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> Minimum waged labor is very, very, very inelastic. For better or worse the people who clean your toilets and serve you coffee in the mornings are extremely necessary and very hard to substitute. Much more so than most middle class jobs, even.

Literally the opposite. It's so elastic they can't demand any wages for what they do. Minimum wage is about turning it inelastic with the punishment of prison.

The best argument I have heard around MW is that businesses can afford to pay more but have too much market power to let that go. I tend to disagree in a 3.5% unemployment economy, but its possible.

These famous studies of minimum wage always come with caveats, on both side of the aisles. If you increase minimum wage today you might not see the unemployment ever in a stat, because you are sacrificing future employment (businesses that don't open because upstart costs are higher). In the end, MW is a handout from left leaning people passing the bill to businesses: they could help the working people they want to target just as well with suplemental labor income, but that implies reducing other expenditures from the government, whereas MW looks like a freebie from businesses.

Elasticity is directional. These wages can be elastic on the downside, and inelastic on the upside. Employers are happy to lower wages, but won't fold if they are forced to raise them.

Are you kidding? Employers will frequently avoid paying higher wages; either by making employees part time, by not hiring additional employees, or by firing. "Do more with less..." is a management mantra for a reason.

Employers will always try to reduce their wage bill by getting rid of unnecessary workers. It's not something they do in response to minimum wage hikes, because if they could reduce headcount and maintain the same level of service, 99% of the time they already have.

This is why it's inelastic. Employers naturally optimize their headcount no matter what the size of the overall wage bill is.

>Literally the opposite.

In which case we should see toilets going uncleaned, coffee not being made in response to minimum wage hikes and a clear spike in unemployment that couldn't be attributed to anything else. Doesn't happen (c.f. Dube, Lester, Reich (Nov 2010)).

>These famous studies of minimum wage always come with caveats, on both side of the aisles.

Dube, Lester, Reich is the only one I'm aware of which comes without caveats.

> In which case we should see toilets going uncleaned, coffee not being made in response to minimum wage hikes and a clear spike in unemployment that couldn't be attributed to anything else. Doesn't happen (c.f. Dube, Lester, Reich (Nov 2010)).

This effect could be explained by capital consumption. If you already have a business you can't switch your entire capital to adjust to the new costs. But new businesses will invest more in less-labor-intensive coffee machines, smaller/worse bathrooms, and wouldn't fire the staff immediately and take the profit hit now and not invest later. Human systems tend to hide away consequences by playing with future expectations, because they are easy and invisible.

This topic is actually academically difficult as it is, I'm not an academic or professional economist, and I simply distrust all parties. Thus, in case of doubt, do no harm. Do nothing.

In a lot of businesses with stronger profit margins, labor costs can go up with no downstream effects.

In a brutally competitive industry such as restaurants, where profit margins of 6% are considered extremely healthy, there has to be some sort of downstream effect to keep the business viable. Most likely they'll all just raise prices, but something has to happen for these businesses to have any chance at surviving the next recession.

So you're right that minimum wage labor is inelastic for many businesses, but in restaurants a small change in costs can make a large number of businesses no longer viable.

>In a brutally competitive industry such as restaurants, where profit margins of 6% are considered extremely healthy, there has to be some sort of downstream effect to keep the business viable. Most likely they'll all just raise prices

Non chain restaurant industry is brutally competitive, yes. Burger King/McDonalds not so much.

In non-chain restaurant industry the costs are typically either pushed on to diner (in the form of higher prices) or the rentier (in the form of lower rent).

The one quirk of the non-chain restaurant industry is that if there is a cost push in the form of higher minimum wage or higher rent it often leads to bankruptcy and a replacement of the business with a different cost profile rather than a smoother transition to higher prices. This is why they fight so hard against unionization and minimum wage hikes.

If a business's profitability drops, that very frequently translates to lost jobs or cut hours in order to preserve expected returns. Otherwise the business may close entirely and the owners seek to invest in a more profitable venture.

>If a business's profitability drops, that very frequently translates to lost jobs or cut hours in order to preserve expected return

Businesses that slash necessary costs in response to cut margins have a special word to describe them:

Bankrupt.

For the record, I’m pro raising the minimum wage. I was just stating that it is absolutely true that _some_ jobs will go away. Therefore a WSJ article about a few jobs going away in a county where minimum wage was raised should not be news to anyone. I completely agree with you.

It also makes sense to me that restaurant jobs are more elastic than janitors as they are a product of discretionary spending.

>For the record, I’m pro raising the minimum wage. I was just stating that it is absolutely true that _some_ jobs will go away.

Yet the study I linked to very much disagreed with this hypothesis of yours.

You can cut profits without cutting jobs. In fact, it's very easy in an economy where the ratio of profit : GDP is so high.