It has long been a GOP article of faith that raising the minimum wage is a recipe for disaster–that businesses will fire some workers in order to raise the pay of others, and that the increased wages will be passed along to consumers and that the higher prices will depress demand.
That last warning has been especially shrill when the effort to raise the minimum wage has focused upon food service workers. (Five cents more for a McDonald’s hamburger? No one will buy it!)
It doesn’t matter that in places that have ignored the naysayers and raised the minimum wage, these disasters have failed to materialize– ideology ignores evidence. (There’s an analogy between the hysteria over raising the minimum wage and the equally fervent belief that cutting taxes on rich people will generate job growth, despite the fact that it has never, ever happened.)
A recent article from Business Insider–not one of those “socialist” publications–confirms the hollowness of these economic chestnuts.
New York City restaurant workers saw their pay increase by 20% after a $15 minimum-wage hike, and a new report says business is booming despite warnings that the boost would devastate the city’s restaurant industry.
As New York raised the minimum wage to $15 this year from $7.25 in 2013, its restaurant industry outperformed the rest of the US in job growth and expansion, a new study found.
The study, by researchers from the New School and the New York think tank National Employment Law Project, found no negative employment effects of the city increasing its minimum wage to $15.
The article noted that numerous restaurant workers saw a pay increase of 20% to 28% as a result of the raise in the minimum wage, and that it represented the largest increase for low-wage workers since the 1960s. New York’s decision to raise the minimum wage had been met with considerable skepticism and warnings of dire consequences.
Across the US, the restaurant industry has the most to lose from a $15 hike. The Bureau of Labor Statistics found that in 2016 the food-preparation and serving industry employed the most workers paid at or below the minimum wage, at 1.1 million. Sales, the industry with the next-highest low-wage workforce, employed 200,000 such workers.
“New York City’s restaurant industry has flourished overall,” the study said.
Excuse me while I repeat–once again–my mantra: public policies should be based on evidence. Theories are fine–they’re even necessary–but when evidence demonstrates that a theory is flawed, the evidence should prompt revision of the theory.
Apparently, however, that’s just too painful…..
18 thoughts on “Minimum Wage Again”
Because who could have possibly predicted that putting more disposable income in the hands of those at the shallowest end of the wage pool would increase demand? I mean, except for absolutely anybody not constrained by dogma?
The money-hungry businesses paying minimum wage would of course raise their prices; or like John Whosit who owns Papa John’s Pizza swore to begin using inferior quality products in his pizzas if forced to provide healthcare for employees. Money-hungry Papa John just happens to be a Trump supporter. The health care insurance corporations had been steadily increasing premiums for years until ACA “was coming” and then escalated their premiums and annual deductions…and they didn’t have minimum wage workers to increase payments to. Pay close attention to the coming hurricane Dorian in Florida; if citrus crops are destroyed, stores will immediately raise prices on all citrus juices and canned products before Dorian hits. And migrant workers are minimum wage workers.
Does anyone understand that the $15 minimum wage for workers is a gradual increase over a period of years…NOT an immediate doubling of salaries to minimum wage workers? The minimum wage is “set in stone” and hasn’t been increased in years while costs of everything has soared beyond the reach of millions making more than minimum wage. 2 plus 2 will continue to equal 4 into infinity and those who have money will spend money; this is especially true of minimum wage and low income workers who now cannot afford necessities but could with a gradual increase. Of course they will never catch up to the ever increasing cost of everything.
“Excuse me while I repeat–once again–my mantra: public policies should be based on evidence. Theories are fine–they’re even necessary–but when evidence demonstrates that a theory is flawed, the evidence should prompt revision of the theory.”
A rather more successful real world experiment than Brownback’s Kansas.
Fifty cents per hour back in the day when a plate of fries and hamburger was 35 cents. A nickel more for a six-ounce glass of coke. It was a communion serving and few of us were overweight even with a little extra change in our pocket to buy gas and go to the movies for 9 cents. Our President was trim and did not require a biggy sized wide rail steel-reinforced swivel to sit in. Dim suh were da days. OMG! MAGA. I surrender. Take me to your leader!
