Tag Archives: Minimum wage

Minimum Wage Issues

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Author: R. Alan Harrop, Ph.D

Two state Democrat Senators, Joyce Waddell and Rachel Hunt have introduced a bill in the N. C. Senate to increase the minimum wage from $7.25 per hr. to $15.50 per hr. Is this a good idea or not? Let’s take a look.

Historically, the first federal minimum wage was mandated in 1933 by the Roosevelt administration at $.25 per hr. Like many. Roosevelt’s leftist actions it was overturned by the Supreme Court. Subsequent laws approved by Congress established federal minimum wages that have been increasing steadily over the years. Most states, like North Carolina, have implemented their own minimum wage laws. The purpose of a minimum wage has been confusing since some claim that it should reflect the minimum needed to support oneself i.e. a living wage. Critics of a minimum wage usually oppose the concept of as an interference by Big Government in the free enterprise system. There are other issues that need to be recognized that make raising the minimum wage problematic.

First, a minimum wage was never intended as a self-supporting living wage. It was intended for new workers, many of whom lack the skills needed to justify a higher wage. Importantly, a wage level is best seen as a contract between a worker and the employer reflecting the value of the workers skills and output to that business. A business cannot long exist if it is paying more to the worker than they contribute to the productivity of the business. The balance between worker skill and contribution to business success if best left to the business owner not some government law. This is especially true for new and or small businesses that typically operate on a very small profit margin. Large corporations, like Walmart and Amazon can afford to pay higher minimum wages than your neighborhood retailer, manufacturer or repair shop. It is important to recognize that very few workers stay at the minimum wage level as they become more skilled and contribute more to the success of the business. Second, in an era of increasing automation, raising the minimum wage can actually be detrimental to workers in the long run. Self-checkout, automated food ordering, robotic manufacturing are all likely to increase as the minimum wage is increased, producing fewer jobs. This is especially harmful for unskilled beginning workers that do not yet possess useful work skills. Third, North Carolina has been doing very well over the past several years as a good place to conduct a business. While the minimum wage rate is not the only factor, it is one reason why businesses select North Carolina over most other states.

The bottom line is that the wages are best left to the negotiation between worker and employer than to mandates from government. To do otherwise, is a direct threat to small businesses that have traditionally been the main source of employment in this country, especially in rural areas.

After All, It’s Only Taxpayers’ Money

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CNBC is reporting today that President Biden will issue an executive order to raise the minimum pay for federal contract workers to $15 an hour by March of next year. The current minimum is $10.95. Future increases will be tied to inflation. (Has it occurred to him that such a rapid increase in wages will fuel inflation?

The article reports:

President Joe Biden on Tuesday will continue his push for a national $15 minimum wage with an executive order that raises pay to at least that level for hundreds of thousands of federal contract workers, according to senior White House officials.

The move will increase the current minimum wage of $10.95 by nearly 37% by March of next year and continue to tie future increases to inflation.

It will apply to federal workers from cleaning and maintenance staff to food service contractors and laborers, sweeping in tipped workers who were previously left out of the last increase under former President Barack Obama.

White House officials insist it won’t increase costs for taxpayers because of benefits including increased worker productivity.

Biden has expressed his belief that strong unions and higher wages can resurrect America’s middle class while helping bridge economic and racial inequities, and the executive order is his latest step in support of the organized labor movement.

So what happens when the minimum wage is raised? First of all, it provides a bargaining chip for unions in their wage negotiations. This creates higher wages across the board which leads to inflation. There is no evidenced that increasing wages increases worker productivity. The people who will actually be financially impacted by this move in a negative way are senior citizens and those in the middle and lower economic classes–the inflation that will follow will be much more difficult to manage for those two groups than for the wealthy.

Getting a significant wage increase is useless if the price of everything you need also increases significantly.

Some Common Sense From The Senate

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Yesterday The New York Post posted an article about the vote in the Senate to raise the minimum wage to $15 and hour. You may remember that the Senate parliamentarian ruled that the wage increase could not be added to the bill. Well, Senator Bernie Sanders went ahead and forced the vote anyway.

The article reports:

Vermont Sen. Bernie Sanders on Friday forced a vote on increasing the federal minimum wage to $15 through President Biden’s $1.9 trillion COVID-19 bill, but it failed, with strong opposition among Democrats.

The Senate voted 58-42 against the idea, which the Congressional Budget Office estimates would lift 900,000 people out of poverty but cause another 1.4 million people to lose their jobs due to higher business operating costs.

Seven Democrats and one independent who caucuses with Democrats — Sen. Angus King of Maine — opposed the Sanders amendment in a procedural vote.

Democratic Sens. Tom Carper of Delaware, Chris Coons of Delaware, Maggie Hassan of New Hampshire, Joe Manchin of West Virginia, Jeanne Shaheen of New Hampshire, Kyrsten Sinema of Arizona and Jon Tester of Montana voted against the measure, as did all Republicans.

The number of Democratic defections was a surprise and many of those voting “no” did not immediately explain their stance.

The article explains why the minimum wage increase was removed from the bill:

The minimum wage hike was included in the House-passed version of the bill, but the Senate parliamentarian ordered it removed for not complying with the narrow rules for budget reconciliation that allow bills to pass the Senate with a bare majority rather than the usual 60-vote supermajority.

Raising the minimum wage on the federal level does not make sense. A wage of $15 an hour in New York City is very different from a wage of $15 an hour in a small town. The cost of living obviously varies in different areas of the country. The vote is, however, a indication that some of the more radical ideas the Democrats want to put in place may face opposition. That is a good thing.

When The Government Decides What Businesses Are Good

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There are those in Congress who are supposed to represent us that believe that the government should be able to decide whether a business should be allowed to operate or not. We have seen a lot of this during the coronavirus outbreak, but unfortunately that may only be a preview of things to come.

Yesterday Townhall reported the following:

Millions of Americans are out of work due to the Wuhan coronavirus pandemic. Thousands more are unemployed because of President Joe Biden’s decision to cancel the Keystone XL Pipeline. Despite the tough times, progressive Rep. Ro Khanna (D-CA) believes “now is the right time” for Congress to press forward with a $15-an-hour minimum wage, something they tied to the latest COVID relief package.

According to Khanna, Amazon and Target made a decision to raise their minimum wage to $15-an-hour across the nation. As a result, Khanna says, the companies have produced more jobs (yet he doesn’t take into account that more people are shopping online due to lockdown restrictions and the pandemic).

