Free Markets, Free People

minimum wage


Unemployment the people’s main priority? So let’s hike the minimum wage …

A poll came out the other day saying that the majority of American’s first priority is unemployment.  And it should be given the incredible low we’re now suffering in labor force participation.

So what bright idea are Democrats pushing in spite of that?  Hey, let’s raise the minimum wage?

Result? Well, even the CBO, the Dems favorite “go to” agency to support their ideas (when it actually agrees, of course), doesn’t see this as a particularly bright idea if they’re concerned about the people’s priority:

Once fully implemented in the second half of 2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects.

Notice it says reduce “total employment” by 500,000.  It also says it is only a projection and that it could actually be higher than that.

Wonderful.

But, but … it will help the poor!

The increased earnings for low-wage workers resulting  from the higher minimum wage would total $31 billion, by CBO’s estimate. However, those earnings would not  go only to low-income families, because many low-wage  workers are not members of low-income families. Just  19 percent of the $31 billion would accrue to families  with earnings below the poverty threshold, whereas  29 percent would accrue to families earning more than three times the poverty threshold, CBO estimates.

Or said another way, Democrats are willing to see a half million plus lose their jobs to serve 19% (and that assumes that all of the 19% keep their jobs).

But, but … it will give the poor more to spend!

Moreover, the increased earnings for some workers would  be accompanied by reductions in real (inflation-adjusted)  income for the people who became jobless because of the  minimum-wage increase, for business owners, and for consumers facing higher prices.

Those are facts, folks.  Democrats don’t deal in facts, they deal in emotions … and if they can pass a minimum wage bill, they’ll feel wonderful about themselves.  And if they can’t, they’ll blame it all on the mean old Repubicans who want you to be able to keep your job or something radical like that.

~McQ


Observations: The QandO Podcast for 26 Jan14

This week, Bruceand Dale just talk about Wendy Davis and other things.

The direct link to the podcast can be found here.

Observations

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Sometimes I wonder …

I wonder just how intelligent the bulk of Americans are.  From a Quinnipiac poll:

American voters support 71 – 27 percent raising the minimum wage. Republican support is 52 – 45 percent. Given several options:

  • 33 percent of voters say increase the minimum wage to $10.10 per hour;
  • 18 percent say increase it from the current $7.25 per hour to something less than $10.10;
  • 18 percent say increase it to more than $10.10 per hour;
  • 27 percent say don’t increase the minimum wage.

Raising the minimum wage will lead businesses to cut jobs, voters say 50 – 45 percent, with Republicans seeing job cuts 68 – 29 percent and Democrats saying no 65 – 29 percent. Independent voters expect job cuts 51 – 45 percent.

We’re faced with the lowest job participation numbers in a long, long time, our economy is just starting to recover, a majority of Americans know that raising the minimum wage will lead “business to cut jobs” and yet, the majority also want to raise it anyway (to include 52% of “Republicans”).

It makes you just want to throw up your ands and say “screw it”.

~McQ


What good is a union if it can’t deliver the goods?

That’s kind of the $64,000 dollar question (yes, I’m showing my age … bite me) isn’t it?

You’ve seen the news about the fast food walkouts and claims that food service people should be paid $15 an hour?  That what the United Food and Commercial Workers union claims workers in that industry should have.  But what do workers they actually represent in that industry actually get?  Not much over minimum wage and union dues to pay out of that:

An examination of UFCW contracts shows that even senior union members are not receiving the wages that ROC and Jobs for Justice demand.

Consider a department manager at Kroger’s union shop in Michigan. She earns a maximum rate of $13.80, even after over half a decade on the job. If this is the highest wage the UFCW can negotiate for skilled, experienced workers, how can the union provide entry-level, low-skilled workers with $15 an hour?

It is not possible for them to accomplish this. Yet, receiving media coverage for the protests they sponsor is an effective way to increase membership and dues collections. The wage they demand is more than twice what similarly skilled union members are paid, namely $7.40 an hour for an entry-level cashier.

Courtesy clerks are paid a starting rate of $7.40 an hour and can work their way to up a wage ceiling of $7.45, after 12 months on the job. Fuel clerks do not fare much better; they start at the same $7.40 and can earn $7.80 an hour after three years of experience, barely over half of the $15 an hour wage worker centers supported by the UFCW demand. Specialty clerks also start at $7.40 an hour, but can earn up to $9.35 after six years. This amount is still 25 percent below the $12.50 an hour “living wage” Jobs for Justice claims all entry level workers should be paid. Read the full union contract between Kroger and the UFCW here.