When business owners and corporate executives are allowed to enjoy immense wealth at the expense of their employees via slave wages they become far too accustomed to their easy lives and all of the privileges that wealth brings to them.
They will fight any mention of giving up a small portion of their income to pay their employees a fair living wage. They live such privileged lives that they are completely disconnected with the struggles of their underpaid employees.
The most egregious consequence of allowing businesses in this country to get away with not paying a living to employees is that other middle and low income taxpayers are forced to make up the difference. As long as the wealthy business owners and execs continue to pay the republican politicians and the media moguls to push their lies onto the naive citizens they keep the status quo.
If you have ever tried to explain to a republican voter that they are being taxed in order to ensure that the wealthy business owners don’t have to pay a fair wage it is like talking to a brick wall. They are angry about being taxed to pay for the food and shelter of others because they have been convinced that “those people” are just too lazy to get another job in order to support themselves. The average republican voter that I come across seems incapable of comprehending that their taxes could be lower if people were paid a living wage, while the wealthy would be giving up a portion of their thievery. They can only focus on the message that they will have to pay more for their fast food meals.
The republican message keeps working like a charm.
$15 X 2080 (the number of hours in one year at 40 hours per week) = $31,200. Minus 8% Social Security and Medicare = $28,704. Divide by 12 = $2,392 per month. Assuming you need housing, clothes, food, and transportation. Where I live the average price paid for a one bedroom apartment is $1,271 per month. That leaves $1,121 for everything else. Yes, it can be done. Note that I didn’t include Federal or state withholding or costs for medical insurance, not to mention medical care. Let’s just admit that $15 per hour is not horribly generous. Heaven forbid you have a family to support on that minimum wage.
Mr. Dimon isn’t quite sure what to do about his teller who ends up in the red every month. The answer might just lie in a more equitable distribution of the net income his company records. BTW, I know she doesn’t get as much press as the “Squad”, but Katie Porter might just be the most interesting new congressperson we’ve seen in decades.
Peggy; months ago I decided to figure my monthly income as if I were still employed. Using my Social Security of $820 (after my Medicare deduction) monthly plus my City retirement of $277.62 monthly as my “take home pay” I discovered I am “earning” $6.67 per hour. Those who do not have the benefit of a retirement, however insecure it may be under Indiana Republicans, would like to be “earning” an increase to minimum wage to live on. Just sayin’
You have painted the most telling picture of the economy of the majority of Americans who cannot afford quality level daily needs to survive at today’s prices…which haven’t yet been hit by Trump’s tariff war. Regarding the restaurant workers referred to; I learned from my waitress friend that those tips we leave for our server does not stay with the server. They are pooled with percentages going to the underpaid people who “bus” tables and the underpaid cooks and other underpaid kitchen workers. And almost every restaurant worker is paid below minimum wage by their employer, forcing them to depend on tips more than their salaries.
Hardy anyone has ever seen an income statement for a food service business. Nor would they understand it. The biggest cost is product. You can’t sell a hamburger unless you buy beef, nor fries without potatoes. Down the way in the calculation of gross margin, you will find direct labor. Normally, costs are expressed as a percentage of sales. Cost of product may range from 40 to 50%. Direct labor might be 3 to 4%. A small increase in labor is not going to have a huge effect on gross margin. I’m not an accountant, but I slept at a Holiday Inn.
The Papa John’s owner was Colorado-based John Schnitter. He was also a local sports jock sniffer who literally kissed Peyton Manning on the field after a football game. To your point, he cut back worker’s hours so that they fell below the full-time employment line. That way he didn’t have to pay for their health care coverage. Oh, and the cost of his terrible pizzas would go up by $0.19 each – on average.
Yes, Schnitter owns a huge mansion in the mountains outside Denver, but he was also ousted by the board for being a greedy little shit….I think. Anyway, Schnitter and all the other fellow travelers bought into Milton Friedman’s fairy tale about the wonders of unregulated capitalism and treating labor like slaves. Friedman should have been teaching economics at the U of Alabama in 1850 instead of at U of Chicago in the 60s and 70s. Friedman basically justified greed and economic indecency to the already frothing capitalists and their stockholders. As we can see, it wasn’t that hard a sell.
