Saturday, January 20, 2018 8:50:18 AM
The Coming Minimum-Wage Tsunami Will Wash Away Millions Of Minority Jobs
https://www.investors.com/politics/commentary/the-coming-minimum-wage-tsunami-will-wash-away-millions-of-minority-jobs/
Blame Minimum Wage, Not Carl's Jr. CEO, For Automated Restaurants
Overregulation: Carl's Jr. and Hardee's CEO Andy Puzder has people all in a huff over his idea to automate restaurants. But why be upset with Puzder? This is an inevitable consequence of massive minimum wage hikes by the government.
"I want to try it," CEO Puzder told Business Insider. He's looking at something "where you order on a kiosk, you pay with a credit or debit card, your order pops up, and you never see a person."
Is he being heartless? No. Just responding to the government's foolish plans to jack up the minimum wage and put restaurants, hotels, bars and other service industries out of business. "With government driving up the cost of labor, it's driving down the number of jobs," said Puzder. "You're going to see automation not just in airports and grocery stores, but in restaurants."
He's right. That's why whenever the minimum wage rises above the market-set prevailing wage, jobs are destroyed. Who would pay someone $15 an hour to do a job that's worth less than that? No one.
This isn't rocket science or even advanced economics. It's plain common sense -- something that populist demagogues on the left seem to be missing entirely.
The proof for this proposition is overwhelming. Consider:
IBD's Jed Graham surveyed six big U.S. cities that hiked the minimum wage in 2015 and found they took a serious jobs hit. "Wherever cities implemented big minimum-wage hikes to $10 an hour or more last year, the latest data through December show that job creation downshifted to the slowest pace in at least five years," Graham wrote.
During the 1970s, Congress forced Puerto Rico to adopt the U.S. federal minimum wage. The result, according to a 1992 study by economists Alida Castillo-Freeman and Richard Freeman: "Imposing the U.S.-level minimum reduced total island employment by 8%-10%." So Puerto Rico lost 1 out of every 11 jobs to the minimum wage.
A study by the American Enterprise Institute looked at Seattle's recent minimum wage hike. After it began phasing in a series of hikes in 2014, Seattle lost 10,000 jobs between just September and November, and its unemployment rate jumped a full percentage point. As AEI economist Mark Perry notes, Seattle's minimum wage hike from $9.32 an hour to $15 an hour amounts to a $11,360 tax on every minimum wage job.
A 2014 Congressional Budget Office study estimated that raising the federal minimum wage from $7.25 an hour to just $10.10 an hour would kill half a million jobs.
Worst of all, those who suffer most are the young, minorities and those with little education or training.
Puzder is no villain. He's not greedy. He's merely reacting to the government's jacking up his costs in the only way he can: by employing fewer workers and replacing them with technology. Don't blame Puzder; blame foolish federal policies, and those who support them.
https://www.investors.com/politics/editorials/blame-minimum-wage-not-carls-jr-ceo-for-robot-run-restaurants/
'Fight For $15': The Most Devastating Minority Job-Killer Ever?
It's very easy to pose as a champion of the common man or woman when you're pushing to have someone else give them more money. But the fact is — and, sadly, it is a fact — that higher minimum wages cost many of those who are the poorest and least-skilled the opportunity to even have a job, much less get a raise.
A new study by economists Andrew Hanson of Marquette University and Zachary Hawley of Texas Christian University shows that the minimum wage hike to $15 an hour from the current $7.25 an hour would have a devastating impact.
"A $15 hourly minimum wage would represent a dramatic increase in labor costs for many employers and the cost increase would be spread unevenly across industries, metropolitan areas and the wage distribution," the economists wrote. "The rise in the cost of labor under a $15 minimum wage would result in substantial job loss, with significant variation across industries and cities."
We're not talking hundreds of jobs, or thousands of jobs, but hundreds of thousands and, ultimately, millions of jobs. In New York's metro area alone, some 170,000 jobs would be lost. Los Angeles, Chicago and Houston would each lose more than 100,000 jobs. All told, some 1.7 million workers in the food industry would lose their jobs nationally, while another 900,000 workers who toil in office and support positions in the food industry would also see their jobs eliminated.
