Tag Archives: Minimum Wage

Raising the Minimum Wage – Harming the Under Privileged

I’ve said it before and I’ll say it again – I do NOT doubt the nobility of the liberal.  From food stamps to public schools – from Medicaid to minimum wage.  The liberal is earnestly striving the raise the standard of living for the less fortunate.

They’re just wrong.

They are wrong due to two critical errors:

1.  They don’t understand economics.
2.  They assign the moral benefits of personal charity to voting for a larger state.

Take for instance the minimum wage.

Businesses run on margin – profit.  Often that margin is razor thin.  So, if wages equate to X% of your expenses and those wages are going to go up by 40% it only stands too reason that costs need to go up by 40% of X or  some other expense is going to go down by 40% of X.

That ‘other’ expense?  Wages.  Either fewer wage earners or fewer hours worked.

And guess who is the first guy shafted?  The least productive – often the least experienced, the youngest, the poorest and the most in need of a job.

The cold hard fact of the matter.  If you want to increase the gap between my kids and kids born to a single, minority, uneducated, poor woman, you simply increase the minimum wage.


Not only do her kids not get the same jobs my kids get – they never benefit from the ‘On The Job Training’ that my kids get.

Data bears this out:

In the summer of 1995, more than half of teens age 16 to 19 worked in the summer; today, less than a third do. The drop has been especially steep for boys, who are now less likely than girls to work during the summer. Experts attribute the decline to a variety of forces: the disappearance of many entry-level jobs, the rising share of young people spending their summers in school or other educational activities and, at least recently, a rising minimum wage. (Employers may not see teen workers — especially those with less experience or fewer skills — as worth $10 or more per hour.)

Two of the three reasons are direct responses to increased cost of labor – automation and worth.

Young Americans from low-income families have been especially hard-hit by the decline in summer employment. According to data from the Current Population Survey, teenagers whose families make less than $20,000 per year are now less than half as likely to work as those from families who earn at least $100,000, and, unlike their wealthier peers, low-income teens have seen hardly any rebound in employment since the recession ended. (Black and Hispanic teens, too, have far lower employment rates than whites.)

Unfortunately, low-income teens are also the ones who most need summer jobs. They need the money, of course — a job that might provide pocket-money to a middle-class teen could be a key source of income for someone from a poorer family. But they also need the experience.

My son is soon going to hit the job market.  And I’ll find him a job.  I’ll either make one or or find one or buy one.  I won’t do this so that he has money for more Pokemon cards or Xbox games.  I’ll do this so that when he hits high school he’ll know how to:

  • Show up on time
  • Complete tasks
  • Take coaching
  • Earn money
  • Work a shitty job in the hopes of one day not

The tragedy, the REAL tragedy, is that the minimum wage liberal is doing more damage to the population they hope to help than any capitalist ever could.

California – The Land Where They Hate Poor People

Job Line

It’s simple econ 101:

Put a ceiling on the price of a commodity, you get less supply of the commodity.

Put a floor on the price of the commodity, you get less demand for the commodity.

Rent control – a ceiling – results in fewer rental units.

Minimum wage – a floor – results in reduced demand for workers.

Politicians ignore this:

In December, The Federal Reserve Bank of San Francisco released a paper examining the current research on the impact of minimum wage increases. It stressed that the “most important” policy consideration was whether there would be “fewer jobs for the least skilled workers” because “they are the ones the minimum wage is intended to help.” It found that the “most credible” research showed minimum wage increases resulting in “job losses” for these workers and “with possibly larger adverse effects than earlier research suggested.”

Or worse, they acknowledge AND ignore:

In January of this year, Gov. Jerry Brown agreed, stating that raising “the minimum wage too much” would put “a lot of poor people out of work.” His conclusion: “There won’t be a lot of jobs.”

I’ll include the math, though it likely won’t help the average minimum wage earner supporting a family [they don’t speak math]:

Take a typical quick service restaurant employing 25 people with annual sales of $1.25 million. The National Restaurant Association’s annual Operations Report states that the average pre-tax profit margin for such a restaurant is 6.3 percent, or $78,750. While more experienced employees typically contribute more to a business’s bottom line, for this example let’s assume that each of these 25 employees contributed an equal amount to the business’s success of $3,150.