The Representative evidently does not see the value of every small business:

“Businesses like Amazon and McDonald’s, for example, can and perhaps should, pay more, but I’m wondering, what is your plan for smaller businesses?” CNN’s Abby Phillip asked. “How does this, in your view, affect mom and pop businesses who are just struggling to keep their doors open, keep workers on the payroll right now?”

“Well, they shouldn’t be doing it by paying people low wages,” Khanna replied. “We don’t want low-wage businesses. Most successful small businesses can pay a fair wage.”

According to the congressman, if workers were paid for their productivity, they would be making $23-an-hour.

“I love small businesses. I’m all for it but I don’t want small businesses that are underpaying employees,” he said. “It’s fair for people to make what they’re producing and I think $15 is very reasonable in this country.”

I have posted numerous articles about the job losses that will result from raising the minimum wage to $15 an hour. The ideas of this Representative would not only limit the access to the workplace for young people seeking jobs, it would also cause the mom and pop restaurants and small shops either to close or to cause the owners to have to work 70-hour weeks because they can’t afford to pay anyone the minimum wage.

This Congressmen has not studied economics. He also needs a serious less on being compassionate to those who are struggling to keep a small business going.

It’s Time To Return To Single-Issue Bills

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Yesterday Townhall posted an article about some of the items included in the coronavirus relief bill proposed by the Democrats. The bill is 591 pages long, and needless to say, is not all relevant to coronavirus relief.

The article lists some of the items:

The 591-page document includes another round of stimulus checks. Individuals making less than $75,000 will receive a $1,400 check. Couples earning less than $150,000 will receive a combined $2,800. As an individual or couple’s income increases, their stimulus amount decreases.

Of the $1.9 trillion, $350 billion will go towards states and local governments. Unemployment benefits will provide Americans with $400 a week on top of their state-issued benefits.

Under this bill, the Paycheck Protection Program (PPP) is replenished with $7 billion in additional funding. The Emergency Injury Disaster Loan (EIDL) program will also receive $15 billion.

In addition, the bill ups the child tax credit to $3,600 for children six and under. That credit drops to $3,000 for kids ages seven to 17.

There are, however, a number of questionable liberal wishlist items in the bill. If passed and signed into law, the federal minimum wage – which currently sits at $7.25-an-hour – would increase to $15-an-hour over the next five years.

…Democrats set aside $50 million for “family planning.” As of now, the Hyde Amendment is in place, which bars taxpayer funds from being used for abortion. This, however, could set the stage for the repeal of the Hyde Amendment down the road. If this bill is passed and Congress later repeals Hyde, money that was funded in this relief bill could theoretically be used for abortion.

…Although higher education has teetered because of the virus, Howard University is the only higher education facility that would be given money to recoup funds lost during the pandemic. Gallaudet University is listed in the bill, but it’s a specialized university for students who are hard of hearing.

It is important to note that Vice President Kamala Harris is an alumna of Howard University, which is an unlikely coincidence.

…Another $135 million would be allocated for the arts and humanities, likely museums that received funding during the CARES ACT.

It is time to bring back legislation that deals with one issue at a time. Some of the items in this bill will actually do damage rather than solve problems. For instance, the $15 a hour minimum wage is likely to result in the closure of any small business that was not closed by the government shutdowns. This relief bill is looking like the Obamacare bill which became law in 2010. That law cost the Democrats their majorities in Congress. If this relief bill is passed without Republican votes, the result will probably be the same.

 

The Cost Of A $15 An Hour Minimum Wage

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What would be the cost of waging the minimum wage nationally to $15 an hour? Townhall posted an article today about the consequences.

The article notes five negative consequences of a $15 an hour minimum wage:

It will destroy jobs

According to the Congressional Budge Office upwards of 1.4 million jobs will be lost if the minimum wage goes to $15 an hour. The cost of doing business will increase and the number of jobs will decrease.

It will hurt low-skilled workers

Low-skilled jobs will be the ones being lost, denying low-skilled workers entrance to the work force.

It will cause inflation

When the cost of doing business goes up, the price of the item produced goes up.

The rich will get richer

Bid companies can absorb the additional cost; small businesses probably cannot. This helps big corporations get rid of their competition.

It will hurt red states the most

Generally speaking, red states are well run and have a lower cost of living than blue states. A sudden increase in the minimum wage would skew their economic profile, causing a sharp increase in their cost of living.

The article concludes:

Yes, people are struggling. I’m not denying that. But an oft-hidden fact is that employers are struggling too … to find workers willing to work … and they are adjusting their rates accordingly. Indeed, the average hourly wage has risen from just under $14 per hour in 2000 to over $25 today. If employers could get workers for less, they would. Instead, the MARKET has forced them to gradually raise wages in order to compete with other employers for labor. Working against this, ironically, is Democrat-encouraged immigration, which serves to dampen wage prospects for lower-skilled employees forced to compete with counterparts used to making less than 50 cents on the hour.

If we’re suddenly jumping from $7.25 to $15, it’s hard not to ask why they wouldn’t just go all out and say $20? Hell, why not $30, or even $50? Everyone in America should have the ‘right’ to a six-figure income, right? No? The same problems anyone with an IQ above 60 could see with such a proposal apply just as much at $15. Of course, none of this has ever been about logic, just politics.

We need the people in Congress to study economics.

Pushing Something Through When You Don’t Have The Votes

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Yesterday Just the News reported that on Tuesday night the Democrats passed a gradual $15 minimum wage hike in a committee vote.

The article reports:

The increase from $7.25 an hour was part of the House Education and Labor Committee’s budget reconciliation markup for President Biden’s $1.9 trillion stimulus plan. In the legislation, the minimum wage would reach $15 in 2025.

The language of the Raise the Wage Act was incorporated into the $170 billion COVID-19 stimulus funding legislation for public schools during the virtual committee markup that began late in the afternoon on Tuesday. The vote on the legislation was 27-21 along party lines. 

The Democrats admit that the only way to get this through in by the budget reconciliation process:

Senate Budget Committee Chairman Bernie Sanders told reporters on Wednesday that Democrats are including the gradual $15 minimum wage hike in Biden’s stimulus plan because they do not have 60 votes in the Senate to pass it.

“We’re not going to get the 60 votes we need and the only way we’re going to do it with 50 votes is through reconciliation,” he said.

The use of budget reconciliation allows Democrats to pass Biden’s stimulus plan without GOP votes in the Senate. 

The nonpartisan Congressional Budget Office recently projected that a gradual $15 minimum wage in Biden’s $1.9 trillion COVID relief package would result in 1.4 million workers losing their jobs.

Has it occurred to the Democrats that if the measure won’t pass it might be because  it is a bad idea?

