Tag: minimum wage

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free trade & free markets general freedom too much government

Exemptions, Not Repeal

If you light the fuse of a bomb, after warnings that this will cause it to explode, you should not be surprised at the explosion.

California’s lawmakers and governor recently imposed super-​high minimum wages for workers in fast-​food restaurants ($20 an hour) and workers in healthcare facilities ($25 an hour). When the legislation was in process, the impact on companies, customers, and job applicants was deemed irrelevant. What mattered was appeasing the labor lobby.

Governor Newsom is suddenly “realizing” (he’d been warned) that these new costs will also burden the state government, currently facing a $45 billion budget deficit.

But this isn’t causing him to seek repeal.

No. Instead, he has signed legislation granting an exception to the new minimum for fast-​food restaurants that are on government land. “Democrats don’t want the mandate interfering with government concession licenses,” The Wall Street Journal observes.

And Newsom also wants to defer the kick-​in of the new minimum wage for workers in healthcare facilities — which he projects would cost the state $4 billion more annually because of the impact on Medicaid and state-​paid health workers — until state revenue is in better shape. He would also permanently exempt state-​owned facilities from having to pay the new minimum.

Carveouts and minor delays are as far as the governor and lawmakers are willing to go. Whatever gets them past the uncomfortable present — the next moment and the one after are things to worry about later. With any luck, with time the voters will have forgotten the issue, and who caused what.

Exemptions are the order of the day for politicians and bureaucrats. Private sector businesses must remain on the rack.

This is Common Sense. I’m Paul Jacob.

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Dining Out on Cause and Effect

California, minimum wage, hamburgers, economics, wages, jobs

Could a barren, charred, devastated landscape be the actual intended goal?

In California as in Washington, lawmakers and chief executives apparently have a long list of nice things to destroy and are crossing them off one by one, as if on the payroll of aliens from outer space wanting to conquer earth without doing very much conquest-​work themselves.

Part 99‑C of the plan is to price entry-​level labor and entry-​level restaurant dining out of the market by hiking the minimum wage of fast-​food workers even further beyond the market rate for the labor and its actual productive value to employers: now to $20 an hour.

Already, prices for restaurant meals are going up, and restaurant workers are being laid off.

The $20 minimum is a compromise that restaurant owners accepted in lieu of probably paying a $22 per hour minimum. Like letting burglars take only most of the silverware and letting them return at will.

Even more looting of employers is to come, if employee and activist Angelica Hernandez has her way. “We’re going to have to keep speaking up and striking to make sure we are heard.” She wants her dough and doesn’t care about the consequences for others. Policymakers rush to appease her and those like her.

So is omni-​destruction the actual intended goal?

Or is it that the mental powers of the crusaders and politicians and too many voters don’t extend so far as the relationship between cause and effect?

This is Common Sense. I’m Paul Jacob.

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Subminimal Morality

Matt Thibodeau

He’s been at the job fourteen years. Congress may kill it.

Matt Thibodeau has disabilities that severely limit how productive he can be and thus how much he can contribute to the bottom line of his employer, Associated Production Services.

Under a longstanding exception to the federal minimum wage, Matt is paid $3.40 an hour for tasks like shrink-​wrapping and assembling packages. The rate makes his employment feasible. (The current federal minimum is $7.25.)

Some congressmen want to scrap this exception to the mandatory minimum, calling it unfair and “out of date.”

“I felt like they were being targeted because they couldn’t speak for themselves,” says Matt’s mom, “and so that made us parents even more determined to speak for them.”

What’s out of date, or was never justified to begin with, is Congress’s federal minimum wage regulation.

Any mandatory minimum wage discourages employers from hiring persons not yet productive enough to justify the cost of being employed at the dictated minimum. It prevents low-​skilled workers — on the outs of the economy — from getting a foot in the door.

Some employees initially paid only a few dollars an hour will soon improve their productivity and earn a higher wage. Others, like Matt, simply cannot advance further but can provide steady, conscientious labor within the compass of their abilities.

That’s fine. Each party to such an arrangement benefits. And his work enables Matt to be productive and valued, which is tremendously important to him. 

As it is important to all of us.

This is Common Sense. I’m Paul Jacob.

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Money for Robots and Representatives!

Rashida Tlaib, minimum wage, The Squad, economics,

Yesterday I addressed Senator Bernie Sanders’ minimum wage problem. Today it is member of Congress and “The Squad” Rashida Tlaib’s turn. She is unsatisfied with the just-​passed national $15/​hour minimum wage. 

She wants to make it $20.

