Monday, July 24, 2023

Links - 24th July 2023 (1 - Minimum Wage)

For Suicide Prevention, Try Raising The Minimum Wage, Research Suggests - "The report focused on less-educated adults because that group is more likely to earn the minimum wage. That group is also at a higher risk of depression and suicide, says Kaufman. Raising the minimum wage did not seem to affect whether college graduates would die by suicide... The study is the third in less than a year to show that raising the minimum wage may lower suicide rates... What's new about the study led by Kaufman, says Tsai, is its discovery that the wage hikes lower the suicide rates more when unemployment is high."

7 Quotes That Reveal the Racist Origins of Minimum Wage Laws - "As Princeton scholar Thomas C. Leonard noted in a 2005 paper “Eugenics and Economics in the Progressive Era,” early progressives understood quite well that minimum wage laws cause job losses. They simply saw it as a social benefit, not a social ill."

How Higher Minimum Wages Impact Employment - "The authors of the new study—Paul Beaudry, David Green, and Ben Sand—create a framework to account for the effect an increase in the supply of labor can have on the demand for labor in order to isolate the effect of wages on employment. They find that increases in wages have a negative effect on employment over 10-year intervals. In terms of magnitude, they find that a 1% increase in wages leads to a 0.3% to 1% decrease in the employment rate depending on whether wages increase citywide or in only one industry.The authors find that most of the negative employment effects that result from wage increases (which are cost increases) are due to more firms closing rather than firms laying off workers. Since more firm closings and fewer openings take longer to show up in the data than less hiring and more firing, it makes sense that the long-term effects of wage increases on employment are larger than short term effects. The idea that higher wages affect employment via firm closings is also consistent with a study that finds lower quality restaurants are more likely to close following a minimum wage increase. Another study also finds that minimum wage increases reduce employment primarily through firm closings... These results don’t necessarily mean minimum wage increases are bad policy. They do, however, support the notion that higher minimum wages have a cost, namely fewer employment opportunities for lower-skill workers. It’s important that we recognize this cost in any discussion about minimum wage policy."
You can't legislate productivity

$15 minimum wage hike is hitting, hurting NYC restaurants - " In a survey of 324 full-service restaurants, the New York City Hospitality Alliance found that 76.5 percent of respondents cut staff hours and 36.3 percent eliminated jobs, including whole layers of middle management, in response to mandated wage increases. “It’s death by a thousand cuts,” says Andrew Rigie, executive director of the group. “The minimum wage increases put pressure on small businesses. They are well-intended but unsustainable. There’s only so many times you can increase the price of a burger and a bowl of pasta.” Philippe Massoud, CEO and executive chef of the Manhattan-based Lebanese eateries Ilili and Ilili Box, says rising wages have forced him to cut hours for his 180 employees, yank labor-intensive dishes from the menu and cut back on staff education events like wine seminars. That’s because new regulations require that employees who receive tips can no longer spend more than 20 percent of their time on work that doesn’t involve interacting with customers.“I can’t even train or educate my staff the way I want to anymore”... He says the industry’s margins have slipped to between 8 and 12 percent from pre-wage-hike levels of 10 to 15 percent.“It has decimated our financial performance,” Massoud says. “We are a high-risk business with low returns and we are no longer attractive to investors.”... To cope, restaurateurs like the Milners are moving from large-scale restaurants to small spaces"

Opinion: Is Denver’s restaurant boom about to go bust? - "San Francisco’s reputation as a tech hub is lately matched by its reputation as a restaurant graveyard. (One food industry publication described a rash of closings there as a “death march.”)Last month, after three more restaurants suddenly closed their doors, the city held a special meeting with restaurant owners to hear their concerns. One warned the council: “We need to do something now or we will be gone.” Another employer even stated, “We’ve started to consider San Francisco a nonviable market.”It’s no wonder why. The city’s minimum wage is among the highest in the country and its lack of a separate minimum wage for tipped employees increases the pressure on full-service restaurants. A representative of the Golden Gate Restaurant Association cited Yelp data showing restaurant closures in the Bay Area have outpaced openings by 9%... The late Democratic Sen. Paul Tsongas once warned his party, “You cannot love employment and hate employers.” Denver once understood that; the city has thrived under the leadership of moderate, business-friendly Democrats."

