wage jobs. But if you think about the types of jobs that pay the minimum wage, you can see why I think the minimum-wage job growth is a result of Texas’s staggering growth, not a cause–as the population has grown, as state GDP has grown, as the economy has diversified, the state has built hotels and fast-food restaurants and gas stations and movie theaters to meet the needs of its growing population. And in Texas, in contrast to a place like the District of Columbia–where the recent campaign to raise the minimum wage was challenged by companies (specifically Wal-Mart) that threatened to take their business across the street to a neighboring jurisdiction–it’s not easy to relocate your store if you don’t like the labor protections available. A couple of Chik-Fil-As might close. None of them are going to move to Louisiana. The point is not that there would be no adverse impacts of a minimum-wage increase in Texas; there would be some people who are negatively affected, and that should be considered. But if any state can handle an increase, it’s this one.

Beyond the pragmatic questions, though, there are normative issues at stake. Here, too, Texas is in a special position. Our poverty rate, at 18.5%, is higher than the national rate (15.9%). Texans who live in poverty are arguably more vulnerable than people living in poverty in other states, because of our threadbare social services, and poverty is correlated with many of Texas’s other ills, from public health problems like Type II diabetes to low rates of post-secondary education to the fact that my car gets broken into roughly once every six months on Austin’s east side. And–this is significant–our poverty rate is nearly three times as high as our unemployment rate (6.2%). That’s because the minimum wage is too low. A person could work full-time, in this state, and if they earn the minimum wage and have one dependent, they won’t even make enough money to crack the federal poverty line. That hardly seems fair.

This normative argument, more than the pragmatic one, is the crucial point in favor of raising the federal minimum wage, too. This is the United States; compared to most rich countries, we eschew the welfare state, and as a matter of social mores, we generally expect adults to contribute to their own upkeep if they are able to do so. Millions of people are doing so, and nonetheless unable to provide adequate resources for themselves or their children. This shouldn’t be a partisan issue. And, in fact, it hasn’t been in the past–the last president to raise the federal minimum wage was George W. Bush. Barack Obama is right to aim for the same goal.  


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  • José

    As you imply, there SHOULD be considerations aside from the one about how it affects business or profits or employment. If we made decisions solely on the basis of whether it was “good for business” then we would still have slavery.

    • WUSRPH

      I agree about the minimum wage…..However, we lead the nation in the percentage of our work force that is paid the minimum (OR LESS)….and I doubt whether that will change if it is raised.

      • Wilson James

        I’m thinking slavery was more economical. The “owners” provided little health care, shelter was a one time cost that went down over time and the poor food provided grown by the slaves. If it were the same cost as wage labor then laborers outside of slavery were as destitute as slaves? Maybe there is a lesson here, outside of the obvious moral one.

        • WUSRPH

          Actually the question of whether slavery or wage labor is
          more economical to the employer is a more than complex question that has long been argued. Defenders of the “slavery
          was les economical” school suggest that it was less economically efficient than wage labor because of such things as 1.) You had to put out large amounts in advance for the slaves in the first place;
          which was not necessary with wage labor who you only hired them for pay to come when you needed them; 2) You still had
          to provide all the services for your slaves—food, clothing, housing, medicaland old age care, etc.—that the wage laborer had to buy out of their wages; 3.) You were stuck with them year round even when most were only useful on a seasonal basis while you could lay off the wage laborer; 4,) If one became disabled, ill or old you
          would have to keep providing for them when the employer of wage labor just fired them and replaced them with often lower paid workers; 5) While you could replace both a wage laborer
          and a slave with a machine, the slave continued to be an economic cost (unless sold, if possible) while there was a savings in not having to pay the laborer. And so forth. So it is not as simple as it might seem. Slavery only became widespread when the supply of indentured servants begun to dry up and would probably have withered away with mechanization (as the share cropper system that replaced it eventually did) even had it not been ended by the civil war….but it was better that it went because of its immorality rather than because it was uneconomic.

          • little john

            You should check out “Time on the Cross” a cliometric approach to slavery.

      • Jed

        all the more reason to raise it.

    • David Dawson

      You sound as if “Business” would just be absorbing the wage increase cost. The purpose of business IS profits. It isn’t a public service with a propensity to aid society.
      If you raise Joey who started work last Thursday from $7.25 to $10.10 where does that leave Mary who has worked there five years and is currently the supervisor at $10.00? What about Ted, Fred and Jed who now make $8.00, $8.50 and $9.50? This is going to add up. You can’t possibly think that these businesses can cut 25% of their employees to cover this cost and do the same job do you? No, prices go up. Now Jed who got a 60¢ raise, a third which went to taxes, has to pay $7.00 for a $5.00 shirt at Walmart. Now we are hurting the very people we are trying to help! While I would agree the minimum wage needs to go up and never should have stopped going up, you can’t just slam-dunk it with a 39% increase now. Investors aren’t going to invest in businesses that don’t provide a worthwhile return.