Policies Have Consequences

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So far the Biden administration has not been kind to American workers. If you work in the energy sector of the economy, you are in danger of losing your job–if you haven’t lost it already. Now there is another policy idea that will increase unemployment in America.

CNBC reported the following yesterday:

Raising the federal minimum wage to $15 an hour, as President Joe Biden has proposed, would cost 1.4 million jobs over the next four years while lifting 900,000 people out of poverty, according to a Congressional Budget Office report Monday.

The impact on the employment rolls is slightly higher than the 1.3 million employment estimate from a 2019 report from the CBO, a nonpartisan agency that provides budgetary analysis to Congress.

The number has been disputed by employment advocates who cite the benefits from the raise and say businesses will be able to handle the costs.

Biden has acknowledged that the plan to phase in the new federal wage floor likely won’t make it through the $1.9 trillion spending plan he is pushing through Congress, though he remains committed to the increase.

The CBO report estimates that the employment reduction would happen by 2025 and come as employers cut payroll to compensate for the increased costs.

Along with the reduction in employment, the federal budget deficit would increase by $54 billion over the next 10 years, a fairly negligible level considering the fiscal 2020 shortfall totaled more than $3 trillion.

There are a few facts being left out in this discussion. The minimum wage exists to allow new unskilled workers to enter the workplace. It exists for high school students looking for part-time jobs. It allows new unskilled workers to learn some basic skills that are applicable in any job–showing up on time, dressing appropriately, being reliable, taking responsibility, etc. Jobs that pay the minimum wage are not supposed to be career jobs–the people in those jobs are expected to increase their marketable skills and move up the employment ladder. Raising the minimum wage will result in a lot of high school students not being able to get jobs and learn the skills they need to succeed in the business world. Although raising the minimum wage sounds like a wonderful idea, the consequences will not be wonderful.

The Cost Of The Biden Economic Policies

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Issues & Insights posted an article today detailing some of the impact of Joe Biden’s economic proposals should he become President.

Some of the highlights of the article:

A recent study by a group of highly regarded economists at the Hoover Institution, including two former members of the Council of Economic Advisers, found that the full panoply of Biden’s policy proposals — Medicare for All, big tax hikes on the wealthy and the working poor, the massively expensive Green New Deal, and thousands of impending regulations — would have devastating consequences for the U.S. economy.

…According to the nonpartisan Committee for a Responsible Federal Budget, Biden’s projected tax increases total $4.3 trillion over the next decade, and that’s a conservative estimate. Trump, meanwhile, would cut taxes by about $1.7 trillion. The quick math: That’s a $6 trillion difference.

“We estimate that the full Biden agenda will reduce long-run real GDP per capita by more than 8% as a result of reducing full-time equivalent employment (FTEs) per person by 3%, the capital stock per person by 15% and total factor productivity by 2%,” the Hoover Institution study said.

Based on current growth estimates by the nonpartisan Congressional Budget Office, “this suggests there will be 4.9 million fewer employed individuals, $2.6 trillion less GDP, and $1.5 trillion less consumption in that year alone. Median household income in 2030 would be $6,500 less.”

…Right now the minimum is $7.25 an hour. By more than doubling it, some 2 million jobs would be lost, EPI estimates. Many of those losing out will be low-skilled workers with little education, including many Hispanics and African-Americans.

Hardest hit of all, however, will be struggling female workers.

“Not only are 59% of minimum-wage jobs held by women and slated to be affected by these wage increases, this means that 1.2 million jobs held by women will be lost by 2027 due to this policy, accounting for 61% of total losses,” the report said.

Just as bad, as noted above, the minimum wage hike will hit struggling small businesses, the nation’s main employers.

“Increasing labor costs through a federal $15 minimum wage would only bring businesses — and the people they employ — closer to the point of no return,” EPI managing director Michael Saltsman said in an interview with the Washington Free Beacon.

The article also notes:

Finally, there’s the proposed 2% wealth tax on the truly rich, an idea proposed by Massachusetts socialist Sen. Elizabeth Warren and part of the Biden campaign’s tax conversation. It would tax the wealth, not the income, of those who have $50 million or more in household wealth at 2%. For those over $1 billion, it goes up to 6%.

If this makes you all warm and fuzzy, as it does the increasingly far-left Democrats, you might want to rethink that. A recent study by the Center for Freedom & Prosperity, a respected free-market think tank, estimated the following results of such envy taxes:

    • “Long-run GDP decline of roughly 2.7% (relative to a steady state with no wealth tax) due to a decline in the capital stock of roughly 3.7%;
    • “An immediate loss in hours worked of 1.1%, equating to approximately 1.8 million jobs, and a long-run loss in hours worked of 1.5%;
    • “Initial decline in average annual household real wage income of about $2,500;
    • “Explosive welfare state growth as transfers relative to GDP (excluding SS) increase by 70.1%;
    • “Per-household wealth held by the top 0.25% falls by $3.7 million, and from lower-middle to upper-middle households, declines in lifetime wealth range from $440 to $49,660.”

That’s not sweet revenge on the rich – it’s foolish, self-defeating envy, the engine that keeps socialism running.

A vote for Joe Biden is a vote for the end of the Middle Class–a major feature of socialistic societies. The recent history of Venezuela is a powerful example of how a country can go from a wealthy, successful country to a place where people are eating their pets in a very short time.

Critiquing The Debate

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On Friday, Breitbart posted a list of the eleven biggest lies Joe Biden told during his debate with President Trump. I am simply posting the list. Please follow the link to the article to read the details.

The list:

  1. No One Lost Their Insurance Under ObamaCare
  2. America was Cozy with Hitler
  3. I Never Opposed Fracking
  4. I Didn’t Oppose Trump’s China Travel Ban
  5. Illegal Aliens Show Up For Asylum Hearings After Being Caught and Released
  6. Raising the Minimum Wage Does Not Hurt Anyone
  7. No One Brought Up Biden’s Troubling Ukraine Conflicts of Interest During Impeachment
  8. Trump Never Told Putin to Stop Meddling in American Elections
  9. Hunter’s Emails are Part of a “Russian Plan”
  10. Trump Refused to Take ‘Responsibility’ for the Coronavirus
  11. Trump Has Alienated ‘All’ Our Allies

Politicians need to remember that in the age of the Internet, it is very easy to compare current comments and policy positions with past comments and policy positions. Some of these lies can be researched easily with a quick Internet search. Some of these lies simply go against common sense. At any rate, the truth seemed to elude Joe Biden during the debate.

 

When Facts Get In The Way Of A Good Talking Point

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The Washington Examiner posted an article today that highlighted one of many lies told by Joe Biden in last night’s presidential debate.