Why is it that prices can go up instantly but wages (like $15 per hour someday) have to wait until employers who set prices can handle the hit? Why not $15 today because if not, workers are constantly in a catching up with inflation mode and may not be enjoying a raise at all depending upon inflation? Thus when Henry Ford decided to pay $5 a day to his workers who put his Model Ts together, his fellow capitalists denounced him as a socialist since only socialists would pay such an outrageously high daily wage to workers. He answered that he was paying his workers well so they would buy his Model Ts. They (and millions of others) did buy his cars. Result? They were well paid and he became a billionaire (and that’s when a billion was really a lot of money).
I recall another anecdotal and personal story in this connection. Ike Royalty, a farmer who lived across the road from us in southern Indiana in the Thirties, a man I never saw in anything but overalls, had an innate grasp of economics, He used to tell my father that he would not mind making a penny a day if you could buy a car for a quarter. So if we have price inflation (set, collectively, by employers), is $15 an adequate wage, and if so, when do we reach that point, and why not index it to inflation starting today?
I wish Ike were around to guide us rather than WSJ writers and paid hacks for hedge and equity fund operators.
Mostly the restaurant owners are enamored with their business plan; i.e., get your customers to pay your workers’ wages via tipping.
Capitalism’s original sin is that it can’t produce what it promises unless it can find someone in the system to take advantage of. That wasn’t necessarily the case until we hired a movie star cum refrigerator salesman to run our government back in 1980. Since that time wealth distribution is less common than wealth sequestration, more than half of us can’t pay a $400 debt, women have struggled to earn 70% of men’s wages, GDP has soared while workers lost real wages, Thomas Piketty taught us how extreme income inequality has become, the U.S./Britain/Brazil/etc. have elected would-be dictators to run their governments, the national debt has skyrocketed beyond $20 trillion, the economy has become thoroughly corporatized, profits have become privatized while costs and risks are socialized, workers have lost nearly all rights of participation in the economy, wars proliferate and lengthen while the military-industrial complex thrives, billionaires have taken ownership of Congress, life-saving regulations have been abandoned, corporations have given up on long-term success to focus on quarterly stock performance, science’s revelation that we live on a planet with limited resources has been rejected, and the goal of capitalism has become to further enrich those at the pinnacle of the economic mountain.
Great truths such as “If you put money in the hands of those who need it they will spend it and thereby boost the economy” are ignored. Although it has never worked, “trickle down” is king, failing CEOs are paid astronomical salaries. Financialization threatens to turn our economy into little more than a money manipulator. Technology is on the verge of displacing millions of jobs -and still we do nothing.
Without question, the inmates have taken over the asylum and get crazier by the day. In any economy power resides in the hands of those who own the means of production. Today that means all power. Without economic democracy there can be no political democracy and 45% of us seem not to care. Endless growth in an overcrowded world – capitalism’s theme song – is not going to save us. That makes consuming less and conserving more worth a try.
Fifteen dollars an hour is an insult to anyone living in a metropolitan area. Surely life consists of more than just busting ass to put food on the table.