      • Yes, and this is a lever. Economics is not a game for right answers and absolutes. What we want is the lowest prices with the greatest number of employees making a wage that allows them to purchase food and housing without government assistance. Low prices that provide wages that require government assistance don’t make those super-low prices seem like a very good deal. We should seek an optimal balance.

      • Marco

        Where do you get the 2 dollar increase in a shirt is my question to you. Yes there will be increase in price on goods an services, but the increase will be small. We’re talking 5 cents or dime for some things. The increase in most goods and services will be increase anywhere from 1 to 2 percent. So, for example, a 1 dollar item will be increased by 1 to 2 cents. Or 5 to 10 cents for a 5 dollar t-shirt at wal-mart, not a 2 dollar increase. Don’t try and scare people into opposition by using these false and greatly inaccurate numbers.

        However, if bringing millions of people out of the poverty line and creating more spending power for people in general is a bad and bothers you, then explain why. If you are concerned about yourself or having to spend 2 to 4 more dollars on a 200 dollar item is a big deal, then explain why.

        Increasing wages is a good thing, the rich at the very top have increased their wages by about 10 to 20 times more in the past decade; some started at 1 or 2 million in annual income/perks, you do the math.

        So why not those at the bottom or at the middle?

        Jed who gets paid 9.50 should be accommodated based on his position at his job using 9, and then 10.10 in 2016 as a base. (Keep that in mind, this won’t take effect til 2016, the economy will make up for this by then it grows every year) So Jed should be paid 12 at least, and if he does not get paid the 12, it will be because the company decides not to pay him. So increasing prices any where from a cent to a quarter for goods and services is worth picking up that lower bracket of people who work for the minimum wage, which allows you to buy your cheap goods and services that you take for granted.

        Have a good one.





  • WestTexan

    Raising the minimum wage to 10.10 would be raising it to roughly 50% of the hourly wage nationwide. It would be somewhat higher than 50% of the average hourly wage in Texas. Classic economic theory is that it would cost jobs. The only problem is, that theory has virtually NEVER panned out. The work has to be done and particularly right now when employment was cut back so dramatically due to the downturn, there just aren’t lots of places where employment can be cut further. Look at the UPS debacle at Christmas. You are right. It would be a good thing.

  • Erica uses the obsolete Census poverty rate calculation to make her case, the one that is not adjusted for cost of living and the value of government benefits. The U.S. Census Bureau’s Supplemental Measure of Poverty has Texas at 16.4%, barely above the national average of 16.0%–in fact, within the margin of error. California actually has the nation’s highest true poverty rate, as adjusted for cost of living and the value of government benefits at 23.8%, some 45% more per capita than in Texas.

    Further, because Texas had the 10th-lowest cost of living in the nation in the 3Q2013, a minimum wage hike here would have a far greater effect than in states such as California. In 2013, the cost of living index for Texas was 91.6, for California, 124.3.

    There are far fewer people getting paid the minimum wage in California because that state’s high cost of living forces employers to pay more for labor.

    Raising the minimum wage to $10.10 would equal the equivalent of $11.03 per hour in real purchasing power in Texas vs. $8.13 per hour in California.

    Such an increase would have a large negative effect on Texas competitiveness and result in far higher cost of living pressure here than in California.

    Artificially setting wage floors is a bad idea. The minimum wage is mainly a wage paid to younger workers with less skills and, according to federal statistics, isn’t very common as the main wage of a head of household. Hiking the minimum wage will make it harder for the young and inexperienced to get their first job.

    • Here’s the U.S. Census poverty report I referenced: http://www.census.gov/prod/2013pubs/p60-247.pdf

      • Erica Grieder

        Chuck, I agree that raising the minimum wage here–given our low cost of living–would have a greater effect than doing so in California. Sounds like another reason it’s a good idea for Texas, if you ask me. Why do you think it would have “a large negative effect on Texas competitiveness”?

        • WUSRPH

          But, back to the subject at hand—a minimum wage increase. Chuck uses the standard business/chamber of commerce argument that overlooks many aspects. (Of course so do the other guys.) But he cannot overlook the major beneficial effect that such an increase would have on purchasing in Texas. With more money to spend, more will be spent and that can only produce more demands for goods and services and an expansion of the economy. As to creating a competitive disadvantage….Perhaps with Bangladesh, but our lower taxes, lower cost of living, lower energy costs and so forth more than offset any effect it would have on our competitiveness with our fellow states. It would still be cheaper to do business here than in most of the rest of the nation who would also have to absorb any effect of a higher minimum wage. There might be some difference if Texas raised its minimum wage and the others didn’t, but not if it is a national increase. P.S. Chuck, did you once work in Galveston?…The name is very familiar from my days in that county in the late 60s and early 70s.