Survival of the Fittest: The Impact of the Minimum Wage on Firm Exit - "Our point estimates suggest that a one-dollar increase in the minimum wage leads to a 14% increase in the likelihood of exit for a 3.5-star restaurant (which is the median rating on Yelp) but has no discernible impact for a 5-star restaurant (on a 1 to 5 star scale). Looking at data from delivery orders, we find that lower-rated restaurants also increase prices in response to minimum-wage increases"

Higher minimum wage means restaurants are likely to raise prices, cut worker hours

NYC’s minimum wage increase will give you takeout sticker shock - "Starbucks locations around the city saw a price adjustment of “approximately 1 percent” in January, according to a representative for the chain. Although it sounds incremental, java fiends like Edward Beck, a 30-something patron of Starbucks’ 40th Street and Fifth Avenue location, are distressed. “It’s obnoxious — kind of a slap in the face,” according to Beck, who says he “drinks coffee all day.” For him, even a few pennies add up fast: “Another increase, and I won’t come back.”... Customers might be soothed to know that the extra money they’re spending is going directly into workers’ pockets — but, according to Bloostein, that’s not even the case. Such incremental price raises, he says, “will not offset fully the minimum wage increase.” Much more has to change on the business back end to afford the raise, he explains. He wishes he and his restaurant industry colleagues had been given a longer time to adjust."
How many of those complaining supported the increase?

Meme - Clown meme: "We need a high minimum wage that Big Business can afford easily but small businesses can't
We need expensive regulations on businesses that that start ups and small competitors can't afford to deal with
We need the government to lock small businesses down during pandemic but leave big ones open
Companies like Amazon are too big. Capitalism has failed"

Federal minimum wage of $15? - "No matter what you think about the recent literature on the minimum wage, all economic theories imply that minimum wages should be decided at the state and local level, given the economic heterogeneity of the United States.  That is the message that you as an economist should be carrying forward... an allied cabal of activists and left-wing economists have combined on social media to insist on a particular approach to minimum wage economics and to bully those who disagree.  Ask yourself a simple question: were any of them calling for a temporary two-year cut in the minimum wage for restaurants and small businesses during a devastating pandemic?  If not, are they really carrying forward the banner of science?"

$15 Minimum Wage Subverts Biden Covid-19 Recovery Plan - Bloomberg - "It’s a slam-dunk case that doubling the federal minimum wage — it’s been $7.25 since 2009 — would lead to significant declines in employment opportunities for workers with few skills or little experience. According to data from the Bureau of Labor Statistics for 2019 (before the pandemic), in 47 states, at least one-quarter of all workers earn less than $15 per hour. In 20 states, half of all workers earn less than $18 per hour, and in 30 states, the median hourly wage is less than $19.  These statistics show that $15 is a very high wage floor. For employers to keep all their workers would require raising the wages of a huge share of the national workforce. But the number of workers affected would be so large that this wouldn’t happen. Instead, the number of jobs in the low-wage workforce would shrink.  The nonpartisan Congressional Budget Office confirms this basic intuition, estimating that joblessness would increase by 1.3 million if the national hourly wage floor were hiked to $15. The CBO also concluded that this policy would reduce business income, raise consumer prices and reduce gross domestic product. Even in high-wage localities, a $15 hourly minimum would reduce employment. Seattle was a pioneer in the Fight for $15, committing in June 2014 to gradually raise its wage floor to that level. Its minimum wage increased from $9.47 to as high as $11 in 2015, and up to $13 in 2016 for large employers.  Using detailed government data, a team of economists estimated that the second wage increase to $13 reduced hours worked in the low-wage labor market by around 9%. Wages increased by less than hours decreased, so the hike to $13 reduced the earnings of low-wage workers by an average of $125 per month. In a subsequent paper, these economists found that the gains from the wage hike accrued to more experienced workers... At the end of 2019 (again, before the virus wrecked the economy), only 4 in every 10 high-school dropouts over the age of 24 had a job. Compare this with 6 out of 10 high-school graduates and 7 out of 10 college grads.  This represents a failure by society as a whole, and there are many reasons for it. But part of the blame rests with labor market regulations like the minimum wage. The accumulated effect of decades of a binding wage floor has probably priced many workers with relatively few skills out of the labor market. And because it happens gradually, it is hard for economists to measure the longer-term effect of any single increase... businesses may cut employment more aggressively when they know future wage-floor hikes are coming... All that said, raising the federal minimum wage to $15 would have some upside. The same CBO report that found this policy would eliminate over one million jobs also concluded that at least 17 million workers would see their weekly earnings increase. Most of those gains would go to families with incomes above the poverty line.  So that’s the trade-off: Is boosting middle-class income worth eliminating hundreds of thousands of jobs for the least-skilled, least-experienced, most vulnerable workers in the labor market?... Earnings subsidies, like the earned-income tax credit, are a better way to lift low-income workers out of poverty in part because they are financed with tax revenue. They use resources from all of society — not just low-wage employers and their customers — to achieve a social goal.  By increasing the financial rewards from working, they also increase employment among low-income households."