The article reports:

Former Vice President Joe Biden said during the final presidential debate Thursday night that there is “no evidence” raising the minimum wage kills businesses.

“There is no evidence that when you raise the minimum wage, businesses go out of business,” Biden told Trump. “That is simply not true.”

The article notes a few statistics:

In 2017, a Harvard study concluded that a San Francisco minimum wage increase resulted in some businesses closing their doors.

According to the Heritage Foundation, minimum wage increases not only kill jobs, up to 400,000 in California alone, but also “disproportionately hurt low-income, low-skill workers and families.”

The article also includes some screenshots of some tweets. Here are a few lines from those tweets:

.@JoeBiden: “There is no evidence that when you raise the minimum wage, businesses go out of business. That is simply not true.”
A new study shows his plan to do just that could kill 2M jobs by 2027.

…Joe Biden just lied again. After raising minimum wages, fast food restaurants fired a lot of people after raising minimum wages

The above tweet notes that a bill to be introduced to the New York City Council would require employers to provide a justifiable cause to fire fast food workers.

Another tweet states:

The city’s (Seattle) escalating minimum wage has meant a slight increase in pay among workers earning up to $19 per hour, but the hours worked in such jobs have shrunk, a study commissioned by the city found. It estimates there would be 5,000 more such jobs without the Seattle law.

Part of the problem is the misunderstanding of the purpose of the minimum wage. The minimum wage was never meant to be an income that would meet the needs of an independent working person. The minimum wage was meant to allow young people to enter the workforce and learn the basic skills of being a productive worker–courtesy, working as a team, showing up on time, leaving on time, developing a work ethic. These are the skills that allow workers to move past minimum wage. If we have a society where people are remaining at minimum wage, maybe we need to look at our education system that produces those workers.

Karma Anyone?

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A lot of elected officials have never worked in the private sector. This impacts their view of economics and how it works. Often people who support liberal ideas have not had enough economic experience to understand that ideas that may sound wonderful may not work out as planned.  A recent example of this is a bookstore owner in New York City.

Yesterday Steven Hayward posted an article on Power Line Blog about Chris Doeblin, the owner of Book Culture, a four-location independent bookseller in New York City. The bookstore has a reputation of being a progressive bookstore.

The owner of the bookstore is quoted in the article:

“Our four stores are in danger of closing soon and we need financial assistance or investment on an interim basis to help us find our footing. This is true in spite of the fact that business has been good and we are widely supported and appreciated,” [owner Chris Doeblin] wrote. “In the last 30 months the payroll costs for Book Culture have risen by 50% and it has been difficult to adapt quickly enough. We have now made the structural changes to our company and the cuts that will allow us to move ahead profitably once we find the financial resources we need.”

The operative statement in that quote is that the payroll costs have risen by 50%. The article explains:

Doeblin blamed payroll cost increases on the city’s minimum wage raise, which he says increased hourly wages for his employees “from $10 to $15.25 since December 2016” and forced him to initiate layoffs and reorganizing.

Now Doeblin has a solution for the problem, which further confirms his lack of understanding of how economics and the free market work:

Doeblin explained to Gothamist what he believes the business needs to survive, and his larger ambitions to try to help other small businesses stay alive in an ever-changing city: “I think we need at least $500K in a term loan but I hope to find $750K to a $1M,” he said. “I would like the city to immediately [guarantee] such a loan and then embark on a serious plan to improve the odds of small business in New York. I would like to be on that panel too, because there is a lack of creative optimistic thinking and action.”

This illustrates the reason we need to teach economics and the principles of the free market in high schools and colleges.

The Impact Of New York City’s New Minimum Wage

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Investor’s Business Daily posted an editorial today about the impact of New York City raising the minimum wage over the past four years.

The editorial reports:

Over the past four years, the minimum wage for New York City restaurants that employ more than 10 workers went from $10.50 an hour to $15. That’s a whopping 43% increase. Next year, every restaurant, big and small, will have to pay their workers at least $15 an hour.

A big victory for workers, right? That’s how it’s depicted by the “Fight for $15” crowd. And, yes, if you held a full-time minimum-wage job over those years, your gross income would have gone up by $9,360.

But those massive wage hikes come at a painful cost that backers refuse to acknowledge. They kill jobs. Just like they’re doing right now in New York City.

In just the last three months of last year, 4,000 workers lost jobs at full-service restaurants, Bureau of Labor Statistics data show.

One of the problems here is a misunderstanding of the purpose of the minimum wage. A minimum-wage job should not be an ultimate goal. A minimum-wage job should be a way to enter into the workforce and learn some basic skills–dealing with people, being punctual, having manners, etc. Theoretically these basic skills will allow you to advance to a job that pays better than minimum wage.

The editorial continues:

Even during the Great Recession, restaurant workers didn’t suffer as much as they are now. In fact, over the course of the recession, which lasted from December 2007 to June 2009, the number of restaurant jobs in the city actually increased by 1,800.

It’s getting so bad that fast-food workers now want the city to protect them from getting fired without “just cause.”

Those who keep their jobs aren’t necessarily better off, either.

The Hospitality Alliance survey found that more than three quarters of New York restaurants cut worker hours in 2018 to offset that year’s wage hike. Seventy-five percent say they want to cut hours this year.

“Though the new regulations are intended to benefit employees, some restaurateurs and staffers say that take-home pay ends up being less due to fewer hours — or that employees face more work because there are fewer staffers per shift,” notes Tara Crowl in an article in New York Eater.

The results of a significant increase in the minimum wage in New York City are similar to the results of a significant increase in the minimum wage in Seattle and in Illinois. It seems to me that we need to stop making the same mistakes over and over again and take a good look at the results. Rather than increase the minimum wage, we should be encouraging people to learn the skills they need to get them into jobs that pay better than minimum wage. We should also realize that raising wages too high too fast will create unemployment–not wealth.

If You Give A Mouse A Cookie…

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I think “If you give a mouse a cookie…” is going to be my motto for 2019. If You Give a Mouse a Cookie is a children’s book written by Laura Numeroff and illustrated by Felicia Bond. The book was published in 2015 and contains more wisdom than most adult books. The basic premise is that if you give a mouse a cookie he will want milk to go with it. Then he will want a chair to sit in and a table to sit at. You get the picture. Well, on January 11th, The Las Vegas Review-Journal posted an article that beautifully illustrates the message of the book.

The article reports:

The Fight for $15 isn’t living up to its promise.

For years, liberals have claimed that the minimum wage needs to increase to $15 an hour to provide a living wage for full-time workers. The stated goal, as socialist Sen. Bernie Sanders writes on his website, is straightforward, “We must ensure that no full-time worker lives in poverty.”