        • By increasing the cost basis of goods and services sold. Further, it would put greater inflationary pressure on Texas than on high cost states such as New York and California. Labor clears at a price determined by age old rules of supply and demand. Increase the cost for unskilled labor and people in the market for that labor will use less of it or seek ways of substitution (see the news story a few months ago about the $100,000 fast food machine that replaces most of the labor used in fast food restaurants). Hiking the minimum wage will decrease employment nationwide, but more so in states where the cost of living due to taxes, regulation, law suit environment, etc. are lower.

          Isn’t there some irony in the fact that the U.S. Census, in their more comprehensive measure of poverty, says that California has the greater percentage of poor in the nation, 45% more than Texas? Hiking the minimum wage to $10.10 will likely increase the proportion of poor in Texas as more go without jobs at all.

          • WUSRPH

            A minor increase in inflation should be easily absorbed in a society where inflation is already at virtually record lows. After all, we are not talking about The Argentine here…..In any case, I read the situation as: higher wages = increased demand (spending) = economic growth = more hiring to feed the growth = the general good. P.S. When you play the old “percentage game” such as “45% more than Texas”….you always have to answer the question PERCENTAGE OF WHAT? When you have two crimes in your town one year and four the next, that is a BIG PERCENTAGE INCREASE in a number that means nothing….but there is a big difference when you have to admit California’s rate is 27% (you claim) while ours is 16%. The way you put it makes it look much, much worse. Of course, that was the intent.

          • WUSRPH, it’s all about ratios. If 16% of Texans are in poverty, we can say that 1 in every 6 Texans are in poverty, about the same as the national rate. This compares to 24% of Californians, or about 1 in 4. Put another way, for every 3 people in poverty in California, there are about 2 in Texas — hence, 45% more people per capita. This is a more honest and complete way of looking at a statistic than saying that there are 8% more people in poverty in California — it gives a sense of proportion to the numbers, just as if we were comparing 1% to 8% – the latter is 8 times bigger than the former.

          • WUSRPH

            Come on, Chuck, I made a living “spinning”….I know how to make figures look bigger or smaller to produce the result you want. Using 45% automatically puts the image into the reader’s mind that the number for California has got to be much, much greater than 16% to 24%…It’s true, but that’s not the point……..In addition, I know “inflation” is a dirty, dirty word but sometimes “just a little bit” is helpful….It makes investing more desirable because the return is going to be higher than the current almost non-existent return rate. Again, I’m not talking The Argentine or Weimar Germany…I’m talking about 2014 in Texas where billions of dollars that could be invested in real job producing things are playing the stock market or sitting frozen awaiting a better return. You also have to take into account, which you don’t, the difference in where the two states start out when you talk about an increase in the cost of living, etc. Yes, raising the wage will increase some factors in the cost of living in Texas; perhaps even a total increase; but Texas starts far below California, which will also have an increase due to a minimum wage increase, so the gap will hardly close, if at all. That old dirty word “perspective”.

          • It’s simply math, not “spin.” Lastly, I don’t see it as the Fed’s business, or government’s, to determine prices and manipulate the economy — that almost always ends badly.

          • WUSRPH

            Come on, Chuck, don’t try to duck it….Math is Math and math used in spin…even if it is valid math…is still Spin. As to the role of the government in the economy, that was settled a long time ago with the passage of the Full Employment Act of 1946 and Humphrey-Hawkins of 1978 if not with the creation of the Federal Reserve 101 years ago, the FDIC, the Interstate Highway System, the Bank and Savings and Loan Bailouts (both 2008-2009 and the 1980s)….Whether it has gone to far is worth debating…but it is a reality and has to be taken into account. As to whether it ends badly or not……our economy did not get to be the biggest in the world because govt. stood on the side lines…Business got import duties and tariffs and “internal improvements” from the very beginning; The railroads got land and bonds and federal funds; the steel barons got import duties and strikebreaking troops…and on and on. Govt. has played, will play and does play a role in the economy, like it or not. And part of that role is to insure that an individual who works hard can make enough to feed and cloth his family. P.S. Erica was talking about one of your previous comments….Not the one directed at me but the one questioning the figures she used. P.S.P.S. If not from Galveston, how about any relation to the great Hugh DeVore of my alma matre?

          • Humphrey-Hawkins should be repealed. Nothing is really settled, is it? Was it settled that the top marginal income tax rate was 91% in 1962? Then 70% in 1966? No.

          • WUSRPH

            No but some of our greatest growth came during the period when the top rate was 91% didn’t it…..We aren’t talking wage and price controls here…The last people to do that (with any seriousness) were Richard M. Nixon and some guy from Texas who masqueraded as the Secretary of Treasury.

          • There were several recessions in the 50s that Pres. Kennedy cited in his arguments to cut the top marginal rate. Growth accelerated after the cut.