Why do big businesses back a minimum wage increase? - "while many big businesses are already paying $15 to all their workers, most small businesses cannot. Passing a wage hike right now would also worsen the pandemic trend of many big businesses thriving while millions of small businesses suffer... In 2019, the NFIB Research Center found that a federal $15 minimum wage would kill 1.6 million jobs. More than 55% of the job losses would be at small businesses, and nearly 45% would be at the smallest firms... For some small businesses, a more than doubling of labor costs would force them to shut down — a blow to Main Streets across the country... Along with big business lobbying groups, many of these same companies are now actively supporting a minimum wage hike, or at least not opposing it. No wonder: They have the revenues and the scale to absorb a more than 100% increase in the federal wage floor. They also have more options to offset higher costs with layoffs, benefit cuts, and technology. A lot of big businesses have already raised their minimum wage to $15. Amazon made this move in 2018, while companies like Target and Walmart have followed suit. Not only would a $15 federally mandated minimum wage not hurt them, it would crush some of their small business competitors"

We'd love to pay higher wages – if we could charge £10 for a coffee - "Of course, we would like to take the Prime Minister’s advice at the Tory party conference and double rates in pursuit of a high-wage, high-skill economy. But we can only afford to pay £20 an hour to our front-of-house staff if you, the customers, are willing to pay £10 for a cup of coffee.   And for all the talk of how we need to increase our national productivity, the reality in my small business in Dorset is that every single member of our overstretched team could hardly be more productive than they are now, unless they grew a second pair of hands and feet, or could be in two places at the same time.  Likewise, investing in new technology – something we are told businesses have failed to do – may work for some employers, but I have yet to come across a robot that can fillet a Dover sole tableside. So all we will end up doing is putting up prices and putting ourselves out of business. To an extent, I am more fortunate than others in my trade. Our customers are loyal and appreciate that supporting our commitment to locally produced, seasonal and sustainable ingredients brings with it additional costs. It also means that we change our menus all the time depending on what finds its way into our kitchen."
Of course, it's the fault of "greedy" businesses if they don't both increase how much they pay staff and not increase prices

