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	<title>Comments on: Minimum Wage Hikes – or – What Econ 101 Didn’t Teach You</title>
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	<link>http://blog.principal.com/2013/02/14/minimum-wage-hikes-or-what-econ-101-didnt-teach-you/</link>
	<description>Investment management insights and commentary</description>
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		<title>By: Chris Borey</title>
		<link>http://blog.principal.com/2013/02/14/minimum-wage-hikes-or-what-econ-101-didnt-teach-you/comment-page-1/#comment-75</link>
		<dc:creator>Chris Borey</dc:creator>
		<pubDate>Wed, 13 Mar 2013 14:22:24 +0000</pubDate>
		<guid isPermaLink="false">http://blog.principal.com/?p=1721#comment-75</guid>
		<description><![CDATA[Interesting series of articles. Thanks for sharing this information.  One observation.

To your point on raising the minimum wage and likely causes, you listed  &quot;reducing employee turnover&quot; as one possibility and followed that up with “Henry Ford did it” and  “Costco does it”. 

I occurs to me that these two examples are at best self-refuting against the cause for raising the minimum wage, and at the least,  questionable examples to use to support the much broader question of the affect on employment as it relates to all businesses that are subject to minimum wage standards.    Here’s why: 

1)   Ford and Costco are just two examples (there are numerous others too) showing that the market does recognize when higher wages are warranted.    In the end, their higher wage offerings didn’t require gov’t action for it to occur. 
2) Ford paid his workers who were heads of households and in many cases,  in their chosen career.    It seems a bit disingenuous to me to try and draw a meaningful parallel between those jobs and many (granted, not all) minimum wage jobs that are filled often times by high school kids looking to work a few hours at a fast food joint to make some extra money. 
3) Finally,  if/when the gov&#039;t artificially equalize the playing field (i.e.…and thus Costco’s competitors end up being forced to pay same wages),  they&#039;ve in a sense cut down Costco’s competitive employment advantage and given their employees less reason to stay since the big box store down the street is now paying same/similar wages).      