According to the Bureau of Labor Statistics, restaurant sector employees work an average of 26 hours per week. Increasing California’s minimum wage from $10 an hour to $15 for such an employee results in an annual cost increase of $6,760, or more than double what the employee contributed to the business’ success – resulting in a loss of $3,610 per employee per year.

I recently went to see “Captain America: Civil War” and had the pleasure of waiting in line for concessions.  Agonizing.  Lines forever, employees that couldn’t remember “a beer, medium buttered popcorn, duds and a water” and the idea of making change was foreign.  Not a whiff of customer service much less mastery of task at hand.

Fifteen an hour?  Hardly worth the job.

Minimum Wage – Minnesota Style

Minimum Wage Another post from one of my favorite blogs, Coyote Blog, has a great illustration on the impact to businesses that an increase in the minimum wage results in.

First, his experience in camping fees in Minnesota:

Labor and labor-related costs (costs that are calculated as a percentage of wages, like employment taxes) make up nearly 50% of our costs.  The Minnesota minimum wage is set to rise from $7.20 to $9.50 in the next two years, an increase of 31%.  Since wages and wage-related costs are half our expenses, the minimum wage increase raises our total costs by 15.5%. This means that all by itself, without any other inflation in any other category of expenses, the minimum wage increases will drive a $3.10 increase in our camping fees (.155 x $20).  Note that this is straight math.  The moment the state of Minnesota passed their minimum wage increase, this fee increase was going to be required.

This in response to angry customers who saw their costs rise for their favorite camping sites in the parks managed by Mr. Coyote.

Now, fortunately for his sake, he is able to raise the prices for camping in his market, but how about businesses that can’t?

In November, San Francisco voters overwhelmingly passed a measure that will increase the minimum wage within the city to $15 per hour by 2018.  Although all of us at Borderlands support the concept of a living wage in [principle] and we believe that it’s possible that the new law will be good for San Francisco – Borderlands Books as it exists is not a financially viable business if subject to that minimum wage.  Consequently we will be closing our doors no later than March 31st.  The cafe will continue to operate until at least the end of this year.

While I absolutely hate the destruction of capital due to the political process when it otherwise could have been avoided, I must admit to a degree of schadenfreude with respect to the bookstore owner.


Since the Coyote story is a bit old I went to check and see what happened to Borderland Books:

Last month it announced its impending closure – until the idea of crowdfunded “sponsorships” was floated. On the bookshop’s website, its owners announced:

Starting immediately we will be offering paid sponsorships of the store. Each sponsorship will cost $100 for the year and will need to be renewed every year. If we get 300 sponsors before March 31st, we will stay open for the remainder of 2015.

Our goal is to gather enough paid sponsors to cover the projected shortfall in income that will be the result of the minimum wage increase in San Francisco. At the beginning of next year we will again solicit sponsors. If next year we again reach our goal by March 31, we will remain open through 2016. This process will continue each year until we close, either because of a lack of sponsorship or for other reasons.

Just two days after launching the initiative, Borderlands’ Jude Feldman announced that they had hit their target – 300 people had offered up sponsorships of $100 apiece, enabling the store to stay open for a further year.

Good on them.

Minimum Wage in Europe

European Minimum Wage

I’ve been meaning to write a larger post with the data above that I found at Carpe Diem, but I just haven’t gotten around to it.  Instead I’ll pass it along with some comments.

  1. I am VERY surprised that the Nordic countries have no minimum wage.
  2. I would never have guessed the youth unemployment rates would be so high in Finland and Sweden – darlings of the big-nanny state fan boys.
  3. The average youth unemployment for the nations with a minimum wage is higher than the highest value for those nations without such a wage.


The Value Of Employment’s First Rung

Minimum WageMuch has been discussed with jobs, minimum wage, poverty, the income gap and unemployment.  One of my central themes is that wages are not the full story when it comes to compensation.  Another is that minimum wage jobs are NOT meant to be careers and certainly are not meant to be a means by which we raise a family.

Rather, these jobs are meant to be the first rung in the employment ladder.  In addition to modest wages they teach job skills; customer service, scheduling, listening, task completion and plain old “boss respect”.