Now a bidding war begins?

But not where laborers bid for jobs. Instead, a war in which restaurateurs bid for robots.

The point being that when you force up the costs of employing one factor in a production process, those who are trying to make a living as producers do not just fold and give their wealth away to rent/​purchase the newly exorbitant factor. They economize.

They make substitutions.

If I am not mistaken, basic economics has a term for the core concept … marginal something of something substitution. 

Why folks enamored of government regulation and prohibition (for the minimum wage law prohibits hiring help below a certain rate of pay) seem to think this elementary aspect of human behavior can safely be ignored is hard to figure.

At Reason, Billy Binion explains just how devastating Tlaib’s “one size fits all approach” would be for restaurants, “particularly those of the mom and pop variety.” What Tlaib demands, for these wage contracts, “amounts to an increase of almost 940 percent.”

Binion cites one study predicting “that a median-​rated restaurant on Yelp (3.5 stars) was 14 percent more likely to close with each additional dollar added to the tipped wage.”

If restaurants go out of business, new businesses would emerge, admittedly. Say, a return of the Automat!

While young folks look up that term, we oldsters wonder if these automation-​minded entrepreneurs will fund Tlaib’s re-​election campaign.

This is Common Sense. I’m Paul Jacob. 

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Rashida Tlaib, minimum wage, The Squad, economics,

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Bernie and Economic Law

Bernie Sanders, minimum wage,

One of the things Vermont Senator Bernie Sanders is known for is his push for a $15 per hour “living wage.” But this is politics — a policy position is never complete until its advocates demonstrate just how idiotic the policy actually is.

As Bernie just did.

His presidential campaign has been embroiled in labor union negotiations and a mini-scandal.

Some staffers have been paid a flat salary, not according to a per-​hour contract, making Bernie’s “living wage” commitment a bit murky. You see, these salaried employees worked longer hours than a typical 40-​hour work week (as is common in political campaigns), dipping their wage breakdown below the $15/​hour “minimum.” 

Now, no one is more deserving of this bit of policy blowback than resplendent millionaire Bernie Sanders.

Yet, it’s his campaign’s response that is especially droll: reduced hours!

So, while in one sense staffers got a pay raise, they did not get more money. Which is, as Matthew Yglesias acknowledged at Vox, “exactly the point that opponents of minimum wage increases are always making — if you force employers to pay more, they’re going to respond by cutting back elsewhere.” 

Ryan McMaken, at mises​.org, dug deeper, noting that there are a number of ways that the new union deal could amount to cuts in real wages. By “cutting worker hours, the Sanders campaign elected to provide fewer ‘services’ in the form of campaign activities. In practice, this will likely mean fewer rallies, less travel, or fewer television ads.” Less chance for growth. And decreased likelihood for increased employment of other workers.

Not exactly shocking. But a lesson. A terrible way to run a business.

Or a campaign. 

Perhaps we should say, “Thanks, Bernie!”

This is Common Sense. I’m Paul Jacob.

Bernie Sanders, minimum wage,

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Pick a Number

Bernie Sanders, 15, minimum wage, magic,

Is the number 15 “magical”?

The “democratic socialists” now dominating the Democratic Party first went for the $15 national minimum wage notion. Now it’s a cap on consumer credit interest rates, at 15 percent.

What’s next, 15 mph speed limits? Age 15 allowed to vote? 

Fifteen men on a dead man’s chest?

At Reason, Peter Suderman explains why “Bernie Sanders’ New Plan Will Make It Tougher for Poor People to Get Credit Cards.” The arguments proffered by Senator Sanders and his House co-​sponsor, Rep. Alexandria Ocasio-​Cortez, more than “suggest that people who choose to use payday loans don’t, and perhaps can’t, understand the choices they are making.… It is a form of benevolent condescension built on the belief that poor people can’t count.”

Now, it may be that, generally, poor people do not figure their finances as well as better-​off people. In fact, that’s demonstrated in the literature. But is that really the point?

The problem is, the methods they choose to help the poor make the poor less well-​off. Because they take away options: “What Sanders is actually bragging about is eliminating choices,” Suderman explains. “In essence, Sanders is proud of having eliminated useful financial tools for the poor.”

What’s really going on here is the magic of persuasion. Fifteen is a “sticky number.” It will be used again and again as self-​described socialists push for more and more unworkable government.

A bit of enchantment that just so happens to make one persuader a three-​house millionaire … and a bartender from the Bronx the talk of the nation.

This is Common Sense. I’m Paul Jacob.

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Bernie Sanders, 15, minimum wage, magic,

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