          • President Kennedy on his tax cut proposals:

            This administration pledged itself last summer to an across-the-board, top-to-bottom cut in personal and corporate income taxes to be enacted and become effective in 1963. I am not talking about a quickie or a temporary tax cut which would be more appropriate if a recession were imminent. Nor am I talking about giving the economy a mere shot in the arm to ease some temporary complaint. The federal government’s most useful role is not to rush into a program of excessive increases in public expenditures, but to expand the incentives and opportunities of private expenditures.

          • Jed

            JFK, economic titan.

          • WUSRPH

            But you do admit that Humphrey-Hawkins is still THE LAW OF THE LAND and until it is not the Fed. has a duty to fulfill. There were also a couple of “economic downturns” during the Reagan-Bush years if I remember correctly….1982 being a particularly bad one…..while Reagan was cutting taxes (and, as the right has conveniently forgotten) raising them too! If you base your rating of the economic policies of the various administrations on the relative health of the economy during their terms over the past 35 years or so you would have to say that Bill Clinton was an economic genius.

          • No relation.

            And no, I was referring to your comments. I used the phrase “honest” there in the context of a full accounting of data. For instance, doubling the marginal income tax from 25% to 50% isn’t just a 25% increase in a tax, rather, in a static analysis, one would be doubling government tax revenue and doubling the income taken from people.

          • nickthap

            “Doubling the marginal income tax” is a meaningless statement. Literally, it means absolutely nothing. In fact, your entire comment is meaningless for what I hope are obvious reasons. It does seem you don’t understand what “marginal” means.

          • WUSRPH

            And all good spinners would say:
            “only a 25% increase” if they favored it; or
            “a doubling of govt. tax revenue” if they opposed it.
            They might also use the actual dollar and cents value of the increase to make it appear smaller, if they favored it….and “Take twice as much our of your pockets” if they opposed it.
            One of the reasons I got out of “public service” was I could not spin any more….But it goes on and on….in and our of govt. and in and out of think tanks (left, middle and right) without me….

          • If you use economics and simply math in the same sentence, I’m nearly 100% sure whatever you’re saying is an oversimplification.

          • Erica Grieder

            Chuck: don’t impugn my honesty.

          • This comment was directed at the prior comment, not your blog post. It’s simply math, not “spin” as WUSRPH said below.

          • Jed

            should you be telling him his job?

    • Jon

      It’s actually interesting right now to see the effects of the oilfield shale boom on the de facto minimum wage in the Eagle Ford and Permian Basin shale areas.

      Because the areas are so short of housing, the labor pool hasn’t been able to keep up with the demand at the same time as the olfield companies can offer far higher salaries to a large part of the pool of workers who normally would be drawn to those minimum wage jobs. The result has been an example of supply and demand, with $14 starting salaries for jobs like ‘sandwich artist’ at Subway in Midland, and the proposed national $10.10/hr figure already being surpassed for things like starting c-store clerk in surrounding cities…

      …not to mention the $50,000 a year pizza delivery drivers.

      That only affects the oilfield play of course, and many of those places having to pay the high starting salaries can’t fully make it up on volume. So the oilfield zones also have become the land of the $5 breakfast burrito, for example, which goes into the cost-of-living status of those living in the areas but whose jobs are not directly tied to oilfield work or its offshoot needs. But it is interesting to see the market self-adjust the minimum wage in those areas to well above what the Obama Administration would even dare propose.

    • Adam

      It looks like the cost-of-living-adjusted poverty rates are related more to income inequality than anything else. California’s cost of living is so high because there are so many rich people there, and people who aren’t rich are getting priced out. Nobody who has been to San Francisco should be surprised by those numbers – the Mission District is the latest ongoing casualty.

      In the first half of your comment, you argue that cost of living pulls wages up; in the second half of your comment, you argue that higher wages pull cost of living up. I think we should clarify the mechanisms at work. Cost of living increases primarily follow high housing demand from people with lots of money (think about San Francisco, New York City, or Austin), which can be fairly sudden, and wages from lower-paid workers thus tend to lag cost of living, not push it upward. As far as cost structure goes, the cost of labor usually only accounts for 5-10% of the price of any particular good, often less. To sum up: I see no evidence that any increase in lower-paid workers’ wages would meaningfully affect cost of living.

      Quick fact-check on the federal minimum-wage stats: the BLS says that 49.4% of workers paid minimum wage are 25 or older. Not sure what your standards are for “younger workers,” but we’re clearly not talking about teenagers getting their first jobs at this point.

      • You have to look at the next age cohort older. If you just advance the age to 26, you’ll see that a full majority of minimum wage earners are 26 and under. Again, the minimum wage is primarily a wage earned by the young, the inexperienced and people earning a second income. Raise the minimum wage and even fewer teens will get jobs, BTW.

        • Adam

          Well yes, if we add more age groups we will get larger percentages, that’s true. What I’m taking issue with is what definition you’re using for “young.” 49.4% of minimum-wage earners are 25 or older, and I don’t think of 25-year-olds as necessarily young or inexperienced.