Yes, some workers would benefit immensely — as we've said before, young workers with some training and education would likely keep their jobs and see a big raise in pay. But the negative impact on young, poor, uneducated and unskilled minorities would be far worse — indeed, disastrous.
Such a big boost in the minimum wage "comes with the terrible cost of job destruction for some of America's poorest workers," the economists write. "For example, in Chicago, the poorest 10% of wage earners would endure 28% of the job losses, while in Boston, the poorest 10% would face 38% of the job losses.
How can young men and women coming from less-than-privileged backgrounds get job training, employment life-skills and basic workplace knowledge if they can't get a job in the first place? These are the prerequisites for ultimate success in any business, yet they will be systematically denied because morally preening leftists think they know better than the labor market what people should earn.
Some small businesses, having small profit margins, will simply shut down if the $15 an hour rate is set nationally. Others will replace human workers with machines — automate.
It's already happening. Former McDonald's U.S.A. President and CEO Ed Rensi wrote in Forbes, "the push for a $15 starter wage has negatively impacted the career prospects of employees who were just getting started in the workforce while extinguishing the businesses that employed them."
Faced with demonstrations outside its stores and the possibility of its franchisees taking a massive hit from higher wages, McDonald's is rolling out touchscreen self-service kiosks. Any store that is viably profitable but can't afford the huge jump in the minimum wage is likely to begin deploying these labor-saving devices soon. The jobs that humans once held will simply disappear.
This will happen across industries, notes Rensi — not just food. Since worker pay is two-thirds or more of most businesses' total costs, the proposed 107% minimum wage hike across the nation "would force many small businesses to lay off staff, seek less-costly locations, or close altogether."
Those who think they're taking a moral stand by pushing wages so high that businesses can't afford to pay them are wrong. They are merely killing jobs that poor people could do, achieving badly needed training and experience along the way. This is a big reason why the U.S. has such a large income and jobs gap, and why minorities have such a hard time getting a foothold in our economy.
https://www.investors.com/politics/editorials/fight-for-15-the-most-devastating-minority-job-killer-ever/
The Bitter Lesson From Seattle's Minimum Wage Hike
Raising the minimum wage is one of those wonderful-sounding ideas that, whenever tried, unfortunately never quite works the way it was promised. To its credit, the Washington Post has noticed.
The Post recently highlighted a new study from a group of economists who were commissioned by the city of Seattle to look at that city's minimum wage hike from $9.96 an hour to $11.14 an hour. What they found was enlightening.
To begin with, the economists said, some of the workers weren't helped at all, since their pay would have likely gone up anyway with experience and tenure on the job.
But the city didn't bargain for what happened to other workers it had sought to help: "Although workers were earning more, fewer of them had a job than would have without an increase," the Post said. "Those who did work had fewer hours than they would have without the wage hike."
Indeed, depending on how it's calculated, the economists found that the minimum wage hike that sounded so generous when passed resulted in somewhere between a $5.54 a week raise and a $5.22 a week reduction in pay.
In comments that sounded as if they came straight out of an Econ 101 text, the Post concluded that "Increasing the minimum wage increases the costs of hiring workers. As a result, employers must accept reduced margins or customers must pay steeper prices. If employers cannot stay in business while paying their staff more, they will either hire fewer people or give their workers fewer hours. As a result, even if wages per hour increase workers' total earnings could decline."
Dead on. That's exactly what happened. And as University of Washington economist Jacob Vigdor, one of the authors of the Seattle study, noted, some businesses simply avoid paying the minimum-wage tax altogether by automating and letting low-end, unskilled workers go — as is now happening in some fast-food chains and at supermarkets.
Yet, such foolishness seems to have infected the Democratic Party, with its now near-ubiquitous "Fight For $15" campaign. As a piece in IBD highlighted right after the Democratic Party Convention's call for a massive hike in the minimum wage, forcing sharply higher wages on troubled local economies where the median wage is low can have a devastating effect.
"The most absurd plank to appear in either party's platform this year is the Democrats' call to 'raise the federal minimum wage to $15 an hour over time and index it,' " wrote Oren Cass, a senior fellow at the Manhattan Institute and author of "Is A $15 Federal Minimum Wage Appropriate?" "It is policy written for the nation's very wealthiest enclaves, but incoherent for economically distressed regions."