the trucking industry,treats the workers like crap,while hiring anyone who fills the bill. ive been around trucks since 1972,and started driving one about 1978’when trucking was regulated.(ICC,,)since 1979 and dereg,its been a nitemare of cutthroating rates and wages. when the unions dried up,due to,dereg. drivers seen pay stagnate.though i see,and understand the working class as a whole,is stagnated,its a far diffrent game here. starting drivers with those investor owned corps, like,swift,werner,england,shove demands,you sign release contacts of any company demands,and hire from a bottom of the barrel low wage,anyone fits here. seriously,the starting driver sees, 4/5 hundred a week,and gets to live in that box on the back
of their cab. demanded,to fuel at high dollar truckstops,further sucking any wages out of their pockets. hest,no money left for main street when they get home..those investor owned enities profit big time on large purchaces ,tires,fuel and trucks. small business trucking does what it can to survive. orgs like the ATA american trucking assoc,is no more than a scam to continue this ongoing level of disgrace. white house attitudes, are like the kochs, at any price,find cheap
labor. we get paid 4 ways, depending on scam. salary,hourly,percentage of load pay,and milage. thats the game,mileage, and its now crammed into a electronic log,demanding truckers to work harder,and,,,not get the rest they need, when thier bodies time clock says it needs rest. the fact, truck parking has dried up,and the truckstops can not,hold capacity for drivers..the truckstop corps like flyingJ/pilot TSA,etc,knows theres a issue with parking,and alls they care about is selling fuel and overpriced cokes,(2 bucks for a small) while i look at the barren fields around the new ones,its obvious,alls they care about is selling fuel.many,are allowed to deny drivers a place to park,(via hired security)(gated entry)if they dont buy a minimum of 100 gals of fuel, are ya listening Dallas!!! so heres a town,trucking is a big buisness,and it treats us like dirt,and get out of our town when your done.plain and simple,Dallas…state and fed, they build fewer rest areas,many are a minus in need of expanding. we get clobbered by people who havent a clue in this industry what it takes to drive safe and make any money,but we do see, where it goes,to wall streets greeed,at our expense. we have orgs who voice discontent with us, matt,is one, get a life,the needs are a better pay,to get better drivers,and get the issues in the front of why,theres trucking issues..fact, 87% of the truckers supported trump. maybe after they see where they are led by his mob,maybe some will bail, but being most of those are just a bunch of bigoted asswipes,,(what did you expect from low wages) (and hiring scheems)the road remains the same.
Liberals believe in we the people while Republicans believe in make more money now regardless of the impact on any others ever. That’s a one business at a time perspective.
So liberals using data say that raising the minimum wage increases consumer (we) spending floating all boats. Republicans say, yeabut, in my business now, all that counts, expenses go up and my odds of beating my competition go down neglecting the fact that the impact is equal on all like businesses.
My conclusion from this is that some Republicans lie in order to increase wealth redistribution pouring uphill as God intends, while others just don’t understand business but are dimly aware that they need a job from a business in order to pay the bills so shoveling money upstream is just the price of it.
Government serves we the people. Business serves workers individually by allowing them to pay their bills and owners individually by rewarding their investments with the excess between what they charge consumers (we) which is as much as possible, and what they pay workers (we) which is as little as possible.
Data serves different perspectives differently. Business owns government now so provides self serving data wrapped in money. We the people must take back government by wrapping our data in unified votes to send the Pharisees packing.
This is absolutely necessary now.
Kudos, Terry! You are right on; $15 an hour is an insult to those who live in both urban and rural areas, but wage inequality dictates that the rich get richer and the poor get poorer. Profits over people but, ironically, with poor wages come tepid demand, and lesser profits. Will we ever learn, as Henry Ford did a century ago?
$15/hr is nada in NYC and, if all at once, problematic in rural Mississippi – it ain’t as simple as it looks. Yes, minimum wages need to be increased, but sensibly and tailored to the many different situations in our country.
Peggy, I agree about Katie Porter! She’s a dandy, very bright and one to watch. Thanks for bringing up her name.
I do not agree with Lester. A federal statute is a federal statute and should cover everyone from sea to shining sea, and I note also that $15 an hour as a minimum in rural Mississippi might well help those people come into the 21st century by moving from welfare to contributing states in the scheme of things as well as providing improved opportunities for education, medical care etc. for these long-ignored workers. Such a minimum wage should be indexed to the inflation basket not as currently composed but rather by its current composition plus the currently excluded items of food and energy.
In re Katie Porter, I have been watching her closely and she is one to watch, super smart and ready to do battle with right wing Republicans. Someday a Senate seat will open up in California and I hope she puts her oar in the water for that office.
Gerald – just one thing about Henry Ford (sorry, I am on a mission to debunk the “save Ford’s reputation myths”) – He was a greedy louse and DID NOT increase wages so that his workers should be able to build the cars that they built. He realized that afterwards and used the fact for positive PR, since he was a jerk and an anti-Semite.
He raised wages because of turn over – I believe over 50%. He pulled in people from the South and from Appalachia (he hated immigrants too) shoved them into hot stuffy factories doing the same thing over and over – hey Joe, you are the left rear wheel guy – they quick in droves — until $5 a day
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