A columnist for the Washington Post named Megan McArdle published a piece.
An op-ed specifically kind of raising some issues with raising the minimum wage.
Her concern is that raising the minimum wage might actually increase homelessness.
>> Mm-hm.
>> Which is interesting, right?
>> Yeah. >> So, here's the piece.
The title is Higher minimum wages may increase homelessness.
And in it, she decides to cite a non-peer
reviewed study done by someone in San Diego.
So, [LAUGH] here's what she writes in the column, okay?
She focuses on a specific part of Los Angeles to make her case that we've
got some high wages here, but a lot of homelessness.
At the beginning of July, West Hollywood's wage floor rose to $19.08 an hour,
surpassing even Los Angeles and San Francisco.
The predictable arguments followed, employers said they couldn't
afford the higher payroll costs and would be forced to cut back on staff.
Progressives retorted that, thanks to the minimum wage,
vulnerable workers are finally able to enjoy a semi-decent standard of living.
Now, I just wanna interject briefly to note that it is true that some
small businesses have difficulty meeting that requirement, right?
That is a significant amount of money, right?
$19 is not a small amount for a small business that's trying to grow,
trying to stay, to maintain itself.
But there are solutions to that,
including potential government subsidies to help uplift these smaller businesses.
While clearly, the bigger corporations that operate in the state or
in the municipality have the means to increase the wages for their workers.
But I just wanted to make that point and kinda move on.
So let's go to the next part.
Supporters of higher minimums can point to studies that seem to show only
small effects or even positive effects.
Opponents have their own studies showing significant job loss, as well as
the common sense observation that when the price of almost anything goes up,
people will consume less of it.
I won't rehash these arguments any further.
Instead, I want to introduce a new argument,
that higher minimum wages may be contributing to homelessness.
A problem that, of course, is particularly bad in California.
And then she cites the study that kinda persuaded her to make this point and
write this column.
So, it's a paper that's published by a gentleman by the name of Seth Hill.
He's a professor of political science at the University of California, San Diego.
And he analyzed cities that raised their minimum wages between 2006 and 2019.
The findings of this paper, again, not peer reviewed.
I think that's an important part of this story.
He found that in these cities,
homelessness actually grew by double digit percentage points.
And the effect was larger for cities with bigger minimum wage increases, and
it also appeared to get stronger over time.
So with this paper in mind, she writes, the columnist here,
writes that, at first I was doubtful of these findings.
For one thing,
I already assume that minimum wage hikes cause significant unemployment.
And I try to bring extra skepticism to research that flatters my opinions.
For another, this paper is a preprint, not yet pre peer reviewed.
For a third,
homelessness seems to be spiking despite an incredibly tight labor market.
I'm glad that she's aware of that, there is an incredibly tight labor market.
And finally, I've been convinced by policy analysts who argue that the main
driver of homelessness is the refusal of liberal cities to build enough housing.
I'm glad she believes that, because that is true.
Nonetheless, she then says that after she reads the paper,
after she finishes reading the paper, the study seemed pretty solid, Cenk.
>> Mm-hm. >> This is her conclusion,
Hill's conclusions are plausibly modest.
After all, the vulnerable people who are most likely to end up homeless,
those with substance abuse or mental health problems.
Unstable family situations and so
forth are probably also the most likely to be let go when employers trim payrolls.
So the argument she's making here is, no, that makes sense.
Companies are obviously going to lay people off or
fire people if they have to pay a higher wage.
So they'll rely on less workers, that'll increase unemployment.
And the people that they will specifically lay off or fire are the most vulnerable.
People who probably have issues with drug or substance abuses or whatever.
Those people end up on the streets, and
that's why we're seeing an increase in homelessness.
What do you think about that argument?
>> So, I don't agree, and I think it borders on silly.
But there's an important distinction here.
Which is that, when I first saw the headline, I was, okay, here we go,
another lunatic, right?
With some insane thing about, my God!
If you just gave the rich more money, there'd be less homelessness, or
some insane theory, right?
And it turns out, no, she's just a classic conservative.
So, she references a study, she gives her point of view, she gives facts.
So it's a normal argument, okay?
So, that's, I'm being fair to her, right?
And it's not impossible the minimum wage could be too high.
It could be, like if you put the minimum wage at $100 an hour, then yes,
obviously restaurants couldn't hire people to be their waiters and waitresses.
But can a minimum wage be too low?
Of course, right now it's way too low, it's $7.25.
And at that rate, you can only make $15,000 a year if you worked a whole year
and never take a day off, okay?
So now the question is,
where should the minimum wage be to get to maximum efficiency?
Well, if it kept up with productivity right now, it'd be at $24,
in that ballpark.
It's nowhere near $24, that means they are paying you less for
the minimum wage than your productivity merits.
