{ "media_type": "image", "post_content": "https://www.cnbc.com/amp/2021/01/14/biden-calls-to-raise-the-federal-minimum-wage-to-15-per-hour.html\n\nBiden’s plan will eliminate the tip credit/tip minimum wage to restaurants and make server minimum wage $15/hour as well. \n\nWill you still tip? Personally I would prefer to pay more for food rather than tip, like all of Europe has done for forever", "post_id": "6002fb6fd9c94400207bce21", "reply_count": 209, "vote_count": 43, "bowl_id": "552d1d24dc1c586b09d2d051", "bowl_name": "Consulting", "feed_type": "crowd" }
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Since it is beneficial (and I would dare say necessarily) to have discussions like this based in data here it is a study completed in the city of Seattle and its effect of raising the minimum wage in the food service industry.

It specifically says that they did not see any effects of disemployment when wages reached levels of $13 per hour. (The increase to $15 had not been faced in at the time of the study). It makes notation of different dynamics within the different type of restaurants as well.

So, before jumping into simplistic arguments such as “look price and demand curves” and “it is just necessary to live” it is better to look at the data and try to replicate the successes. Is that not something we can all agree with or is each position based on just political posturing? If that is the case then there is no point on looking at the data anyways.

Also, As someone that worked minimum wage until I was 23 yrs old, it baffles me that minimum wage does not follow inflation. Literally in 2010 before getting my first engineering job I was making 7.25 an hour. Today, it is the same. Even accounting for the recession, inflation has eaten into the real value of the minimum wage.

https://poseidon01.ssrn.com/delivery.php?ID=602105112074018105103088073073083100009027025060007078094069114010096001074019099022118037004106027044014127068102090077079021038018032065037100085098093024090070030062047004106023067089071091030080069078107064069118090088000004124022000089010125091071&EXT=pdf&INDEX=TRUE

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That’s absolutely intentional. One half of this country would much rather see that value created through inflation move into business-owners’ profits. By making minimum wage a fixed amount they can have the same arguments against it every time it gets raised, and erode the value to the worker through inflation exactly as you described.

The arguments against raising minimum wage are the exact same ones made against having a minimum wage in the first place.

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I think the minimum wage may not culturally fit with a lot of Americans. As a European (Scandi and British) there are just some things you need to do for society. What is the point of all this civilisation if we condemn some people to work full time and still live in poverty?

If you have to pay a bit more for your food service then too bad! You are supporting a poor household to pay its bills and those people will then be able to spend some of that money to further support the economy. As opposed to the excess profits going to people who have a much smaller multiplier (they save it or spend it abroad so the money sloshes around the economy less).

It is true that some jobs may become completely unviable but that is the story of the industrial revolution and automation. The people will find other work to do. Would you be impressed by a society that employed human beings to do tasks that only add $5/hour of value?* Of course not. Automate that away and use humans for much more productive work so those humans can be paid more.

*There is an important exception, but not a deal breaker, to this rule which is that rehabilitative work to people with disabilities can be hugely beneficial to them personally but they struggle to be as productive as a fully able person. There is an argument that, without government subsidy, these roles will disappear of they cannot be paid a lower wage. However, this can be overcome by, for example, using subsidies or tax breaks so the cost to the employer is reduced even if the wage is higher etc etc. Americans have been to the Moon, you have the brains to take this into account.

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So long as we get to assume that raising the minimum wage has no impact on employment rate, why stop at $15/hour when $1500/hour is an option?

likefunnysmart

Also I finally looked at the *facebook* post you provided for evidence and it’s an interpretation of the same findings from your original article. Except the original article was later and noted that the Seattle Min Wage Project at UW later released findings that suggested they may have been incorrect.

Good lord, man, I hope you’re drunk

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I never quite understood why not making the price a full one.
Adding tips and taxes on top of price makes no sense. Indicated price should be what you pay.
Very happy with this measure that makes perfect sense to me.

likefunny

Tax: it helps keep local government accountable for what their taxes rates are. I know my state sales tax is ridiculously high compared to states with 5% or even 0%. It comes up in discussion when we are electing people to government, and how our state/city mishandles money (I am from Illinois). If I didn’t know sales tax was 10% here I would be more frustrated with businesses charging 10% more for goods here compared to Delaware than I would be at the local government for their ridiculous %

Tips: I am in favor of removing but there will definitely be people in the service industry wanting to keep it. The % of a bill isn’t an appropriate pay scale for a lot of service industries when a tab at a diner is $20 for 2 people and fancy restaurants are $200 for 2 people. Servers that can make an extra $20 on a table for pouring a more expensive bottle of wine will take that over $15 minimum wage.

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Seems like a great plan to destroy small businesses. Restaurants ? Childcare. ? Small stores? All already struggling.

likefunnysmart

I don’t think it’s clear that demand falls. All of your assumptions are around an efficient market — if the USA was efficient, consultants wouldn’t exist.

you have a bunch of people making $15 who are now willing to spend money. So demand may not fall.

And even if demand falls, then that means restaurants are buying less raw materials - which means producers need to lower prices to get rid of their stock —- the profit margin will find equilibrium again.

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Buried in this is in addition to the measure to eliminating the Tipped Minimum wage, it will also ban paying people with disabilities less than the minimum wage.

This is huge and will benefit millions of the working poor.

likefunny

WF1: it is hugely illegal to pay them less for the same job so most just never get jobs.
Tbh, if the person has mental disabilities and then it actually takes extra supervision to support them through work. Personally I would be fine with taxes funding the position. This is a role for society rather than private business (which, within limits, has to be allowed to seek efficiency in a rather cold way).

While productivity and profits have sky-rocketed, peasants don't deserve to get more than $7.25.

