Posts tagged with: minimum wage

Various forms of government intervention negatively affects economic vitality in many ways, however few policies impact the market as directly as wage laws. The $15 minimum wage law in Seattle dramatically influences determinants of business owners’ hiring practices. In many cases, wages are the highest economic cost in the production process, making hiring new employees a risky endeavor. Regardless of size, businesses of all scales must turn profits to stay operational and risk potential losses each time they hire new associates. Extra government mandates and regulations only make this natural market process more onerous.

While wage laws intend to immediately increase pay for the working poor, they severely hinder not only full time employment, but employment itself. Government mandated wage policies erect an artificial economic barrier that increases the supply of, but reduces the demand for, labor. Minimum wage mandates, contrary to their original intent, directly harm the groups they are designed to help. Government intervention in business typically aims to cure certain social ills, but the Utopian desire to cure humanity of all suffering leads to various economic distortions, sending false signals to consumers and producers. This is especially evident in wage policies.

Minimum wage laws primarily target the working poor, about 2% of the working population. Typical of intrusive government intervention, rather than having little to no effect, the laws have an active negative effect. As a labor demographic, the poor are least likely to possess marketable skills necessary to higher level employment and often rely on low-wage, unskilled jobs before developing their talents. When government forces business to pay above the market rate for unskilled work, this results in unemployment of the poor. Minimum wage laws price the poor right out of the labor market and rob them of work that may potentially lead to greater opportunity. African American communities particularly suffer from wage controls. Noble Prize economist, Milton Friedman, dispelled the incorrect perceptions of minimum wage laws in the 1960s and 1970s saying, “the most anti-negro law on the books of this land is the minimum wage rule.” The workers who retain their employment undoubtedly benefit from such wage increases, but at the expense of others. (more…)

fight forRobert Reich seems to be a smart man. He served under three presidents, and now is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California, Berkeley. His video (below) says raising the minimum wage is the right thing to do. Unfortunately, he gets it all wrong.

Donald Boudreaux of the Cato Institute notes a couple of errors in Reich’s thinking. First,

Ignoring supply-and-demand analysis (which depicts the correct common-sense understanding that the higher the minimum wage, the lower is the quantity of unskilled workers that firms can profitably employ), Reich asserts that a higher minimum wage enables workers to spend more money on consumer goods which, in turn, prompts employers to hire more workers.  Reich apparently believes that his ability to describe and draw such a “virtuous circle” of increased spending and hiring is reason enough to dismiss the concerns of “scare-mongers” (his term) who worry that raising the price of unskilled labor makes such labor less attractive to employers.


Blog author: jsunde
Wednesday, May 6, 2015

00979473.JPGI recently gave a hearty cheer for bringing back childhood chores, which are shockingly absent in a majority of today’s homes. The same appears to be the case with summer work for teenagers, which is increasingly avoided due to sports activities, cushy internships, video games, clubs and camps, and, in many cases, a lack of employment prospects altogether.

In an article for the Wall Street Journal, Dave Shiflett explores the implications of this development, recalling the “grit and glory of traditional summer work, which taught generations of teenagers important lessons about life, labor and even their place in the universe.”

Whether it was newspaper delivery, construction, factory work, fast food, or manual labor on the farm or the railroad, such jobs have introduced countless kids to responsibility, creativity, and service, helping connect the dots between God-given gifts and the broader social order. (more…)

closedSeattle has now mandated an increase in minimum wage. The economic ramifications are being felt, especially throughout the restaurant industry.

Several Seattle restaurants have done away with tipping, but are adding a mandatory service charge on a customer’s bill.

Restaurants often operate on thin margins, so higher wages quickly impact profitability. As opposed to tips, a service charge becomes part of the restaurant’s overall revenue. The restaurateurs say the service charge component will be used exclusively for employee wages, benefits and payroll expenses.

While this may solve the economic issue for some restaurants, the mandatory minimum wage increase is causing others to simply close their doors. (more…)

raise-minimum-wagejpg“I’m tired all the time.” That’s the lament of one of the working mothers in the video below (from The Guardian), as she describes her life working minimum wage jobs. She and the other women featured are all fighting for an increase in pay to $15 per hour (like Seattle’s recent mandate.)

