is supposed to redistribute money from rich to poor. But economists disagree about whether it actually does so. Some researchers, for example, have found that, in America, Canada and Europe, raising the minimum wage tends to decrease employment among the least-skilled workers, as firms downsize to trim costs. Others have found no effect on employment.
A new paper by Lev Drucker and Katya Mazirov of Israel’s Ministry of Finance, and David Neumark of the University of California, Irvine, examines increases in Israel’s minimum wage in 2006-08 in search of an answer. The more low-wage workers a company employed, they found, the more its profits declined. Companies with 60-80% of staff earning the minimum wage saw their profits cut by almost half.
Since business owners with low earnings relative to their peers are still relatively well off compared with the general population, raising the minimum wage is still progressive. But it may seem unfair, as low-income businesspeople pay, but richer business owners and better-off employees do not. Those lower-income bosses who were hardest hit by minimum-wage increases earned only about as much as many mid- to high-earning workers.
In some places, minimum-wage rules are designed to try to minimise the impact on low-earning firms. In America they apply only to businesses with sales exceeding a certain threshold. In South Korea, a minimum-wage increase in 2018 was accompanied by subsidies for small firms. The authors do not discuss how Israel’s lack of such provisions might affect their findings. But they do suggest using an employer tax credit to offset the disproportionate burden of minimum wages on low-income firms.
The POLIS is a the people. You can make money and still participate in the polis. You can’t rape the people and expect to have a polis.
Piss poor business models.
We're CEOs in these poorer companies earning 700% or more in Israel?
alllibertynews Aye but America will cover the vile ones when it goes wrong anyway.
Seems logical. Try to run a small restaurant.
Was that the immediate effect, or long term? Where were their profits after the economy had absorbed the wage increases? What was the effect in GDP and disposable income? Did public poverty subsidies reduce?
Still profitable? If not, their business model is not viable
Not at all surprising.
Companies with less than 10 people should be exempt from paying a liveable wage as long as none of their employees are full time
good, the insatiable desire for profits is destroying the world
Still turned profit
Solution is to have govt provide financial assistance to small biz to help them afford increased min wage, than taper off help as company grows in size and profit and can pay in full on their own.
Raising the minimum wage is a placebo effect because everything else raises with it only a dumb mfer is going to be happy about it.
MORE STUPIDITY
Yeah no shit. Massively disproportionate effect on small business.
The purpose of an economy is NOT to make profit. It's to FEED PEOPLE. Low profits + healthy people = GOOD economy high profits + hungry people = BAD economy
Bernie and AOC want to do that to America!! PutAOCinGitmo2020
No really? Who could have guessed.
low minimum wages hit MILLIONS of people's pockets. Bosses have had a discount on labor for the past 10 years. Boo hoo they finally have to pay a little more
Double DUH!!!!!!
alllibertynews DUH
Republicans call this 'letting the market sort it out'
When labor is priced above market rates via minimumwage laws, employers will raise prices on consumers as one means to compensate for the artificially higher cost for labor.
They needed a study for this.
Real wages not rising and creating a wealth gap created fault lines in the economy that translated into crisis of 2008 as per R. Rajan in his book “Fault Lines”.
Can't wait till the robots take over and I don't have to hire any employees
If they can’t afford to pay their workers maybe that’s the market telling them their business acumen is poor and it’s time for them to sell to a better manager.
Poor poorer bosses don't get to exploit their even poorer workers.
It destroys small busineeses.
The problem is minimum wages should be progressive based on the size of the company raked by number of employees and sales/profits. Larger profitable corporations like WalMart/McDonalds should have naturally been paying higher minimums than small mom and pop operations.
Everyone involved in this study should be held for causing climate change.
Seriously,will those bosses trade place with their workers
RedAMLOmx
They shouldn’t be trying to grow their business if they can’t survive without exploiting other people.
Wait, you’re telling me the more employees are paid, the less the boss makes? Mind officially blown
Fuck 'poorer' bosses pockets.
Well duh! You needed a study?
.. sorry, did you say ‘a study’..?!?.. has the world suddenly become devoid of common sense!.. 🤦♀️
Minimum wages is a foolish idea.
The assumption that the protection of 'poorer bosses' is in the best interests of society is peculiarly dismal.
If your business plan depends on workers accessing welfare type programs, you need a better business plan.
I reject their premise from rich to poor. 75% of small businesses are non employers. I owned 2 businesses 30 years ago and paid higher than min. wage. I didn't go broke.
The policy actually does lead to lower employment and a weaker workforce by implementing an arbitrary floor on salaries that fails to make sense in a variety of circumstances. Examples: - untrained teenagers - high / low-cost localities - temp work - etc.
juanrallo
Standard of living is true measurement of a good economy. Whether the owner of a small company or the executives of large ones are ambitious and expanding is only good for the numbers on the board which existentially mean nothing. It’s the employees that matter not the entity.
Basically doom for small business owners (see restaurants in Seattle).
Minimum wage increase=more tax for the government =less money for the worker... This is all a loolhole for more tax to the government.
Economists disagree? Still trying eh? When were they right? Can any of them be if they disagree?
alllibertynews When wages rise the capitalists profits fall so obviously small business struggle marx had a perfect understanding
Is this the same economist who tried to tell us there was a 'trickle down effect' when the rich were allowed to keep more of their money!! Now demonstrably laughable. The rich keep their money off shore and it benefits no one but themselves.
They may disagree but 'The' Economist has the correct answer. As always.
Forget the 1% against the 99% class war, the real class wars are: One is between those who working want minimum/better wages and those who look for any job. And one between those who own houses as investment assets, and those who just want to afford a home
“A minimum wage is supposed to redistribute money from rich to poor”. This statement epitomizes how economists helped neoliberals destroy western democracy.
xscoutie If you can't afford to pay a living wage, you shouldn't be in business.
That's a poor excuse.......
How about a profit maximum? Via progressive taxation. Everything above a certain level per capita income goes into the collective pot and gets spent in a transparent way in collective goods to improve the lives of families and individuals.
Always economist have their doubts when is benefits for the meek.
I can see that but those poorer bosses still own their own homes etc
Lack of a living wage is a symptom of poor planning and greed.
Can't have that. Memo to staff: try to understand the difference between relative risk and absolute risk. Questions will be asked. But not by your readers. Obviously.
Is this supposed to be bad news? livingwageforall
The end of slavery hit a lot of industries pretty hard too.
It's obvious. Wages are biggest expenses in any company until ur doing ur business in Africa
Try explaining this one to a modern leftist.
Smaller businesses too
And
What makes me think that 2006-2008 is not the best period for this study?
Who cares? The goal is for net profits to be as close to zero as possible.
you don't say bro
That's still profit for employers as long as they are not subjecting employees to wagetheft.
If the only way a company can stay in business is by underpaying their employees, they shouldn't be in business.
But the staff could buy more, you know, food.
The study concludes: “After months of exhaustive research, using rigorous qualitative methods we conclude: DUH!”
So what? How much profit does a company really need Workers livelihoods should always be a priority. I’m so tired of the BS “but our profits” narrative, especially when stock buybacks get prioritized over wage increases. Bullshit inequality policies.
More important is the data on unemployment. Less profit is still profit.
So did they start bombing the West Bank again to try and gain more land to offset their expenses?
Yeah. They still made profit.
Not in my country, since the increased demand from raising minimum wages beneficts mainly the domestic market, where are the so called poorer bosses.
😍😍😍
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