Now how can I get $200k in RSUs?

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TM1, actually YOUR privilege is showing. You don't know sht about how the other half lives so don't even pretend. Thinking that someone getting a 100 pct increase in wage (7.25 to 15) cannot 'afford' a 10 pct increase in prices is asinine and not a reason to keep the status quo.

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I don’t like the tipping culture. Being a server should be like any other job where what you do is part of the role. You screw up / don’t perform you get fired. Excellence is a habit it shouldn’t have to need external stimulus.

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From my anecdotal experience with my blue collar small business owner friends...of the ones who start their employees at minimum wage, they're all in price sensitive industries where they'll have to either release employees or cut hours if the minimum wage is raised to $15, since their businesses can't support the kind of price increases that would be necessary to keep paying the same number of hours they are now.

likesmartfunny

“Oh I can do it. Everyone else should figure it out. Just be smarter” isn’t a good argument.

Unless you had 1-2 kids, it’s irrelevant.

Car payments - $100 a month. Daycare: $200 a month. Rent: $700 a month. That’s half your income. And you haven’t paid for food, insurance, gas, etc.

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So now the waiters and waitresses will receive less tip (if any), their income is taxed more since their dependent on their wage not tip as well so this may not benefit them much), and costs for food will go up which means less customers and less staff needed. Well done Biden!!! Great plot to damage the hospitality industry.

likefunny

Only if tax is reported. Cash typically isn’t and I received every tip I’ve ever gotten in cash

Just want to remind everyone that America’s love for tipping has history in racism - https://www.forbes.com/sites/rakeenmabud/2019/02/12/the-racist-roots-of-tipping-reappearing-in-the-gig-economy/

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You know what else in America has a history in racism? Minimum wage laws.

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No if they’re making $15 I might tip a few percent like in Europe but won’t do 20%

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This may take the good service out of the service industry.

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A lot of people in this thread are missing the point. In some states, if you are wait staff, you can legally be paid *an even lower minimum wage* because the assumption is that tipping will bring you up to “normal” minimum wage.

This is horrendously abusive and I am glad to see it corrected. The people this change affects aren’t the high-end workers who are making extra off the bottle of wine. This helps the people working Waffle House or Denny’s and the like in jobs that require a lot of physical toll with very few social safety nets. These people are struggling and being taken advantage of because they have no better options available to them.

Plus, if it erodes our seriously flawed tipping culture, I’m all for that as well.

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Ok, let’s try a different approach. This is an age old debate. The general consensus from EXPERTS (not us), is that economists are still divided on whether it’s a good or bad thing (Seattle)

So, given that the experts are divided, do we:

1. Maintain status quo
2. Provide more case studies / TRY something else and monitor the results

Considering the state of our economy and the wealth gap, I’d go for #2.

Not doing so is the equivalent of “we’ve tried nothing and we’re out of ideas”

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Good post, A2. It’s clear that what we’re doing currently doesn’t work. It’d be a failure to not try to adjust.

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*sigh* this whole minimum wage debate is a smokescreen for a much broader issue - the bifurcation of the labor market in this country which has been rampaging for decades. There used to be a time in this country where you could graduate from high school and get a job at the local factory. You wouldn’t be rich, but you could afford the classic middle class American lifestyle - a house in the suburbs, a reliable car, food on the table and a vacation every now and then. Work at the factory for 30+ years and you’d have a nice pension waiting for you to see you through your golden years and you could be around to enjoy your grandkids.

Well thanks to globalization, all those jobs got shipped overseas and they ain’t coming back. Unless they were lucky enough to get a trucking job or pick up a skilled trade like HVAC / plumbing / electrician, all those workers that used to work at the factory now can only get jobs slinging burgers at the local fast food joint because that is the overwhelming majority of jobs that are being created in this country. And then they scream that these jobs aren’t paying a “living wage”.

Here’s the thing though - these jobs were never designed to be a career. They are meant to be a stepping stone to something else. But when the only job choice you have is to work at McDonald’s or to work at Burger King (or perhaps work at both to make ends meet), of course you will demand higher wages.

This more than anything is the reason why this country is falling apart. And why people will clutch at anything / anyone who promises them things like “hope and change” and “make America great again”.

But the die has already been cast - globalization has destroyed the American middle class for the benefit of workers in lower wage countries and the top 0.01% of this country. America has had a good ride - it will be interesting to see how the citizens of this country react when it fully melts down.

likesmart

There are lots of jobs out there with limited growth opportunities and benefits. In my opinion it’s better to have a low paying jobs than no job.

It’s a slippery slope as if you mandate too high of wages, employment will suffer. The other factor is job protections.

A good example of this is France... wages are set at a moderate level and it’s very difficult to get fired. The end result is people are hesitant to switch jobs as getting a new one is difficult. Unemployment is also quite high, especially for the lower class and youth...

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Why not have said so before the election ? Aren’t a lot of waiters especially in efficient high traffic or expensive restaurants pulling a lot more than minimum wage? If we switch to a no tipping by default culture they will lose.

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Somehow countries without tipping cultures have well-paid waiters in high-end restaurants as well. In fact, in many of those places that kind of job can be a lifelong career choice.

It’s almost as if whether or not the culture tips is irrelevant to whether or not the culture will pay good rates where high-quality service is desired.

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I hate tips not being part of the menu/prices in the first place so I welcome this. I wouldn’t tip once it increases.

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Majority of people will no longer tip

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Why would it matter if people tip less? Even though I doubt that’s true, there’s no reliance on tips if you’re making $15 an hour

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Rip small businesses. It’s a perfect storm caused by covid then legislation.

likefunny

Either way, someone is gonna be the victim here. Capitalism will play its course.

.

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