          The same BLS report says that 68.5% of minimum-wage earners work at least 35 hours per week, so many of these are full-time jobs. I wouldn’t be surprised if a lot of those people are working second jobs, though, because it’s the only way to possibly pay the bills when their wages are so low. If the options are to work 100 hours a week to pay the rent or get evicted, you’ll get a lot of people working multiple jobs. The fact that some people have coped with a bad situation doesn’t change the fact that it’s a bad situation.

          I’m also not particularly concerned about fewer teens getting jobs, particularly balanced against all the people that rely on the minimum wage to pay their bills. Besides, maybe that will reduce our horrific high school dropout rates.

  • John Johnson

    I have no reports to back up my thoughts…just what I consider to be logic.
    What happens to the minimum wage offered in Texas if we deported all the illegals and lined the border with agents a few yards apart? Lots of minimum wages workers are gone. Who will replace them? It certainly won’t be the ones that quit looking, nor the ones who are doing better on the dole than what minimum wage or physical labor has to offer.
    If there is a labor shortage, for whatever reason, better wages and benefits are the only things that will attract new ones. At this point, consumer prices rise. If your economy is healthy, like ours is in Texas, there will be no major business loss or jobs being eradicated.

  • nickthap

    “That hardly seems fair.”

    The GOP doesn’t care about fair. They say it time and again.

    • and democrats do? Can you explain the fairness of obamacare? First take a sip of the kool aid

      • WUSRPH

        Take that up with Mitt Romney. He’s the one who passed it first. You might also ask the Heritage Foundation folks who originally came up with the “mandate” idea and the Newt who pushed it while he was speaker. It was a REPUBLICAN IDEA from the very beginning.

        • BS, dems have been pushing obamacare since Woodrow. The media picked Romney as the republican nominee and the voters rejected him. Why so many dems are now having buyers remorse over President Obama?

          • WUSRPH

            Actually, Teddy Roosevelt suggested it BEFORE WILSON.

  • Beerman

    A recent article in the Austin Statesman made the point that, “if the minimum wage had kept pace with productivity over the past 30 years, it would be over $20 per hour. And, the economy would be booming.”

    I believe it was Henry Ford that said, “I pay the unheard-of wage of $5 an hour because well paid workers generate consumer demand, which in turn promotes business expansion and new hiring, and sells automobiles.”

    • The recent article you cite didn’t take into account the growth in welfare benefits since then. There’s a lot of in-kind assistance today that’s given out in greater numbers and values than before. Further, according the federal statistics, minimum wage earners are mainly the young, people who have second incomes, or non-heads of households. Raising the minimum wage will drive the youth, already the group with the worst employment numbers, into even greater unemployment.

      • Beerman

        Did the federal statistics, you offer, include any info on immigrant labor?

        • I haven’t seen that breakdown. The data I’ve seen lumps it all together.

          • Beerman

            The breakdown would be interesting. The illegal population adds a great deal to our economy in Texas, and most of their wages are at today’s minimum level.

          • Perhaps. Do you think raising the federal minimum wage would result in an across the board increase in these wages too, given that they are not completely in the legal economy?

          • WUSRPH

            There probably would not be much, if at all, of a raise for those in the “shadow economy”. As long as we refuse to face the fact that they are part of our economy….guest worker, normalization or something…they are going to get screwed again and again.

          • Beerman

            I am not sure what the “legal economy” is?

            However, if they live, eat, drink, and buy goods in the USA, they are part of our economy.

            Also, most of the minimum wage labor performed by illegals (construction, lawn care, etc) would not be done by today’s youth. The illegals do it to earn a living and support their families. They do it because they can and no one else will. They are a big part of the Texas economy.

          • nickthap

            They do it because they’re willing to get paid less for the job, and the Republicans that employ them have no incentive to not hire them.

          • WUSRPH

            Take a look at the report Comptroller Strayhorn put out a few years ago on the role of illegals in our economy. It was attacked because some did not like the figures …not that they were not true…only that they did not like them. You may find something useful there.

      • nickthap

        “There’s a lot of in-kind assistance today that’s given out in greater numbers and values than before.”

        Absolute horses&%t. Please provide a source for any legitimate data that proves that an increase in welfare benefits makes up for minimum wage not keeping pace with inflation. You won’t because it doesn’t exist. Next you’ll be saying the EIC and other tax cuts make up for the difference.

        • See: “…since 1965. In constant dollars, federal spending on welfare and anti-poverty programs has risen from $178 billion to $668 billion, a 375 per cent increase in constant 2011 dollars, while total welfare spending—including state and local funds—has risen from $256 billion to $908 billion.” http://www.cato.org/sites/cato.org/files/pubs/pdf/PA694.pdf

          • Jed

            halfway there. now compute the earnings lost by an effective halving of the minimum wage (adjusted for inflation) over the same period. then compare.