The tragic irony of this is that those who are worst hurt by a higher minimum wage are those with little education or training, mostly minorities, immigrants and the young. They get priced right out of the labor market by the well-meaning nanny-staters who want to impose a one-size-fits-all minimum wage on the entire country — regardless of the damage it does.
It's really a matter of basic logic. Any time someone raises the price of something — anything — those who consume it use less, all things being equal.
That also happens when the government requires businesses to pay more for labor than the market demands. In doing so, government helps to create unemployment, idleness and long-term dependence on welfare, especially for the most vulnerable people in the workforce.
The folks at the Legal Insurrection blog site really nailed the rancid politics of it: "Yes, Obama and Democrats are aware of this, and no, they do not develop policies that address the reality of minimum wage hikes and their measurable failure; instead, they focus on 'feel good, sound good' policies that appease the masses, harm businesses, and displace workers."
By the way, Jared Bernstein, formerly Vice President Joe Biden’s chief economist, noted Wednesday at the Washington Post that the Seattle study seems to suggest no harm from hiking the Seattle minimum wage from $9.50 to just over $11 an hour.
Well, it’s true that Seattle’s economy has done pretty well in recent years, due largely to the spillover effects of a regional tech boom. And that means some jobs have been created, despite a higher minimum wage.
But the study’s authors themselves say: “We strongly caution that these results show only the short-run impact of Seattle’s increase to a wage of $11/hour, and that they do not reflect the full range of experiences for tens of thousands of individual workers in the City economy.”
Moreover, other studies on a national level suggest that minimum wage hikes can be major job killers. A University of California at San Diego study showed that when the federal minimum wage was lifted to $7.25 from $5.15 in 2013, it cut employment of those earning less than $7.50 an hour by 8%. That’s 1.7 million fewer jobs nationally, and a decline in average monthly income of $100.
So what will happen when Seattle raises its minimum to $15 an hour in 2017? It could be ugly.
That this destructive policy is a plank in a major political party's platform is nothing short of a national disgrace.
https://www.investors.com/politics/commentary/the-bitter-lesson-from-seattles-minimum-wage-hike/
https://www.investors.com/politics/commentary/the-coming-minimum-wage-tsunami-will-wash-away-millions-of-minority-jobs/
Blame Minimum Wage, Not Carl's Jr. CEO, For Automated Restaurants
Overregulation: Carl's Jr. and Hardee's CEO Andy Puzder has people all in a huff over his idea to automate restaurants. But why be upset with Puzder? This is an inevitable consequence of massive minimum wage hikes by the government.
"I want to try it," CEO Puzder told Business Insider. He's looking at something "where you order on a kiosk, you pay with a credit or debit card, your order pops up, and you never see a person."
Is he being heartless? No. Just responding to the government's foolish plans to jack up the minimum wage and put restaurants, hotels, bars and other service industries out of business. "With government driving up the cost of labor, it's driving down the number of jobs," said Puzder. "You're going to see automation not just in airports and grocery stores, but in restaurants."
He's right. That's why whenever the minimum wage rises above the market-set prevailing wage, jobs are destroyed. Who would pay someone $15 an hour to do a job that's worth less than that? No one.
This isn't rocket science or even advanced economics. It's plain common sense -- something that populist demagogues on the left seem to be missing entirely.
The proof for this proposition is overwhelming. Consider:
IBD's Jed Graham surveyed six big U.S. cities that hiked the minimum wage in 2015 and found they took a serious jobs hit. "Wherever cities implemented big minimum-wage hikes to $10 an hour or more last year, the latest data through December show that job creation downshifted to the slowest pace in at least five years," Graham wrote.
During the 1970s, Congress forced Puerto Rico to adopt the U.S. federal minimum wage. The result, according to a 1992 study by economists Alida Castillo-Freeman and Richard Freeman: "Imposing the U.S.-level minimum reduced total island employment by 8%-10%." So Puerto Rico lost 1 out of every 11 jobs to the minimum wage.