The take-home pay is even lower once dues—and federal and state taxes—are removed. Dues are mandatory and usually take between $19 and $60 a month from members’ paychecks.

A non-union member could negotiate that without even trying hard.  So, what good is the union really done for those those it represents?  Other than pay it’s union staff very well?

It is expensive to run a union. The average total compensation for those employed by the UFCW—rather than represented by the UFCW—is $88,224 a year. This income is almost six times what the union negotiated for cashiers at Kroger’s. Joseph Hansen, the International President of UFCW, earns in excess of $350,000 a year—over twenty times the earnings of many of the workers he represents. The Executive Vice President and National President both earn over $300,000. Are entry-level union workers receiving benefits from paying dues out of their $7.40 an hour paychecks to fund these salaries?

But you know, it’s “management” that’s the problem, right?  I mean how could a cashier negotiate a $7.40 an hour paycheck without the union – and then give the union its “dues” out of that same paycheck?  Hey, the president of the union has to have his perks, right?

I know, I know, don’t look at the paycheck, look at the other benefits … like a pension, right?

The UFCW has one of the worst records for funding of union pension plans. The Labor Department has informed the UFCW that nine of its pension plans have reached “critical status,” meaning they are less than 65 percent funded. Many of these funds have been underfunded for six years. They have low chances of regaining sustainable financing unless they can convince more new members to join and pay dues without receiving similar benefits.

Sigh.

And, of course, there’s the political side of things … it is important to help fund the union’s political activities, no?

Some portion of dues goes towards political contributions. The UFCW contributed $11.6 million during the 2012 election cycle, of which nearly 100 percent went to Democrats.

Well of course it went to Democrats.  Democrats have been in the union’s pocket (and vice versa) since time began, apparently.  Put $11.6 in the pension fund?  What are you, a Republican?

Yes, it’s a crying shame people aren’t represented by this union … said no libertarian, ever.

~McQ


NYT: Raise the minimum wage!

You may find this interesting … I did.  The New York Times editorialized about the minimum wage on the 12th of February.  Unsurprisingly, they’re for raising it:

New York is an expensive place to live, and unaffordable for workers struggling on $7.25 an hour, the federal minimum wage. Nineteen other states, recognizing that the federal minimum is too low for survival, even with food stamps or other government assistance, have increased their minimum above that level. Lawmakers in Massachusetts raised it to $8 an hour. Connecticut’s is $8.25, and it is $9.04 an hour in Washington State.

It is time for New York to raise its minimum wage enough to help more than 600,000 struggling workers. Assembly Speaker Sheldon Silver is vigorously pushing a bill to raise the minimum to $8.50 an hour immediately and to adjust it each year for inflation. This should not be a controversial measure.

Want to know what would be a controversial measure, at least as far as the NYT would be concerned?  George Mason University economics professor Donald J. Boudreaux (Café Hayek) answers the Times:

In the same spirit of demanding that government improve people’s economic well-being simply by ordering that people be paid more, allow me to make a similar plea on your behalf.

The newspaper business today is in difficult straits.  So I hereby call upon the legislature in Albany to force you and other newspapers in New York to raise your subscription and advertising rates by 17.2 percent (the same percentage raise that you want to force low-skilled workers to demand from their employers).  Voila!  If your economic theory is correct, your profits will rise.  And the magnitude of these higher profits, we can assume (just as you assume in the case of low-skilled workers), will be greater than any negative consequences that might be unleashed by such legislative interference in your ability to determine the terms on which you sell your services.

I. Loved. That. Answer.

It is the perfect comeback to those who would use the force of government to arbitrarily raise wages and commit your money to their priorities.  As with most things, they’d never stand for you doing the same to them.  Boudreaux’s answer highlights that in spades.  It’s perfect.  And he challenges them with “if your economic theory is correct …”.  I laughed out loud reading that.

Oh, and we demand that the NYT adjust their subscription and advertising rates each year for inflation.

That shouldn’t be a controversial measure, should it?

You can hear the huffing and puffing in the NYT boardroom from here.

[HT: Villainous Company]

~McQ

Twitter: @McQandO


How hungry are governments for tax revenue?

Hungry enough to tax minimum wage employees for their “free” (or reduced cost) restaurant meals in Michigan:

Although it may be “free,” that’s not stopping some legislators from attempting to tax it. State Rep. Mark Meadows, D-East Lansing, has introduced House Bill 6214, which would tax free meals employees get while working at restaurants and food establishments.