I feel for them. I can’t imagine trying to raise a family on minimum wage salaries. But I have several issues with what I see in this video. (more…)

300px-GeocentrismGeocentrism was the belief that the sun, the planets, and all the stars revolve around the Earth. The alternative view—heliocentricism—had been around since the 3 BC but was not taken seriously until the 16th century AD. What seems obvious to us now was a matter of heated debated for almost two thousand years.

Economist Don Boudreaux says the minimum-wage debate in economics is rather like the reverse of this debate that took place centuries ago among astronomers.


1.21411In the latest addition to Mike Rowe’s growing catalog of pointed Facebook responses, the former Dirty Jobs host tackles a question on the minimum wage, answering a man named “Darrell Paul,” who asks:

The federal minimum wage is $7.25 and hour. A lot of people think it should be raised to $10.10. Seattle now pays $15 an hour, and the The Freedom Socialist Party is demanding a $20 living wage for every working person. What do you think about the minimum wage? How much do you think a Big Mac will cost if McDonald’s had to pay all their employees $20 an hour?

Rowe begins by recounting a job he had working at a movie theater for $2.90 per hour (the minimum wage in 1979). He served his customers, learned a host of new skills, and received several promotions in due course. Eventually, he decided to move on, pursuing areas closer to his vocational aspirations.

He worked. He learned. He launched.

Turning back to the present (and future), Rowe is concerned about the ways various labor policies have prodded many business owners to innovate ever-closer to full-blown automation, leading to ever-fewer opportunities for unskilled workers. “My job as an usher [at the theater] was the first rung on a long ladder of work that lead me to where I am today,” Rowe writes. “But what if that rung wasn’t there?” (more…)

coins_ladderOne holdover from 2014 into the new year is the cry for an increase in the minimum wage. President Obama pledged (in a December 2014 speech) to bump the minimum wage up to $9/hour nationally. Many believe that this move will help stimulate the still-sluggish economy.

Michael R. Strain, at  the American Enterprise Institute, isn’t wholly against raising the minimum wage, but he’s not wholeheartedly for it, either. He thinks we are asking the wrong question. Do we need to raise the minimum wage, or do we need to increase employment?

The labor market for young and low-skill workers is in terrible shape. More than 14 percent of workers aged 16–24 are unemployed. The situation is even worse if you look only at teenagers, over 1 in 5 of whom are unemployed. The unemployment rate for high-school dropouts over the age of 24 is 10.8 percent — a two-decade high — and only 4 people out of every 10 in that group have jobs. And there are still a staggering 4.1 million unemployed workers who have been looking for a job for six months or longer, many of whom are young or low-skill. (more…)

Blog author: jcarter
Thursday, December 11, 2014

Summer-JobsGiving disadvantaged youth a summer job reduces violent crime, according to a new study published to the journal Science.

In a randomized controlled trial among 1,634 high school youth in Chicago, assignment to a summer jobs program decreases violence by 43 percent over 16 months (3.95 fewer violent-crime arrests per 100 youth). The decline occurs largely after the 8-week intervention ends.

Denny's Offers Free Breakfast In Effort To Aggressively Promote SalesIf you’re blessed, your job is more than just a paycheck. It’s a structure for your life, it’s a place of friendship and camaraderie, and a sense of purpose. At least, it was for Stacy Osborn.

Osborn had been working at Tastes of Life, a Hillsdale, Michigan, restaurant that also supported a residential program, Life Challenge of Michigan. The restaurant was owned by Pastor Jack Mosley and his wife, Linda.

Mosley explained that, unlike a typical business that might fire a chef with a hot temper “who breaks dishes,” Tastes of Life managers were more long-suffering and wanted to help employees polish their life skills.

“Life has issues,” Mosley said. “This was a place to shore them up, and help them cope and get through.”

So why isn’t Osborn working there anymore? Because Tastes of Life couldn’t afford to stay open after the state of Michigan raised its minimum wage. Mosley said he figured he’d have to bring in 200 more customers a week in order to stay open. (more…)