In one way, the campaign has been remarkably successful. California and New York are phasing in a statewide $15 an hour minimum wage. Numerous cities, including Seattle, Minneapolis and Washington D.C., have passed $15 an hour minimum wage laws as well.

But as sure as the sun comes up in the morning, progressives are now demanding more.

“$15 an hour: A higher wage, but hardly a living,” a CBS News headline from October reads. After bemoaning the inadequacy of the $7.25 an hour federal minimum wage, the CBS story asserts that “even at $15 an hour, life doesn’t get a whole lot easier.”

The article continues:

“The arrival of a $15 hourly minimum wage cannot be considered the end of something,” New York Times columnist Ginia Bellafante wrote last week. Her suggestion? A $33 an hour minimum wage for the Big Apple.

Ah, the wonders of progressive economics. Just pass a law mandating that everybody must make at least $68,000 a year — with full medical benefits, vacation time and family leave allowances, of course. But why stop there? Why with a stroke of the pen, we could all be millionaires!

The argument for a higher minimum wage is that in some cities housing is very expensive. Might this be an argument for the free market? If housing is too expensive and people cannot easily afford to live there, don’t they move to places they can afford? If people can’t afford housing in a city, doesn’t the availability of housing increase and put downward pressure on the price?  It seems to me that is one of the reasons many states are losing rather than gaining population.

The article concludes:

The minimum wage was never intended to provide a living wage. Most minimum wage workers aren’t trying to make a living. A great many are earning supplemental income. Most are between 16 and 24 and work part-time. Inexperienced workers don’t produce that much value. It can still be profitable for the company to hire them — at a lower wage rate.

This creates a win-win. Companies make money by hiring less expensive workers. The workers receive the experience and training that allows them to move up the career ladder. According to the Heritage Foundation, two-thirds of minimum wage workers see their wages increase within a year of starting their job.

This normal career progression is short-circuited when politicians meddle in the marketplace and set unreasonable wage floors. As some leftists are now acknowledging, it’s not even as beneficial as advertised for the workers who manage to find work.

Raising the minimum wage isn’t going to end poverty. But it can make it worse.

If the minimum wage ever increases to $50 an hour, I promise to come out of retirement!

The Law Of Unintended Consequences

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On Friday Investor’s Business Daily posted an article about a recent bill sponsored by Washington, D.C.’s city council.

The article reports:

On Tuesday, 7 of the 13 members of Washington’s city council sponsored a bill to jettison the wage hike for tipped workers that 56% of D.C. voters had approved by a ballot initiative less than a month before.

Under Initiative 77, the workers would see their minimum wage climb from the current $3.89 an hour to $15 an hour by 2026, erasing the difference between tipped and nontipped workers.

Keep in mind that D.C. is about as heavily Democratic as you can get. It went for Hillary Clinton by a 91%-4% margin.

But the D.C. council members came to understand what economists — and D.C. restaurant workers themselves — already know. Sharp increases in the minimum wage will cost lost hours, lost jobs and lost income.

The article concludes:

This wage mandate, just like the one the council is trying to repeal, will also end up hurting the very people it’s supposed to help.

That’s not speculation. It’s what happened in Seattle, which four years ago decided to gradually hike the city’s minimum to $15. Researchers from the University of Washington found that the average low-wage worker lost $125 a month as the mandate took effect and employers cut back on hours and jobs.

Other parts of the country are catching on as evidence rolls in of the job-killing side effect of these mandated wage hikes. The mayor of heavily Democratic Baltimore vetoed a minimum-wage bill last year. The city council in Flagstaff, Ariz., decided to scrap the planned hike to $12, and cap it at $10.50.

“Fight for $15” makes a good bumper sticker. But as Democrats are finding out first hand, it makes bad public policy.

Maybe the answer is not raising the pay for minimum-wage jobs, but in better educating our children so that when they enter the workforce at minimum jobs, they are able to learn skills and progress to better paying jobs. In many cases, companies have responded to increases in the minimum wage by replacing workers with machines. Minimum-wage jobs are valuable–they teach workers entering the workforce the basic principles of holding a job–showing up, working hard, being courteous to fellow employees and customers, and being dependable and on time. Drastically increasing the minimum wage will result in many minimum-wage jobs being eliminated.

The Entry-Level Job Is Going The Way Of The Starter Home

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Investor’s Business Daily posted an article today about the impact of raising the minimum wage. Traditionally the minimum wage job has been a place for those young people who are just entering the workforce to learn the basic principles of holding a job–showing up on time, being there when you are supposed to, treating people with respect, integrity, etc. Most of these concepts should have been covered during the school years, but many of them are not. The entry-level job was the last place a potential employee would be able to learn them. An entry-level job was supposed to encourage the employee to work hard in order to get a better paying job and advance his/her career. Well, I guess that concept has gone out the window.

Investor’s Business Daily reports:

Twenty-one states and Washington, D.C., will raise their minimum wage this year, under the misbegotten notion that it will help the poor, in particular struggling minority youth. It won’t.

As a new study from the American Action Forum shows, not only will most workers not be better off, they will take a huge hit.

Why? Common sense tells you that when you raise the cost of something, anything, less of it will be used or consumed. It’s a fundamental precept of economics. And labor is no different.

Coercive minimum-wage hikes this year, the AAF estimates, will kill 261,000 jobs held mostly by poor, undertrained, undereducated, young suburban millennials and minority teens.

But it’s even worse than that: Once the minimum-wage increases are fully phased in, some 1.7 million jobs will be lost. As the Daily Caller helpfully notes, the U.S. Bureau of Labor Statistics estimated last year that the U.S. economy will add 11.5 million jobs over the next 10 years. So that’s roughly 15% of a decade’s worth of jobs destroyed.

The complaint has been that you can’t support yourself on the current minimum wage. You’re not supposed to—you are supposed to use the opportunity of a minimum-wage job to become a better worker and be promoted or educate yourself and move on to a better job.

The article concludes:

Yes, some people will do better because of the “Fight for $15,” the organizing shibboleth used by activists who want a national minimum wage. But many small businesses struggle to stay open. Labor is their No. 1 cost, taking up more than two-thirds of total costs. If you raise the minimum wage sharply, they have to lay off people or raise prices to stay in business. And some won’t make it.

The job losses are already happening. Just last month, the food chain Red Robin announced it would eliminate busboys at 570 restaurants to “address the labor increases we’ve seen.” For “labor increases,” read “minimum wage hikes.”