A study by the American Enterprise Institute looked at Seattle's recent minimum wage hike. After it began phasing in a series of hikes in 2014, Seattle lost 10,000 jobs between just September and November, and its unemployment rate jumped a full percentage point. As AEI economist Mark Perry notes, Seattle's minimum wage hike from $9.32 an hour to $15 an hour amounts to a $11,360 tax on every minimum wage job.
A 2014 Congressional Budget Office study estimated that raising the federal minimum wage from $7.25 an hour to just $10.10 an hour would kill half a million jobs.
Worst of all, those who suffer most are the young, minorities and those with little education or training.
Puzder is no villain. He's not greedy. He's merely reacting to the government's jacking up his costs in the only way he can: by employing fewer workers and replacing them with technology. Don't blame Puzder; blame foolish federal policies, and those who support them.
https://www.investors.com/politics/editorials/blame-minimum-wage-not-carls-jr-ceo-for-robot-run-restaurants/
'Fight For $15': The Most Devastating Minority Job-Killer Ever?
It's very easy to pose as a champion of the common man or woman when you're pushing to have someone else give them more money. But the fact is — and, sadly, it is a fact — that higher minimum wages cost many of those who are the poorest and least-skilled the opportunity to even have a job, much less get a raise.
A new study by economists Andrew Hanson of Marquette University and Zachary Hawley of Texas Christian University shows that the minimum wage hike to $15 an hour from the current $7.25 an hour would have a devastating impact.
"A $15 hourly minimum wage would represent a dramatic increase in labor costs for many employers and the cost increase would be spread unevenly across industries, metropolitan areas and the wage distribution," the economists wrote. "The rise in the cost of labor under a $15 minimum wage would result in substantial job loss, with significant variation across industries and cities."
We're not talking hundreds of jobs, or thousands of jobs, but hundreds of thousands and, ultimately, millions of jobs. In New York's metro area alone, some 170,000 jobs would be lost. Los Angeles, Chicago and Houston would each lose more than 100,000 jobs. All told, some 1.7 million workers in the food industry would lose their jobs nationally, while another 900,000 workers who toil in office and support positions in the food industry would also see their jobs eliminated.
Yes, some workers would benefit immensely — as we've said before, young workers with some training and education would likely keep their jobs and see a big raise in pay. But the negative impact on young, poor, uneducated and unskilled minorities would be far worse — indeed, disastrous.
Such a big boost in the minimum wage "comes with the terrible cost of job destruction for some of America's poorest workers," the economists write. "For example, in Chicago, the poorest 10% of wage earners would endure 28% of the job losses, while in Boston, the poorest 10% would face 38% of the job losses.
How can young men and women coming from less-than-privileged backgrounds get job training, employment life-skills and basic workplace knowledge if they can't get a job in the first place? These are the prerequisites for ultimate success in any business, yet they will be systematically denied because morally preening leftists think they know better than the labor market what people should earn.
Some small businesses, having small profit margins, will simply shut down if the $15 an hour rate is set nationally. Others will replace human workers with machines — automate.
It's already happening. Former McDonald's U.S.A. President and CEO Ed Rensi wrote in Forbes, "the push for a $15 starter wage has negatively impacted the career prospects of employees who were just getting started in the workforce while extinguishing the businesses that employed them."
Faced with demonstrations outside its stores and the possibility of its franchisees taking a massive hit from higher wages, McDonald's is rolling out touchscreen self-service kiosks. Any store that is viably profitable but can't afford the huge jump in the minimum wage is likely to begin deploying these labor-saving devices soon. The jobs that humans once held will simply disappear.
This will happen across industries, notes Rensi — not just food. Since worker pay is two-thirds or more of most businesses' total costs, the proposed 107% minimum wage hike across the nation "would force many small businesses to lay off staff, seek less-costly locations, or close altogether."
Those who think they're taking a moral stand by pushing wages so high that businesses can't afford to pay them are wrong. They are merely killing jobs that poor people could do, achieving badly needed training and experience along the way. This is a big reason why the U.S. has such a large income and jobs gap, and why minorities have such a hard time getting a foothold in our economy.
https://www.investors.com/politics/editorials/fight-for-15-the-most-devastating-minority-job-killer-ever/
The Bitter Lesson From Seattle's Minimum Wage Hike
Raising the minimum wage is one of those wonderful-sounding ideas that, whenever tried, unfortunately never quite works the way it was promised. To its credit, the Washington Post has noticed.