          • nickthap

            Cato Institute? Please. Propaganda, plain and simple.

          • You may not agree with them, but the numbers are real–it’s math.

          • Unwound

            Sure, but dont count on them to include #’s that dont support what they want them to.

  • vietvet3

    Just 1 instance, but a telling one: There was a report about 2 McDonald’s, one in eastern WA and the other 10 miles away in Idaho. The WA store paid the state min. wage of over $11, and the other paid the pathetic $7.25. Guess what? The price of a Big Mac was the same in both stores.

    • You realize that these stores may have been owned by the same franchise, with one store’s profits supporting the other? Until you see their P&L statement, you can’t tell much. Further, according to the U.S. Department of Labor, Washington State’s minimum wage is $9.32 per hour, not the “over $11” you claimed.

      • vietvet3

        You’re right about the WA min wage. Here’s the story: http://www.nytimes.com/2014/02/16/us/crossing-borders-and-changing-lives-lured-by-higher-state-minimum-wages.html?_r=0
        Whoever own the stores, the point is, the price of a burger did not go up.
        2 quotes from the article:
        “The competition for workers has in turn forced many businesses on the Idaho side to raise their wages. “I have to offer more to my employees to keep them,” said Steven Lindsay, owner of Main Street Automotive, a repair shop in Payette, Idaho, six miles from Ontario. “People are going to go to where the money is. You can’t blame ’em. They have to make a
        “…and whereas Ms. Lynch covered three tables at a time in her old Idaho job,
        Mackey’s waitresses, with the owners helping out, cover five.
        “You work for the money,” Ms. Lynch said.
        Competition! Hard work! Fine socialist concepts…..

        • Thanks for the NYT piece, vietvet3 (and thanks for your service, I’m a lieutenant colonel in the U.S. Army (retired) Reserve myself). But, the piece you cite mentions nothing about McDonald’s pricing their burgers the same in stores with different minimum wages, to the contrary, the story says the opposite:

          “But opponents of raising the minimum wage can also point to evidence here of negative, or uneven, consequences. When wages go up, they say, prices do as well.”

  • Holly

    Is there any consideration given to what a job is “worth?” I asked for a raise at the movie theater because I was never late and hardly ever burned the popcorn. My boss, who was also my grandfather, said “Honey, it is not a hard job. It doesn’t take much skill. It’s worth minimum wage and no more. Also, there are 500 girls over at the high school who would love to have this job.” I got mad, got some skills, got a harder job and a raise. And became a Republican.

    • nickthap

      The point of raising the minimum wage is to improve the overall economy by pumping more money into it by giving people who spend money more spending money. It’s not a morality play.

      • Holly

        Jobs have value. People should be encouraged to “earn” their pay, not lobby for it.

        • nickthap

          The working poor are not lobbying for it, they can’t afford it.

        • WUSRPH

          And society—business, industry, private and public, including govt.–have to provide a way to be able to “earn” their pay thru education, training, fair and equal pay laws and an open door to all…..without that you can work as hard as possible and still, with the current minimum wage, not earn enough to feed, cloth and medicate a family.

        • Jed

          did your grandpa get to the “why not everyone can be a CEO” part of the story?

        • Fallout2man

          And you’re telling me that CEOs work 375 to 400 times harder than their employees? Have you seen Undercover Boss? ;p

          • You know we’re mainly talking about small businesses here?

          • Fallout2man

            That’s a lovely Red Herring you have there, be a shame if something “happened” to it.

      • Nickthap, that money comes from somewhere. If an employer pays more for labor, and the output is the same, the employer has less profit and less to invest in improving productivity.

        • Jed

          also less to feed squirrels with.

        • Fallout2man

          At a time when businesses are making record profits I think they can more than afford to share a little bit of that with their workers. Business profits have fully recovered from the recession yet wages (except in three states) have actually gone down.

          Also, what’s the point of increasing productivity if that productivity doesn’t translate into wage increases for the workers? If all the money a business earns goes into the pockets of the executives and investors then that business isn’t exactly playing fair. Workers deserve their due.

          • Wow, it’s so awesome that you know more than hundreds of millions of people making decisions on their own. Can I entrust my retirement plan to you?

          • Fallout2man

            Sweet deal! I’ve got some mortgage backed securities you just haaaave to invest in. ;p

  • Want a raise work harder. I’m sick of this entitlement attitude by liberals.

    • Fallout2man

      Who says working harder is going to get you anything?

      • What about working not at all, even if capable?

        • WUSRPH

          In Texas. other than food stamps and Medicaid, it gets you virtually nothing and nothing to a non-working man. .We are 49th or 50th in welfare spending….We starve our non-workers and some of our workers, too. This ain’t California where you came from.