Other restaurant chains take a slightly different approach, automating to offset rising labor costs. Neighborhood mainstays Chili’s and Applebee’s,  for instance, are replacing front-end wait staff with computer tablets for placing orders. Since a tablet entails a one-time expense of roughly $200, the investment pays for itself in a little over 13 hours at minimum wage.

It’s sad that just as the tax-cut boom gets going, one big group is going to be cut out of the action entirely. Whenever government sets the price of anything, distortions occur. In this case, the “distortion” is millions of lost jobs. It’s cruel, racist and devastating to lower-income people who depend on entry-level jobs to make ends meet.

The Cost Of Raising The Minimum Wage

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On Friday, The Washington Free Beacon posted an article about a new minimum wage law in Washington, D.C.

The article reports:

Washington, D.C. will lose thousands of jobs as the district’s plan to raise the minimum wage to $15 goes into effect, while the higher wages will primarily benefit workers in the surrounding suburbs, according to a new report by the city’s chief financial officer.

D.C. Mayor Muriel Bowser spearheaded the effort for a $15 minimum wage, more than double the federal minimum wage of $7.25 an hour. Analysis by the city’s Office of Revenue Analysis, however, says the plan could cost the district 2,500 jobs by 2026, the Washington Times reports.

The district’s minimum wage is currently $11.50 an hour and each year will grow by 70 cents until it reaches $15 in three years. After 2020, the minimum wage will grow based on inflation.

The article explains that the probable impact of the increase in the minimum wage will be to bring more workers into Washington from the neighboring suburbs. This will increase the competition for jobs within the city and make it more difficult for residents of the city to find jobs.

The article concludes:

D.C. passed a measure to raise the minimum wage to $15 for hourly employees in June. Critics immediately castigated the law at the time.

“Unfortunately, it’s employees and small businesses who will pay the tab,” Michael Saltsman, research director of the free market Employment Policies Institute, told the Washington Free Beacon at the time.

D.C. restaurants lost 1,400 jobs in the first six months of 2016 and experienced their worst hiring period in 15 years. Suburbs in Virginia and Maryland added nearly 3,000 jobs over the same period.

Sometimes Reality Is Just Not Fun

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The Service Employees International Union (SEIU) is known for its fight for a $15 minimum wage for fast food workers. The union chooses to ignore the fact that these are entry-level workers learning the basics of holding a job–showing up on time, being conscientious, treating people with respect, etc. Recruiting these people into the SEIU provides a larger base for union dues (and bigger donations to Democratic candidates), but where has the battle gotten the workers?

Ed Rensi posted an article at Forbes on Tuesday talking about the consequences of the push for a $15 minimum wage for fast food workers.

The article points out a few of the unintended consequences:

Let’s start with automation. In 2013, when the Fight for $15 was still in its growth stage, I and others warned that union demands for a much higher minimum wage would force businesses with small profit margins to replace full-service employees with costly investments in self-service alternatives. At the time, labor groups accused business owners of crying wolf. It turns out the wolf was real.

Earlier this month, McDonald’s announced the nationwide roll-out of touchscreen self-service kiosks. In a video the company released to showcase the new customer experience, it’s striking to see employees who once would have managed a cash register now reduced to monitoring a customer’s choices at an iPad-style kiosk.

…Of course, not all businesses have the capital necessary to shift from full-service to self-service. And that brings me to my next correct prediction–that a $15 minimum wage would force many small businesses to lay off staff, seek less-costly locations, or close altogether.

…The out-of-state labor groups who funded these initiatives aren’t shedding tears over the consequences. Like their Soviet-era predecessors who foolishly thought they could centrally manage prices and business operations to fit an idealistic worldview, economic reality keeps ruining the model of all gain and no pain. This brings me to my last correct prediction, which is that the Fight for $15 was always more a creation of the left-wing Service Employees International Union (SEIU) rather than a legitimate grassroots effort. Reuters reported last year that, based on federal filings, the SEIU had spent anywhere from $24 million to $50 million on the its Fight for $15 campaign, and the number has surely increased since then.

This money has bought the union a lot of protesters and media coverage. You can expect more of it on November 29. But the real faces of the Fight for $15 are the young people and small business owners who have had their futures compromised. Those faces are not happy ones.

I suspect that over time many of the businesses involved would have switched to kiosks anyway, but the drive for $15 an hour definitely helped speed up the process. The fact that the SEIU was able to gather (or pay) protestors and that the news covered this story in a positive light is evidence that we are not teaching people basic economics in school. Somehow we have lost sight of the fact that businesses are in business to make a profit. When businesses are no longer profitable, they go out of business. In this case even the businesses that could afford to automate cut back on their workforce because of increasing labor costs. This is another example of shortsightedness on the part of the unions and of the law of unintended consequences.

Why Should We All Have To Play By The Same Rules?

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On Friday The Washington Free Beacon posted a story about a group in Colorado that was working toward a $12 an hour minimum wage.

The article reports:

Colorado Families for a Fair Wage, which obtained the signatures needed to place a measure requiring a $12 minimum wage on the November ballot, paid many of its petition handlers less than $12 an hour, according to paperwork filed with the state and obtained by in the Washington Times.

“According to a circulator and wage report filed with the Colorado Secretary of State’s office by proponents of increasing the minimum wage, 24 of the workers collecting signatures to get on the ballot were paid less than $12 an hour,” the Times reported. “The report was obtained Keep Colorado Working, the opposition campaign, in an open records request.”

Colorado Families for a Fair Wage is a coalition of liberal groups, including prominent labor unions, such as the AFL-CIO and American Federation of Teachers. The group denied the allegations that it failed to pay its employees adequate wages following the Washington Times report, blaming “clerical errors” in campaign filings for the gap in pay.

“Every person working on the minimum wage ‘$12 by 2020’ ballot initiative has earned a minimum of $12 an hour and more because it’s crucial that the paychecks of Colorado working families can cover housing, food and other basics, campaign manager Patty Kupfer said in a release. “We included pay policy language in our office policy document to specifically ensure that every worker would earn at least $12 an hour.”

The group said it will file amended paperwork with the secretary of state’s office to reflect that it paid all of its workers at least $12 an hour.

How embarrassing. Either they paid their workers less than the minimum wage they were working toward or the people they paid the proposed minimum wage were not competent enough to do their job right. Either way it’s embarrassing.

There is something being overlooked here, and I don’t know why. The minimum wage was never intended to support a family or an individual living on their own–it was intended to provide a gateway into the workforce to enable people to learn the real basic job skills–showing up on time, respecting authority, being curteous, and other basic fundementals. So what happened? Unions discovered that if the minimum wage increased, the unions could bargain for higher wages for their members. Note that the Colorado Families for a Fair Wage includes prominent labor unions. Because much of the American public does not understand the purpose of the minimum wage, the fact that raising the minimum wage significantly will put small businesses out of business and cause employees to lose hours or jobs is not considered by most people.