An old story that emphasizes this point:

Here’s one reason why Volkswagen likes hiring former fast-food employees for its 2.5 million-square-foot plant here in the heart of the Tennessee Valley.

“Inexperience is a key,” said Gary Booth, director of the Volkswagen Academy training operation. “Some of our best employees came from McDonald’s. They know standardized work.”

Booth, strolling the halls of Volkswagen’s 163,000-square-foot training facility connected to the plant, said he doesn’t want to hire assembly-line workers who have developed “bad habits” at previous manufacturing jobs.

I work at a highly specialized center and I continually advocate hiring local McDonald managers to fill our centers.

Just sayin’.

Poverty, Africa And The Minimum Wage

African Poverty

There’s a bunch of talk about the minimum wage with the recent fast-food protests.  People are dismayed that there are jobs that only pay $7.25 an hour and claim that there is no way that you can support a family on that amount of money.

Forget for a second that no one believe you should START a family on $7.25.  Forget that a vanishingly small number of people earn the minimum wage and that it is an entry level position where future job skills are learned.

The economics of the thing is what matters.

In a world that has been faced with bone jarring poverty in large swaths of our populations, and with the ever increasing globalization of our economy, it only makes sense that as millions and millions of people enter the “global work force” that competition for jobs increases.  And as that occurs, the cost of labor is going to go down.

I’ve never understood the Leftist who complains about the diminished wages of Americans while at the same time bemoaning the poverty of people in Asia, India and Africa.

But there is good news.  These regions are leaving poverty behind:

AFRICA’s poverty levels are falling by one percentage point per year, with the absolute number of people living below the poverty datum line declining drastically, the World Bank Group has said.

As a result of the impressive economic growth rate, the continent has been posting in the last 10 years, the poverty rate has gone down, while the number of people living below the datum line of US$1.25 per day, has fallen by nine million in three years.

World Bank Group president, Jim Yong Kim said here during the opening session of the fifth Tokyo International Conference on African Development (TICAD V) that, the bank has placed Africa at the core of its effort to end poverty and boost shared prosperity.

He said the growth the continent had recorded in the last 10 years had impacted on the poverty levels.

“The growth has had an impact on poverty – the poverty rate has been falling at one percentage point a year. For the first time, the absolute number of people living below $1.25 a day has fallen – by nine million in three years,” he said.

Soon these places and their people will cease to be “any job at any price” employees and will enter a condition where they will become consumers.  They’ll surpass their needs of food and clothing and begin to want the Nikes, the iPads and the Plantations.


(Reuters) – When Wal-Mart Stores the world’s top retailer, bought control of major South African discount chain Massmart Holdings in 2011, American shopping mall developer Irwin Barkan had an epiphany.

An industry veteran of 30 years, Barkan’s U.S. home market was “graying”, while the youthful, underdeveloped African continent offered a sweet spot, with a rapidly expanding middle class and no competition from online retailers.

“When Wal-Mart announced it was buying 51 percent of Massmart, I knew that if I was going to stay in business, Africa was where I had to go,” he said.

He moved last year to Ghana, one of the continent’s brightest economic hopes, and his company, BG International, has broken ground on what will be an 18,400-square-metre (200,000 sq feet) enclosed mall in West Accra. Another mall planned for Ghana’s second city of Kumasi is at a similar stage.

Barkan is not alone. Across Africa, commercial real estate developers are responding to the lure of one of the world’s fastest-growing consumer markets and rushing to build malls for eager retailers.

Consumer spending accounted for more than 60 percent of sub-Saharan Africa’s buoyant economic growth, the World Bank said in its Africa Pulse report in April, adding economic growth would accelerate to more than 5 percent over the next three years, far outpacing the global average.

Africa can be said to be rising.  And with it, the wages and hopes and dreams of an entire continent.  And as THAT occurs, the downward pressure on wages in America will ease.

So, fellow Americans, take solace in your hearts that a very predictable economic truth is unfolding.  As the poorest individuals in the world lurch out of abject poverty, our wages will struggle.  But as those poor become consumers, we will recover.

Take solace and rejoice in the power of the economic engine that is capitalism.