          • And we have work requirements for those benefits. I

          • WUSRPH, how do you figure? Remember that new U.S. Census report that I cited? It uses a new methodology to calculate poverty, one advocated for by those on the left for quite some time. Unlike the old measure, which simply takes 3 times the cost of food as the poverty line, the new measure looks at cost of living by state, the value of government benefits, and the impact of taxes. Using this new, more comprehensive measure, Texas’ poverty rate from 2010 to 2012 was 16.4% while the national average was 16.0%. Texas was within the margin of error of the national average. California, on the other hand, with some of the most generous welfare benefits in the nation (they have 1/8th of the population, but 1/3 of the nation’s TANF recipients, for example) had a poverty rate of 23.8%, the nation’s highest. This isn’t my calculation, it’s that of the Obama Administration. See: http://www.census.gov/prod/2013pubs/p60-247.pdf

          • WUSRPH

            That was my point….We provide little or nothing beyond a very low TANF (with a one time limit), food stamps and Medicaid….And a non-working, but able male does not get TANF….The idea of massive numbers of lazy folks living off handouts just does not apply to Texas…California, where you came from, maybe…But not Texas.

          • I never said there were “massive numbers of lazy folks living off handouts” those are your words. What I said was that our true poverty rate, using a more comprehensive measure, 16.4% is barely above the national average, 16.0%.

          • WUSRPH

            No, you did not. And I did not mean to infer that you did (although I guess I wound up doing that).but too many from your side believe that, even when the evidence is contrary. But then all of us tend to believe what we want to believe sometimes. I’m glad that our poverty rate is not higher…but I would also like to see our per capita wage, percentage covered by insurance and other numbers in a similar ratio to the national average. Here, or course, we have another use of numbers that, without meaning to, makes a real situation look less bad than it is. That .4% above the national average looks small when you put into a percentage figure….but we have a larger population than all but California and that .4 is a whole lot of people when you put in in those terms…especially when the few benefits we provide are so pitiful. Putting that 16.4% another way says that we have more than 4,273,971 people in Texas living below the poverty level, as it is figured your way….That .4% by itself represents 104,213.2 PEOPLE (based on the 2012 census bureau estimates). A “good spin” would use the percentage figures. Making the situation look as bad as you can (another kind of spin) would use the population figures….I can do it either way…but it is much more depressing to use the number of people than to use a percentage without answering that old question: PERCENTAGE OF WHAT?

    • Beerman

      JBB, Careful, many of us know that you have been living off the government teat for a long time!

      • WUSRPH

        You don’t mean he’s part of the 47 percenters. do you? Don’t tell MITT.

        • Beerman

          An Aggie 47%er……..OOPS!

  • Only a bored state worker could view employment as slavery.

  • More on the unintended consequences of hiking the minimum wage from a column by Scott W. Rasmussen entitled, “The Economics Profession Doesn’t Understand How the Economy Works.”

    “Recognizing that most minimum wage workers currently get a raise within a year, some businesses might respond by keeping workers at the new minimum for a longer period of time. Others might trim their profits a bit while a different group might trim the pay of those who earn a bit more than the minimum. There could be other positive or negative feedback as well.”

    • WUSRPH

      There can be a positive and a negative aspect to anything anybody does any time….What has to be estimated—which is all anyone can do before the action is taken–is whether the overall outcome makes things better than they were. An Increased minimum wage that makes it possible to work hard at the lowest jobs and be able to feed and cloth your family….increased spending, increased demand, all are good…..There will be some “bad” as well, but, overall, the situation will be better…and that is what counts,

  • Kris

    Partisan politics is a player, let’s pause for a moment, shall we,

    If you want to help the poor, you could offer other suggestions, guaranteed income, negative tax credits, expanding the earned income tax credit for childless adults,etc. All that would cost money, if a conservative is wise, he will know that tax cuts are tax hikes if other folks have to pay for them and services, which is why the argument for a tax neutral policy holds water. The same conservatives may not however want revenue increases for a tax neutral policy, of course we can presume tax rates are high, however even if tax rates were lowered if revenue was raised there could be a protest on the conservative side. If tax to gdp were 20% and lowered to 15% and later hikes to 18%, conservatives would go nuts about 20% tax hikes.

    On the democrats said its politics, but not in a different sense, with a minimum wage, there is a more practical way to help the poor then have to fight for the above with additional federal programs such as housing, education, healthcare, job training, public sector works, etc. Rather than fight for “more government spending and programs” democrats may not necessarily see the min wage as the “best way of helping the poor, rather the most practical that would resonate with voters and be simple”.

    You could argue and campaign for a min wage, hence obamas “10.10”, rather than promote a thousand page healthcare law and campaign and discuss.

    So its politics, a society such as norway has cost of living issues where a small piece of chicken and bread will cost a lot of money due to socialism. In addition, a min wage increase is great but cost of living is a bigger factor such as health care costs, transportation, housing, education, and the “cost of being poor” meaning less access to banks/credit and living paycheck to paycheck which makes you vulnerable to situations and less savings.