The Post recently highlighted a new study from a group of economists who were commissioned by the city of Seattle to look at that city's minimum wage hike from $9.96 an hour to $11.14 an hour. What they found was enlightening.
To begin with, the economists said, some of the workers weren't helped at all, since their pay would have likely gone up anyway with experience and tenure on the job.
But the city didn't bargain for what happened to other workers it had sought to help: "Although workers were earning more, fewer of them had a job than would have without an increase," the Post said. "Those who did work had fewer hours than they would have without the wage hike."
Indeed, depending on how it's calculated, the economists found that the minimum wage hike that sounded so generous when passed resulted in somewhere between a $5.54 a week raise and a $5.22 a week reduction in pay.
In comments that sounded as if they came straight out of an Econ 101 text, the Post concluded that "Increasing the minimum wage increases the costs of hiring workers. As a result, employers must accept reduced margins or customers must pay steeper prices. If employers cannot stay in business while paying their staff more, they will either hire fewer people or give their workers fewer hours. As a result, even if wages per hour increase workers' total earnings could decline."
Dead on. That's exactly what happened. And as University of Washington economist Jacob Vigdor, one of the authors of the Seattle study, noted, some businesses simply avoid paying the minimum-wage tax altogether by automating and letting low-end, unskilled workers go — as is now happening in some fast-food chains and at supermarkets.
Yet, such foolishness seems to have infected the Democratic Party, with its now near-ubiquitous "Fight For $15" campaign. As a piece in IBD highlighted right after the Democratic Party Convention's call for a massive hike in the minimum wage, forcing sharply higher wages on troubled local economies where the median wage is low can have a devastating effect.
"The most absurd plank to appear in either party's platform this year is the Democrats' call to 'raise the federal minimum wage to $15 an hour over time and index it,' " wrote Oren Cass, a senior fellow at the Manhattan Institute and author of "Is A $15 Federal Minimum Wage Appropriate?" "It is policy written for the nation's very wealthiest enclaves, but incoherent for economically distressed regions."
The tragic irony of this is that those who are worst hurt by a higher minimum wage are those with little education or training, mostly minorities, immigrants and the young. They get priced right out of the labor market by the well-meaning nanny-staters who want to impose a one-size-fits-all minimum wage on the entire country — regardless of the damage it does.
It's really a matter of basic logic. Any time someone raises the price of something — anything — those who consume it use less, all things being equal.
That also happens when the government requires businesses to pay more for labor than the market demands. In doing so, government helps to create unemployment, idleness and long-term dependence on welfare, especially for the most vulnerable people in the workforce.
The folks at the Legal Insurrection blog site really nailed the rancid politics of it: "Yes, Obama and Democrats are aware of this, and no, they do not develop policies that address the reality of minimum wage hikes and their measurable failure; instead, they focus on 'feel good, sound good' policies that appease the masses, harm businesses, and displace workers."
By the way, Jared Bernstein, formerly Vice President Joe Biden’s chief economist, noted Wednesday at the Washington Post that the Seattle study seems to suggest no harm from hiking the Seattle minimum wage from $9.50 to just over $11 an hour.
Well, it’s true that Seattle’s economy has done pretty well in recent years, due largely to the spillover effects of a regional tech boom. And that means some jobs have been created, despite a higher minimum wage.
But the study’s authors themselves say: “We strongly caution that these results show only the short-run impact of Seattle’s increase to a wage of $11/hour, and that they do not reflect the full range of experiences for tens of thousands of individual workers in the City economy.”
Moreover, other studies on a national level suggest that minimum wage hikes can be major job killers. A University of California at San Diego study showed that when the federal minimum wage was lifted to $7.25 from $5.15 in 2013, it cut employment of those earning less than $7.50 an hour by 8%. That’s 1.7 million fewer jobs nationally, and a decline in average monthly income of $100.
So what will happen when Seattle raises its minimum to $15 an hour in 2017? It could be ugly.
That this destructive policy is a plank in a major political party's platform is nothing short of a national disgrace.
https://www.investors.com/politics/commentary/the-bitter-lesson-from-seattles-minimum-wage-hike/
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