Can anyone think of a better example of a tax which would hit those that can afford it least? One of the few benefits of working what is usually a minimum wage job is the server or worker is allowed one free or reduced cost meal a day. When working for the wages the restaurant industry usually pays – especially in fast food establishments, that helps a bit.

Making them pay the sales tax on the meal probably won’t break them, but it is a direct tax on what Democrats always call “the working poor”. The party that contends they’re the champions of this class are taking a run at squeezing a few more pennies out of their pocket – at least in Michigan.

It also places another collection and book keeping demand on the business. That isn’t “free” either.

Michigan, of course, is a state in which government has essentially failed, is significantly in debt and is looking for any sort of revenue it can scare up.

What’s next, taxing the dead for the privilege of being buried in the state?

~McQ


Questions and Observations #4

For new readers, the title is what the shortened “QandO” stands for.

  • I thought one of the things the Obama administration was promising it wouldn’t do was use signing statements to ignore the law? Apparently not.
  • It would appear that a witch-hunt for “extremists” in the military is building. First we had the DHS warning claiming veterans might be recruited by right-wing extremist organizations. Then Alcee Hastings proposes law (a law already on the books, btw) to prohibit “extremists” from joining the military. Now the Southern Poverty Law Center is asking Congress to investigate the military based on a couple of postings it found on a suspect website.  The premise, of course, is because we now have a black Democratic president, there is more of a threat from such extremists who might be in the military.
  • Government’s attempt to regulate every aspect of your life takes another step in that direction, but in an unexpected area – licensing yoga teachers. Of course, government knows so much about yoga to begin with. In fact, all this will do is add cost and paperwork to something which is at the moment, self-regulated by the market.  What it will do for yoga is present an government imposed bar to entry.  And, of course, create another revenue stream where none previously existed.
  • Electric cars? The panacea? Not according to the Government Accounting Office which claims, at best, they’d reduce CO2 emissions by 4 – 5% but would see that negated by increased travel because users would drive more believing their use isn’t a threat to the environment. And then there’s the lithium problem.
  • David Brooks sat through an entire dinner with a Republican Senator’s hand on his inner thigh? Really? Why? And what does that say about David Brooks?
  • Corporations which have taken taxpayer money are on notice not to book meetings at fancy resorts. But government (which exists on nothing but taxpayer money)? No problem.
  • Mark Steyn wonders if the era of “soft despotism” has begun here? It’s a good description of what is going on I think.  For the record, Obama isn’t the initiator of it, he’s just an accelerant. The only problem with “soft despotism” is it usually turns to the garden-variety hard despotism after a while.
  • Timing is everything, isn’t it? In the midst of the recession, the federal minimum wage is scheduled to increase by 70 cents an hour to $7.25 on July 24th. That’ll certainly help the recovery and create jobs, won’t it?

I’ll add more as I find them – check back throughout the day.

~McQ


Honduras And The Effects Of Raising The Minimum Wage

Honduras is going through a rather large spike in kidnappings. From 5 in 2005 to 121 in 2008. In an attempt to understand this rise in kidnappings, The Overseas Security Advisory Council (OSAC), part of the Bureau of Diplomatic Security of the U.S. Department of State, was sure that economic conditions had most likely driven the spike. But what specifically was likely to have caused it? Apparently an increase in the minimum wage:

In January, Honduran President Manuel Zelaya increased the minimum wage 60 percent, raising monthly wages from US$ 181 to $289. As a result, an estimated 15,000 people have been laid off in urban areas. This number is expected to steadily increase as businesses cannot afford the new mandatory wages. Remittances from Hondurans in the U.S. have also decreased throughout 2008.

Some analysts predict increased crime in Honduras due to citizens unable to find legitimate sources of income. Many unemployed Hondurans could look to kidnapping for ransom in order to obtain large sums of money for a small amount of planning and effort. As the disparity between economic classes continues, wealthy Hondurans or foreigners of affluent appearance conducting business in Honduras could continue to be targeted at a higher rate.

Of course everytime increases are argued against here, those in favor of them tend to wave off the point that raising the wage will cause unemployment among those who can least afford it. Obviously I’m not contending that if we do so here, those laid off will take up kidnapping, but to pretend such rises in minimum wage don’t have any detrimental effect is simply not true – and Honduras provides the case study.

~McQ