Bottom-line:    In seems to me,  at least on this one point(given the two examples you cited), it supports the argument that a federal mandate is NOT required as the market will make adjustments and individual companies will be justly rewarded in doing so due to higher employee retention.     In the very least,  it seems to only support the correlation seen when specific individual companies voluntarily offer higher wages.   This is a completely different question than the more broad/sweeping one.   That is, “why doesn’t an increase in the minimum wage seem to affect employment?”     Maybe it doesn’t, but in my opinion,   neither the Ford or Costco examples would appear to be relevant in answering this question.]]></description>
		<content:encoded><![CDATA[<p>Interesting series of articles. Thanks for sharing this information.  One observation.</p>
<p>To your point on raising the minimum wage and likely causes, you listed  &#8220;reducing employee turnover&#8221; as one possibility and followed that up with “Henry Ford did it” and  “Costco does it”. </p>
<p>I occurs to me that these two examples are at best self-refuting against the cause for raising the minimum wage, and at the least,  questionable examples to use to support the much broader question of the affect on employment as it relates to all businesses that are subject to minimum wage standards.    Here’s why: </p>
<p>1)   Ford and Costco are just two examples (there are numerous others too) showing that the market does recognize when higher wages are warranted.    In the end, their higher wage offerings didn’t require gov’t action for it to occur.<br />
2) Ford paid his workers who were heads of households and in many cases,  in their chosen career.    It seems a bit disingenuous to me to try and draw a meaningful parallel between those jobs and many (granted, not all) minimum wage jobs that are filled often times by high school kids looking to work a few hours at a fast food joint to make some extra money.<br />
3) Finally,  if/when the gov&#8217;t artificially equalize the playing field (i.e.…and thus Costco’s competitors end up being forced to pay same wages),  they&#8217;ve in a sense cut down Costco’s competitive employment advantage and given their employees less reason to stay since the big box store down the street is now paying same/similar wages).      </p>
<p>Bottom-line:    In seems to me,  at least on this one point(given the two examples you cited), it supports the argument that a federal mandate is NOT required as the market will make adjustments and individual companies will be justly rewarded in doing so due to higher employee retention.     In the very least,  it seems to only support the correlation seen when specific individual companies voluntarily offer higher wages.   This is a completely different question than the more broad/sweeping one.   That is, “why doesn’t an increase in the minimum wage seem to affect employment?”     Maybe it doesn’t, but in my opinion,   neither the Ford or Costco examples would appear to be relevant in answering this question.</p>
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		<title>By: david ross</title>
		<link>http://blog.principal.com/2013/02/14/minimum-wage-hikes-or-what-econ-101-didnt-teach-you/comment-page-1/#comment-74</link>
		<dc:creator>david ross</dc:creator>
		<pubDate>Wed, 13 Mar 2013 13:53:30 +0000</pubDate>
		<guid isPermaLink="false">http://blog.principal.com/?p=1721#comment-74</guid>
		<description><![CDATA[Robin, 
I&#039;m usually a little suspicious of these reports, especially when they come from an extreme left  think tank like the Center for Economic Policy Research. I&#039;m not disputing their assertions, but perhaps if you presented a counter argument from Cato or Brookings, we&#039;d see a more balanced discussion. Thanks for starting the dialogue.]]></description>
		<content:encoded><![CDATA[<p>Robin,<br />
I&#8217;m usually a little suspicious of these reports, especially when they come from an extreme left  think tank like the Center for Economic Policy Research. I&#8217;m not disputing their assertions, but perhaps if you presented a counter argument from Cato or Brookings, we&#8217;d see a more balanced discussion. Thanks for starting the dialogue.</p>
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		<title>By: Minimum Wage Hikes Part III: Minimum Wages and Federal Assistance &#124; The Principal Blog</title>
		<link>http://blog.principal.com/2013/02/14/minimum-wage-hikes-or-what-econ-101-didnt-teach-you/comment-page-1/#comment-73</link>
		<dc:creator>Minimum Wage Hikes Part III: Minimum Wages and Federal Assistance &#124; The Principal Blog</dc:creator>
		<pubDate>Mon, 25 Feb 2013 20:09:50 +0000</pubDate>
		<guid isPermaLink="false">http://blog.principal.com/?p=1721#comment-73</guid>
		<description><![CDATA[[...] the thoughts from the post I had on Valentine’s Day, I wanted to address a few of the questions I received surrounding the [...]]]></description>
		<content:encoded><![CDATA[<p>[...] the thoughts from the post I had on Valentine’s Day, I wanted to address a few of the questions I received surrounding the [...]</p>
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		<title>By: Robin Anderson, Economist, Principal Global Investors</title>
		<link>http://blog.principal.com/2013/02/14/minimum-wage-hikes-or-what-econ-101-didnt-teach-you/comment-page-1/#comment-72</link>
		<dc:creator>Robin Anderson, Economist, Principal Global Investors</dc:creator>
		<pubDate>Thu, 21 Feb 2013 20:01:47 +0000</pubDate>
		<guid isPermaLink="false">http://blog.principal.com/?p=1721#comment-72</guid>
		<description><![CDATA[Hi Ben! Thanks for reading and thanks for the questions! You bring up some interesting points, so I&#039;m actually going to address these in my next couple of posts. Check back in for the answers!]]></description>
		<content:encoded><![CDATA[<p>Hi Ben! Thanks for reading and thanks for the questions! You bring up some interesting points, so I&#8217;m actually going to address these in my next couple of posts. Check back in for the answers!</p>
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		<title>By: Minimum Wage Hikes Part II: Washington State Strikes Back &#124; The Principal Blog</title>
		<link>http://blog.principal.com/2013/02/14/minimum-wage-hikes-or-what-econ-101-didnt-teach-you/comment-page-1/#comment-71</link>
		<dc:creator>Minimum Wage Hikes Part II: Washington State Strikes Back &#124; The Principal Blog</dc:creator>
		<pubDate>Thu, 21 Feb 2013 19:57:41 +0000</pubDate>
		<guid isPermaLink="false">http://blog.principal.com/?p=1721#comment-71</guid>
		<description><![CDATA[[...] on Valentine’s Day, I posted about the link (or lack of one) between a proposed hike in the federal minimum wage and [...]]]></description>
		<content:encoded><![CDATA[<p>[...] on Valentine’s Day, I posted about the link (or lack of one) between a proposed hike in the federal minimum wage and [...]</p>
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		<title>By: Ben Miller-Coleman</title>
		<link>http://blog.principal.com/2013/02/14/minimum-wage-hikes-or-what-econ-101-didnt-teach-you/comment-page-1/#comment-70</link>
		<dc:creator>Ben Miller-Coleman</dc:creator>
		<pubDate>Wed, 20 Feb 2013 17:27:46 +0000</pubDate>
		<guid isPermaLink="false">http://blog.principal.com/?p=1721#comment-70</guid>
		<description><![CDATA[Hi Robin,  

Is there any research that details how many minimum wage employees also have to receive government assistance?  And, how is unemployment in Washington and Oregon that have a high minimum wage?]]></description>
		<content:encoded><![CDATA[<p>Hi Robin,  </p>
<p>Is there any research that details how many minimum wage employees also have to receive government assistance?  And, how is unemployment in Washington and Oregon that have a high minimum wage?</p>
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		<title>By: Robin Anderson, Economist, Principal Global Investors</title>
		<link>http://blog.principal.com/2013/02/14/minimum-wage-hikes-or-what-econ-101-didnt-teach-you/comment-page-1/#comment-69</link>
		<dc:creator>Robin Anderson, Economist, Principal Global Investors</dc:creator>
		<pubDate>Tue, 19 Feb 2013 16:19:59 +0000</pubDate>
		<guid isPermaLink="false">http://blog.principal.com/?p=1721#comment-69</guid>
		<description><![CDATA[There are a few ways that raising in the minimum wage could affect somebody making a bit more than $7.25/hour, say $15:

1—Employers would have to adjust their pay scales to move up those currently making $9 to $10 to $11, so that would mean somebody who makes $15/hour now may end up making a bit more depending on the pay scale adjustment. This is the White House’s &lt;a href=&quot;http://www.whitehouse.gov/the-press-office/2013/02/13/fact-sheet-president-s-plan-reward-work-raising-minimum-wage&quot; rel=&quot;nofollow&quot;&gt;view&lt;/a&gt;. They refer to the boost in wages for those making above the $7.25-$9 range a ‘ripple effect’.