    I agree with Erica that min wage jobs can be a healthy sign of success, much talk about minimum wage jobs are in states with little diversification of an economy, retirees and folks start moving to the sunbelt or states like florida and jobs end up being minimum due to tourism and limited economical diversity.

    In contrast in texas if high and middle income jobs are growing, you can expect more folks to eat out more for instance and spend money on leisure, min wage jobs would be created.
    However, a min wage may hurt texas in a big way, and may not in a curious way, a minimum wage hike would reduce the incentive for a company to hire folks in texas as opposed to other states, while blue states hike minimum wages, if the gap is low, a company in california would save less money if the difference in min wage between the states were $1 instead of $3. Also, a min wage makes sense in texas as not all areas are diversified economically and many cities have a large unskilled labor force. Certain sectors of the economy may also not do so well with min wage hikes. Of course this neglects the issue of illegal immigration and cheap labor, in this case a min wage hike would be more negligible owing to texas’s geography.

    Poverty usually results in increases crime, but it can be overstated and many folks take it personally saying that their struggle doesn’t necessarily make them a criminal. A city like el paso is generally safe if not on of the safer ones in the nation, but poverty and health problems are abundant. Health issues as Erica points out are more complex, for instance the article about health care costs being higher in mcallen,tx then el paso but similar results.
    In addition, cities where employment is high and where jobs are likely to be, be it min wage and others have better social services than rural areas, crime is also influenced by economic opportunity, a growing economy and wealth may spur crime and opportunity. Also, Erica fails to point out that education and even language issues may come to play, it may not be your wage, your lack of proficiency in the English language may hurt you, yes you could learn enough english to get by your job and do “ok, but is that enough to use the internet, read legal and contract agreements?

    In summary, the min wage may not be the problem, but its a more convenient political solution, it will likely be harmful for texas, and if it isn’t it will be because of illegal immigration or shadow economies, and the correlation between income,crime,health is more complex than what Erica is suggesting.

  • William Andrew McWhorter

    The author should take note that the poverty guidelines is measured against all households whereas the unemployment rate accounts for only that subset of individuals that are working or actively seeking work. Attempting to compare such figures is a red herring.

    The federal poverty guidelines you cited are themselves are barely relevant to a nuanced discussion about poor people. There is only one rate for all 48 contiguous states, so that includes New York City and Pharr, TX in the same figure. A lot of people are poor because they can’t find employment or are outright incapable of being employed. (Others are only technically poor by choice because their circumstances allow them to be and they need not be motivated to work hard in order to live comfortably.) Would raising the minimum wage solve real social problems or merely make for a solid populist feel-good moment even as the State tiptoes around those poor people that are the most helpless?

    The author might also ponder the reaction of the discount retailing industry to higher input costs. If it’s an industrywide problem then they can pass it along to consumers; and it may not show up at the bottom of a receipt, but a tax is a tax. In fact, if the businesses that are the most impacted by hikes in the minimum wage are the same businesses that are frequented by low- and middle-income consumers, then the author’s line of argument ultimately becomes a rather regressive means of transferring wealth to the poor.

  • Madrigalian

    When I first started working, I worked for minimum wage. I remember when $4.25hr was implemented and I was ecstatic! I thought, “Finally! I might make a livable wage.” (It was a long time ago) But over time, reality began to set in. Yes, my paycheck was somewhat larger than before and I was happy about that. At least, I was until I started noticing that my disposable income had hardly changed. As soon as minimum wage went up, so did the cost on many things I bought. Such as food, clothing and so on, all started to creep higher. Within a very short period of time, $4.25 an hour felt no different than what I had been making before.

    But hey, I paid more in taxes too! An “unintended consequence” for the government. I’m sure they hardly considered it.

    Later they raised the minimum wage again. (I don’t remember to what) Only this time I was making somewhat (not a lot) more than the new minimum. That was the year they told me I wasn’t going to get a raise because the company couldn’t afford all of the wage hikes and still give raises to other “deserving” employees. I remember wondering why I was working so hard if everyone else was getting raises just for showing up and in the end I was barely making more than they were, despite the added responsibilities. They also started laying off good people and cutting other’s hours to reduce payroll. Those of us who did not get the raise, were required to pick up the slack. And btw, quickly thereafter, the cost of goods again went up.

    The moral of the story, and the lesson I learned, is that minimum wage is not meant to provide a livable wage. It is not meant to build a career from. These jobs were always intended for the unskilled laborer, the teenage part-timer, the student needing extra beer money, the retired person just looking for supplementary income, etc. If you want to make a decent living, educate yourself, learn a skill, develop your own potential value to an employer and get a better paying job. Which is exactly what I did. Today “occupiers” would consider me, the 1%er enemy.

    Minimum wage isn’t broke. It doesn’t need to be raised, again. People need to take personal responsibility for their own lives and work toward something better. And they’ll get there.

  • Ya know, $7.25 an hour may suck, but $0 an hour is even worse.