There is also the aspect of illegal immigration. As long as America has thousands of illegal immigrants who are willing to work under the table for below minimum wage, raising the minimum wage is going to do more harm than good. One of the problems in the battle to close our borders to illegal immigration is that the U. S. Chamber of Commerce is a major campaign contributor to politicians (particularly Republicans). The Chamber of Commerce is an organization of businessmen. These businessmen like the fact that illegal immigration is a source of cheap labor. As long as the Chamber of Commerce continues to pour money into political campaigns, our illegal immigration problem will continue. That is the way Washington currently works. Until people are elected to office at all levels who are not part of the current system and not interested in becoming part of the current system, illegal immigration will continue and because unions contribute heavily to Democratic campaigns, the minimum wage will probably be raised past the point where it makes economic sense. That is where we are.

The Cost Of Paying A Higher Minimum Wage

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Yesterday Twitchy reported that Wendy’s will be introducing self-service kiosks in their 6000 stores nationwide this year.

Investor’s Business Daily reported yesterday:

Wendy’s Penegor said company-operated stores, only about 10% of the total, are seeing wage inflation of 5% to 6%, driven both by the minimum wage and some by the need to offer a competitive wage “to access good labor.”

It’s not surprising that some franchisees might face more of a labor-cost squeeze than company restaurants. All 258 Wendy’s restaurants in California, where the minimum wage rose to $10 an hour this year and will gradually rise to $15, are franchise-operated. Likewise, about 75% of 200-plus restaurants in New York are run by franchisees. New York’s fast-food industry wage rose to $10.50 in New York City and $9.75 in the rest of the state at the start of 2016, also on the way to $15.

Wendy’s plans to cut company-owned stores to just 5% of the total.

There are some things those asking for significant increases to the minimum wage should keep in mind. Very few people are actually attempting to support families on minimum wage jobs–generally those holding those jobs are people attempting to enter the work force for the first time. These jobs allow them to develop basic workplace skills–showing up on time, being polite to customers, and showing up for work every day. Companies are in business to make a profit. If they do not make a profit, there is no reason for them to stay in business. No government has the right to determine what profit is acceptable–left alone, the free market will do that. Part of our current problem is that the government has interfered so much with the free market, that that normal checks and balances within the free market are not working as they should. The solution would be to get the government out of the marketplace–let businesses complete for workers and pay them what is necessary. It is also telling that because economic growth in America is currently slow, workers who would not normally be working in minimum wage jobs are working there.

Be Careful What You Support

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Investor’s Business Daily is reporting that a week after California Gov. Jerry Brown signed the state’s $15 minimum wage boost into law, UC Berkeley Chancellor Nicholas Dirks sent a memo to employees announcing that 500 jobs were getting cut.

The article reports:

Those workers might want to have a chat with the folks at UC Berkeley’s Center for Labor Research, who just days before Brown signed the wage-hike bill released a study touting the minimum wage as a boon to low-income household breadwinners.

After that report came out, Ken Jacobs, chairman of the UC Berkeley center, told the Los Angeles Times, “This is a very big deal for low-wage workers in California, for their families and for their children.”

It is a big deal, as well, to those soon to be out of work UC Berkeley workers.

But why is anyone surprised about jobs cuts following a wage hike? It’s one of the most basic laws of economics. Any high school kid taking Econ 101 can explain it:  If you raise the price of something, demand goes down.

Keep in mind, too, that a $15 minimum wage is more than twice the federal minimum wage today. And it would set the wage floor higher than it’s ever been. On an inflation-adjusted basis, the minimum wage peaked in 1968 at just over $10 an hour.

In a strong economy, raising the minimum wage might not be as much of a problem, but in an economy that is not rapidly expanding, companies simply do not have a large enough profit margin to handle the increase in the cost of employees. The demand for an increase in the minimum wage also overlooks the fact that most of the people who hold minimum-wage jobs are people who are just entering the work force. It is in that entry-level job that new employees learn basic skills–such as showing up on time, following directions, being responsible, etc. Those minimum-wage jobs give young people the skills they need to move on to higher-paying jobs. Increasing the minimum wage to the point where there will be less minimum-wage jobs accomplishes nothing positive. Unfortunately, it has become a Democratic policy talking point, and because of that, more young people who support this idea will lose their jobs if they succeed in increasing the minimum wage.

How To Pass A Minimum Wage Hike Without Hiking Minimum Wage

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Hot Air posted an article today about the recent fight in California to pass an increase in the minimum wage. Unions and business owners are supporting the increase. Each have their own reasons.

Under the new law, hotels that are unionized don’t have to increase their wages. Hotels that are open shops have to follow the law and increase wages. So a union hotel employee who pays $56.50 every month for membership in the hotel workers union does not get a raise, while his non-union equivalent gets a pay raise.

The article concludes:

The raison d’etre of unions is supposedly to arrange better conditions, compensation and benefits for their members, so why they would agree to that deal doesn’t jump out at you. But the reality is that not all of the hotels are unionized. The ones who run open shops fall under the new arrangement and have to pay their workers significantly higher wages. So how do they get out of this sudden spike in labor costs which could put them at a disadvantage with their competitors? (Cue the Jeopardy music…)

They can just unionize their work force.

It’s really a genius maneuver if you think about it. Getting a raise for some of the workers in the city who already belong to your union doesn’t really translate into that much more money in dues because they only collect a small percentage of the increase. But if you can suddenly enlist the workers at a whole raft of new businesses into your organization you get a piece of all their paychecks. It’s the perfect plan, really.

Of course, the people who get left out in the cold are the actual members of the union, particularly once they find out what’s going on. But that was never the real objective of the union in modern times anyway. What’s critical is enlisting as much of the workforce as possible and keeping the cash flowing in so they can continue to fund the political campaigns of Democrats.

It pays to read laws carefully and look at who is supporting them. In this case, those in the unions who have worked to pass the law assumed that they would gain by its passage. Those in the upper levels of the union had another idea. They supported a law that would cost union shops less while potentially increasing the number of union shops. This is only one example of the damage that the alliance of unions and politicians can do.

The Law Of Unintended Consequences At Work

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The video below was posted on YouTube today:

Raising the minimum wage has a negative impact on both small businesses and on those seeking to enter the workforce. This video shows one example of the law of unintended consequences regarding the minimum wage. Minimum wage jobs are for low-skilled employees entering the workforce. Anyone attempting to support themselves by working for minimum wage needs to be encouraged to seek further education or increased job skills.