2—Employers decide to hold pay scales constant or reduce pay raises/bonuses for those making above $9 hour –‘wage compression’- as their labor costs increase. A recent academic study did find evidence of wage compression resulting from a minimum wage increase in Georgia and Alabama.  

3- Firms will pass on the cost of increased wages to the consumer.   One literature review cited by &lt;a href=&quot;http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/14/why-economists-are-so-puzzled-by-the-minimum-wage/&quot; rel=&quot;nofollow&quot;&gt;Wonkblog &lt;/a&gt;found that a 10% increase in minimum wage led to 4% increase in prices (That is not a 1 to 1 relationship.)]]></description>
		<content:encoded><![CDATA[<p>There are a few ways that raising in the minimum wage could affect somebody making a bit more than $7.25/hour, say $15:</p>
<p>1—Employers would have to adjust their pay scales to move up those currently making $9 to $10 to $11, so that would mean somebody who makes $15/hour now may end up making a bit more depending on the pay scale adjustment. This is the White House’s <a href="http://www.whitehouse.gov/the-press-office/2013/02/13/fact-sheet-president-s-plan-reward-work-raising-minimum-wage" rel="nofollow">view</a>. They refer to the boost in wages for those making above the $7.25-$9 range a ‘ripple effect’.</p>
<p>2—Employers decide to hold pay scales constant or reduce pay raises/bonuses for those making above $9 hour –‘wage compression’- as their labor costs increase. A recent academic study did find evidence of wage compression resulting from a minimum wage increase in Georgia and Alabama.  </p>
<p>3- Firms will pass on the cost of increased wages to the consumer.   One literature review cited by <a href="http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/14/why-economists-are-so-puzzled-by-the-minimum-wage/" rel="nofollow">Wonkblog </a>found that a 10% increase in minimum wage led to 4% increase in prices (That is not a 1 to 1 relationship.)</p>
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		<title>By: Eric Hollister</title>
		<link>http://blog.principal.com/2013/02/14/minimum-wage-hikes-or-what-econ-101-didnt-teach-you/comment-page-1/#comment-68</link>
		<dc:creator>Eric Hollister</dc:creator>
		<pubDate>Mon, 18 Feb 2013 15:21:16 +0000</pubDate>
		<guid isPermaLink="false">http://blog.principal.com/?p=1721#comment-68</guid>
		<description><![CDATA[Robin, while on the topic of Minimum Wage, can you take a moment to address what happens to other people&#039;s wages when the minimum wage goes up?  Specifically, if the minimum wage go up by $1, how does that impact the wages of someone who makes $15.00 an hour.  I&#039;m sure it&#039;s not a 1:1 relationship, but my first thought would be the person making $15.00 would feel the impact of higher costs, consequently, feeling like they received a cut in pay.  What are your thoughts?  Thanks, Eric]]></description>
		<content:encoded><![CDATA[<p>Robin, while on the topic of Minimum Wage, can you take a moment to address what happens to other people&#8217;s wages when the minimum wage goes up?  Specifically, if the minimum wage go up by $1, how does that impact the wages of someone who makes $15.00 an hour.  I&#8217;m sure it&#8217;s not a 1:1 relationship, but my first thought would be the person making $15.00 would feel the impact of higher costs, consequently, feeling like they received a cut in pay.  What are your thoughts?  Thanks, Eric</p>
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		<title>By: Robin Anderson, Economist, Principal Global Investors</title>
		<link>http://blog.principal.com/2013/02/14/minimum-wage-hikes-or-what-econ-101-didnt-teach-you/comment-page-1/#comment-67</link>
		<dc:creator>Robin Anderson, Economist, Principal Global Investors</dc:creator>
		<pubDate>Fri, 15 Feb 2013 20:09:46 +0000</pubDate>
		<guid isPermaLink="false">http://blog.principal.com/?p=1721#comment-67</guid>
		<description><![CDATA[Thanks for reading! And thanks for the comment!]]></description>
		<content:encoded><![CDATA[<p>Thanks for reading! And thanks for the comment!</p>
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		<title>By: Kristen</title>
		<link>http://blog.principal.com/2013/02/14/minimum-wage-hikes-or-what-econ-101-didnt-teach-you/comment-page-1/#comment-66</link>
		<dc:creator>Kristen</dc:creator>
		<pubDate>Fri, 15 Feb 2013 19:30:43 +0000</pubDate>
		<guid isPermaLink="false">http://blog.principal.com/?p=1721#comment-66</guid>
		<description><![CDATA[Great information!]]></description>
		<content:encoded><![CDATA[<p>Great information!</p>
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