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Minneapolis Is the Wrong Place to Try a $15 Wage
From Megan McArcle. Excerpt:
"So the who, what, where and when matter a great deal when we are
considering an increase. That’s why, while I’m skeptical of the Los
Angeles increase, I’m downright bearish on the outcomes of a $15-an-hour
minimum wage in Minneapolis.
Look at the relative cost of living in the two cities:
The cost in places like Los Angeles and Seattle is about 30 percent
higher than in Minneapolis. A wage that might have relatively small
employment effects in higher-cost cities can have much larger effects in
places where the cost of living is lower, because local consumers don’t
have nearly as much room to absorb the cost of higher services.
At
the very least, I’d be quite cautious about enacting such an
experiment, particularly before we have good data on what these minimum
wage levels are doing to cities with higher costs of living. If it turns
out that a $15 minimum wage causes a significantly higher unemployment
rate in Los Angeles and Seattle, I’d be very leery indeed of trying the
same in a place with a significantly lower cost of living.
Unfortunately
these campaigns are not constructed by careful technocrats who are
experimenting in small areas before rolling things out to larger
regions; they’re grass-roots movements that generally seem more
interested in questions of social justice than the boring slog of
constructing empirical data.
There's some consolation here.
Imposing a $15-an-hour minimum wage in Minneapolis would give
researchers a real-life laboratory to find out what happens when you
push through a dramatic increase in an area without the dramatic
disparities between median wages and median housing costs that you see
on the coasts. That might end up being bad for Minneapolis workers. But
it would indisputably be great for social science."
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