Ashton Kutcher on “opportunity”

I believe that opportunity looks a lot like hard work.  When I was 13 I had my first job with my dad carrying shingles up to the roof.  And then I got a job washing dishes at a restaurant.   And then I got a job in a grocery store deli.  And then I got a job in a factory sweeping Cheerio dust off the ground.

And I’ve never had a job in my that I was better than.  I was always just lucky to have a job.  And every job I had was a stepping stone to my next job.  And I never quit my job until I had my next job.

And so opportunities look a lot like work.

Today there is much gnashing of teeth and rending of clothing over the minimum wage and the ability to raise a family.

Here’s the cold hard truth.  That minimum wage job?  It isn’t MEANT to live on or raise a family.  A clue for those folks – if they are can’t have  a puppy because they can’t afford the dog food….they can’t afford to have a family.

That job paying minimum wage?  It isn’t meant to provide a living.  It’s meant to serve as training for your next job, which in turn is training for the next job.

Until you get the job that is meant to be the job you raise a family with.

Wherein Pino Becomes A Business Owner

Small Business

Posting has been light lately.  In part because I’ve been somewhat busy in life.  Work is ramping up some and the family has been doing some traveling.   However, the large reason blogging has taken a hit is that a good friend and I have started a new small business here in Carolina.

I’ve always wanted to strike out on my own but I’m pretty severely risk averse.  The idea of depending on my own resources for a living to support home and family is horribly frightening.  Which makes this opportunity nice.  We’re able to operate while maintaining our normal day jobs.

It’s hard, to be sure, to do both.  But the security is well worth the extra time.

Some things that I’ve learned:

  1. Working for someone else is a massive benefit.  As an employee there is minimal risk while the owner carries significant non-trivial risk.  Not only in terms of money, but in terms of time and of potential liability; personal and property.
  2. Customer service is not an inherent trait in most people.
  3. The perceived need of a minimum wage is an illusion created by the left.
  4. The unemployment rate doesn’t begin to address the whole picture of who is and who isn’t working.  People are working and making money; on the books or off.

I’m no where near being in danger of transition from the red to the black, but so far the experience has been positive, even if not enjoyable.

Minimum Wage : New York

Minimum Wage

I was in New York back in April during the fast food workers strike against the prevailing minimum wage.  They want to raise the wage to $15.  Amusing to say the least.

I think the whole argument is flawed.  Consider:

Gregory Reynoso, a driver for a Domino’s in Brooklyn, complains that he is making $7.25 an hour after a year and a half on the job. “It’s impossible to support a family on $7.25 an hour,” said Mr. Reynoso, 26, who lives with his 3-year-old daughter and his wife, a part-time employee at Macy’s. “We’re just surviving.”

The reality is that these jobs are not meant to be used to raise a family.  Neither are they meant to be a job that an individual stays at for more than a year or possibly two.  These jobs are meant to be entry level jobs in the job market.  A place where an individual learns to work, to take instruction, follow through, show up on time.  A place to learn customer service.

The argument that you cannot support a family working at Burger King is not a valid argument for raising the minimum wage.

Wherein Slate Agrees Minimum Wage Is Silly

minimum wageMinimum wage and minimum wage laws.  The creation of a system that forces employers to engage in charity by compensating someone more than their production would warrant.

Without getting into the concept that implementation of minimum wage laws, with the noble intention of helping out marginal employees, which hurt the very folks they are trying to help, let us suffice it to say that even Slate understands the economics of the whole thing:

I’m relatively bullish on the American economy, but I do worry that the prolonged downturn has created some odd mental blocks among American CEOs. Today, for example, the Wall Street Journal has a long story about how even though McDonald’s did fairly well at the depths of the recession they’re now having problems with the quality of the customer service they provide. I’m no management genius, but even I know that how much you pay people is relevant to how demanding you can be about the quality of the work they do.

And the converse is also true- how much you can earn is relevant to how demanding you are about the quality of your work.

And it continues:

Part of what you’re seeing here is that the prolonged weak labor market has in some ways been a sweet ride for managers. As things bounce back, it gets tougher. You might need to add staff. And to add high-quality staff you might need to offer better wages and working conditions.


This is why attorneys are paid more than gas station attendants.