The Law Of Unintended Consequences At Work

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One of the political discussion of late has focused on the minimum wage. What it is, what it should be, and should it be raised. One thing that is often not considered in the debate is who are the people who work at minimum wage jobs.

The Pew Research Center reported in 2014:

Perhaps surprisingly, not very many people earn minimum wage, and they make up a smaller share of the workforce than they used to. According to the Bureau of Labor Statistics, last year 1.532 million hourly workers earned the federal minimum of $7.25 an hour; nearly 1.8 million more earned less than that because they fell under one of several exemptions (tipped employees, full-time students, certain disabled workers and others), for a total of 3.3 million hourly workers at or below the federal minimum.

That group represents 4.3% of the nation’s 75.9 million hourly-paid workers and 2.6% of all wage and salary workers. In 1979, when the BLS began regularly studying minimum-wage workers, they represented 13.4% of hourly workers and 7.9% of all wage and salary workers. (Bear in mind that the 3.3 million figure doesn’t include salaried workers, although BLS says relatively few salaried workers are paid at what would translate into below-minimum hourly rates. Also, 23 states, as well as the District of Columbia, have higher minimum wages than the federal standard; people who earned the state minimum wage in those jurisdictions aren’t included in the 3.3 million total.)

People at or below the federal minimum are:

  • Disproportionately young: 50.4% are ages 16 to 24; 24% are teenagers (ages 16 to 19).
  • Mostly (77%) white; nearly half are white women.
  • Largely part-time workers (64% of the total).

Often minimum-wage jobs represent an opportunity for someone with little experience or job skills to enter the workforce. Minimum wage jobs teach workers to show up on time, be responsible employees, and be reliable employees. These are skills that are valued at all levels of employment.

So what happens when you raise the minimum wage? On Friday, Investor’s Business Daily posted an article on the subject.

The article reports:

 

  • IBD’s Jed Graham surveyed six big U.S. cities that hiked the minimum wage in 2015 and found they took a serious jobs hit. “Wherever cities implemented big minimum-wage hikes to $10 an hour or more last year, the latest data through December show that job creation downshifted to the slowest pace in at least five years,” Graham wrote.
  • During the 1970s, Congress forced Puerto Rico to adopt the U.S. federal minimum wage. The result, according to a 1992 study by economists Alida Castillo-Freeman and Richard Freeman: “Imposing the U.S.-level minimum reduced total island employment by 8%-10%.” So Puerto Rico lost 1 out of every 11 jobs to the minimum wage.
  • A study by the American Enterprise Institute looked at Seattle’s recent minimum wage hike. After it began phasing in a series of hikes in 2014, Seattle lost 10,000 jobs between just September and November, and its unemployment rate jumped a full percentage point. As AEI economist Mark Perry notes, Seattle’s minimum wage hike from $9.32 an hour to $15 an hour amounts to a $11,360 tax on every minimum wage job.
  • A 2014 Congressional Budget Office study estimated that raising the federal minimum wage from $7.25 an hour to just $10.10 an hour would kill half a million jobs. Worst of all, those who suffer most are the young, minorities and those with little education or training.

The article at Investor’s Business Daily focused on Carl’s Jr. and Hardee’s CEO Andy Puzder, who has begun to automate his restaurants. Because the minimum wage has increased, his expenses have gone up, and he has used technology to keep expenses down.

Before anyone gets all up in arms about this, I would like to introduce a little history into the discussion. Back in the days of dinosaurs, I attended school in New York City. My family did not have a lot of money, but I did not have the option of taking lunch to school every day. We were expected to use our one hour lunchtime to find a place to buy and eat lunch near the school [which was located in the Pam Am Building (now the Met Life Building)]. Because my allowance was small, I often ate at the automat. I would put in 35¢ and get a ham and cheese sandwich. I would put in 10¢ and get a carton of milk. If I was feeling rich, I would spend 20¢ or so on a piece of pie or cake. No one was screaming about automation then. The automat eventually disappeared from the scene, but I am not sure why. It was a great place to eat lunch.

At any rate, actions have consequences. When you raise the minimum raise past the skill level of certain jobs, you eliminate people from the work place–generally those with limited skills or limited experience. Those are the people who with a little training and experience could go on to get good jobs that pay more than minimum wage. In trying to help them by raising their wages, you are actually preventing them from getting the foot in the door that they need to become successful.

 

Pay Raises Happen Naturally In A Healthy Economy

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In a healthy economy, incomes will rise. If the economy is not growing, artificially forcing companies to raise wages only creates problems. Some recent events at WalMart reinforce this concept.

Investor’s Business Daily posted an article about Walmart’s story today:

The Benton, Arkansas-based mega-retailer has tried hard to be a good corporate citizen but has been met with angry opposition every time it tries to open a store. More recently, it announced raises for 1.2 million employees next month to a $10 per hour minimum, with senior workers getting a hike to $15 an hour, from $13 currently. But these wage hikes were made for the worst possible reason: political pressure.

Not coincidentally, Wal-Mart recently announced it was closing 154 stores. Those are mostly stores that, operating on Wal-Mart’s razor-thin 3% profit margin, can no longer make money at higher wages. That’s precisely why Wal-Mart won’t build the two stores in D.C. it said it would. As a result, local minority youths will lose out on hundreds of decently-paying entry-level jobs.

During a healthy economy (or an economic recovery), family income increases.

This is a picture of what has happened to household income since 1985:

https://www.rightwinggranny.com/wp-content/uploads/2016/01/640px-us_real_household_median_income_thru_2014.png

As you can see, when the economy is healthy household income rises, when the economy falters, incomes fall or remain the same. This is a basic economic concept. When the government interferes in this process, companies lose money and are forced to cut their loses.

The article concludes:

In the five-year period between January 2010 and December 2014, DC restaurants were hiring an average of 187 new food workers every month,” wrote economist Mark J. Perry on his Carpe Diem blog at the American Enterprise Institute. “Last year though, restaurant hiring stalled out, likely due to rising labor costs, and the city’s food jobs fell by an average 21 every month in 2015 (through November).” By the way, job growth for restaurants remains healthy in surrounding areas just outside D.C.

This is what happens when you raise the minimum wage, even with the best of intentions. Perry estimates that just by raising the minimum wage to $10.50 in D.C, with another hike to $11.50 slated for July of this year, some 2,000 jobs already have been lost.

Sorry, but forcing employers of unskilled, largely untrained labor to pay higher prices for their labor is a recipe for automation, layoffs and no job creation. It punishes the poor, unskilled and uneducated most of all. The leftist demagogues who push this nonsense should be ashamed.