Which means that they're still making the money,
it's just the people at the top are making more money.
So, even if this argument was correct, and I don't think it is.
First, let me tell you why I don't think it's correct.
She says, okay, look, if we increase the minimum wage and
that leads to some job losses.
First of all, all the studies have shown that it does not.
>> In fact, a McDonald's Executive admitted, admitted as such.
That they thought, no, raising the minimum wage was gonna hurt the business to
the point where they were gonna have to lay people off.
And then he's, but that didn't happen at all, actually.
>> Yeah, and different cities have tried this, and states have tried this, and
they've studied those.
And it has shown either no effect or sometimes a positive effect,
more jobs rather than less jobs, okay?
So that's great, but even if it was true that you got a couple of less jobs and
those people were forced to be homeless.
But then you're discounting the idea that, wait a minute,
a lot more people got a little bit higher wages.
Which that means some of them or a lot of them can now afford the rent.
And they could have been homeless, but are not anymore, right?
In LA there's tons of working poor who are homeless.
>> Yeah. >> Because their wages are low, and
that's true in a lot of the country.
And their wages in LA are not that bad as far as minimum wage compared to the rest
of the country.
Look, guys, so the giant part that is left out of this whole conversation is,
how about all the people getting a raise?
>> Yes.
>> So, that's 33 million Americans, if you applied it to the whole country,
let's take $15 minimum wage as the standard.
Although Bernie now rightfully says with inflation, it should be $17, okay?
But let's say $15, it would affect 33 million Americans.
And collectively, it would give them a $92 billion raise.
>> Yeah, can I?
>> That's all the difference in the world.
>> Okay, I got to jump in on this, right?
Because think about how our economy is supposed to work, right?
Supply and demand, now if you have people with less disposable income,
they're living paycheck to paycheck.
They are not able to stimulate the economy with their disposable income.
They are unable to buy goods and services, which, in theory, right?
End up uplifting these companies, uplifting these small businesses.
Now, because of the Federal Reserve and its monetary policy, its fiscal policy.
And because of these major corporations having the ability to essentially do
corporate stock buybacks.
And artificially inflate the value of the stock market or
the shares of their specific stock.
The economy is, it just doesn't make any sense, right?
You look at the valuations for these major corporations, and you're,
how are they doing well when most ordinary people don't even have the disposable
income necessary to buy these goods and services?
So that's where the disconnect is.
So when ordinary workers, when rank and file workers are able to make more money,
they are very likely to spend that money and stimulate the economy.
That helps businesses, small businesses, big corporations,
all across the board, everyone does better.
And so that gets left out of these arguments as well.
And then finally, I wanna address the homelessness issue, right?
Because she seemed to have the right idea in regard to supply and demand.
There is very little supply of housing in Los Angeles, very high demand.
And that is, I think, the main driver of homelessness.
In addition to, yes, it's a complex issue.
There are substance abuse issues, mental health issues, it is way more complex.
So anyone who thinks it's one factor, they are incorrect.
But the lack of housing is a problem, right?
And then you have to consider how the lack of housing leads to higher prices
at a time when wages have been stagnant.
And have been stagnant since the 1970s.
So let's take a look at graphic seven.
From 1985 to 2020, the national median,
median rent price rose from $359 to $894, a 149% increase.
In the same time frame, overall median income
grew just 35% from $84,113.
>> No, $48.
>> I'm sorry, sorry, $48,113 to $64,994, okay?
So obviously, there's a massive disparity there.
Let's take a look at this graph.
Rent price increases have exceeded income
increases by 325% since 1985.
So, people can't afford the housing.
Their wages aren't keeping up with inflation.
And on top of that, there is a shortage of housing.
So, to blame homelessness on increasing the minimum
wage seems a little silly to me.
>> Yeah, for sure, look, our bar is so low now, for right wingers.
The fact that she wasn't crazy made me go, wow, not bad!
A person who put together a rational argument, it's totally wrong.
But it wasn't a lunatic argument, that's my bar now.
Now, having said that, guys, supply and demand, as Ana pointed out there,
improved it.
And the significant increase in really hard drugs like fentanyl,
meth have driven up homelessness so much more than minimum wage increases.
First of all, there's barely any minimum wage increases.
And wherever they've happened, they have not been proven to drive up homelessness.
And all the effects are minuscule compared to the other two giant effects.
So when you're making the argument that maybe it's a tiny,
tiny percentage increase of homelessness because of this.
And that's why we shouldn't have a higher minimum wage, to me,
it sounds like you're stretching to make sure that workers don't get more money.
And you're pretending to be in favor of the homeless instead of in favor of
the giant corporations who don't want those wages to go up.
Cuz they wanna keep the $92 billion for themselves.