Who Really Employs Minimum Wage Workers? - "Contrary to the rhetoric of organized labor and its allies, the vast majority of people earning the minimum wage aren’t working at large corporations with 1,000 or more employees. Roughly half the minimum-wage workforce is employed at businesses with fewer than 100 employees, and 40% are at very small businesses with fewer than 50 employees.  The results are similar even if you follow the left’s cue and broaden the analysis from minimum wage employees earning $7.25 an hour to “low-wage” employees earning $10 an hour or less: 46% still work for businesses with 100 or fewer employees.  Some of these businesses are small diners or independent grocery stores; others are franchisees that own a handful of stores affiliated with a recognizable brand. (For instance, over 80% of McDonald’s locations are owned by franchisees.) In either case, the profits and executive pay at the country’s largest businesses have nothing to do with the stark economics these small-business owners face: single-digit profit margins, extremely price-sensitive customers, and no room to absorb a substantial increase in the minimum wage without dramatically reducing the cost of service.  These facts are important because the contrast between corporate pay and entry-level wages is a linchpin in the liberal argument for a higher minimum wage. “Many corporations are posting record-breaking profits,” complains the SEIU-backed National Employment Law Project. “They can afford to pay better.”... Even if the talking point was true, and large corporations were mostly responsible for the country’s minimum wage workforce, organized labor’s math still wouldn’t make sense. Profit margins are determined more by the business model than the size. According to Deloitte’s Restaurant Industry Operations Report, the median profit margin at an independently owned fast-food restaurant is 2.6%—and only about a percentage point more at a corporately-owned location. The corporate locations might have more of a cash reserve than their independent counterparts, but any labor cost increase is also magnified across a larger workforce.  The large corporate villain is unlikely to disappear off the public stage anytime soon. It’s proved an effective boogeyman in campaigns on health care, paid time off, and a host of other union priorities. It’s disappointing, but not surprising: In labor’s political campaigns, truth is always the first casualty."
I presented this to a leftist insisting that greedy businesses could afford to pay staff more, and his response was to dismiss it because of the source

What is the Minimum Wage? - "Using Congressional Budget Office (CBO) methodology, economists of Miami and Trinity University found that just one in 10 of those affected by a $12 minimum wage are single parents with children. A majority of those affected are either second or third-earners in households where the average family income exceeds $50,000 per year."
So much for the myth (that I've seen more than one person spout) that most people earning the minimum wage are single women with children

Who Earns the Minimum Wage in Canada? - "we find that 7.7 percent of all minimum wage earners in Canada live in households that are below the LICO after taxes and transfers. This means that 92.3 percent of minimum wage earners live in households that are above the LICO. The reason for this is driven primarily by the fact that most minimum wage workers are not primary breadwinners in their households but rather are secondary or tertiary earners... We find that 53 percent of all minimum wage workers are between the ages of 15 and 24... just 2.2 percent of minimum wage workers are single parents with a child or children under the age of 18."

GOLDSTEIN: New study breaks down how minimum wage hikes don’t help the poor | Toronto Sun - "  Raising the minimum wage is popular with “progressive” governments because private-sector employers are forced to foot the bill for the social goals of the government.  The problem is that it doesn’t deliver what politicians promise... an earlier study for the Fraser Institute by Philip Cross, former chief economic analyst for Statistics Canada, said there are better ways to raise incomes for low-income families than by increasing the minimum wage.  “(They) could invest more in skills-training programs,” Cross said. “Governments could subsidize firms that hire low-skilled workers or subsidize the wages of low-skilled workers through programs such as the Working Tax Benefit. The latter has paid a benefit to low-income workers since 2007, modelled partly on Quebec’s Work Premium program … one reason its low-income workers are better off despite having a lower minimum wage than most other provinces.” "

Canadian economist David Card’s research on minimum wage wins Nobel Prize - The Globe and Mail - "Increasing a country’s minimum wage does not lead to reduced hiring, and that immigration does not harm the employment prospects of native-born workers... In a study published in 1993, Prof. Card looked at what happened to jobs at Burger King, KFC, Wendy’s and Roy Rogers when New Jersey raised its minimum wage from US$4.25 to US$5.05, using restaurants in bordering eastern Pennsylvania as the control – or comparison – group. Contrary to previous studies, he and his late research partner Alan Krueger found that an increase in the minimum wage had no effect on the number of employees.  Prof. Card and Prof. Krueger’s research fundamentally altered economists’ views of such policies. As noted by The Economist magazine, in 1992 a survey of the American Economic Association’s members found that 79 per cent agreed that a minimum-wage law increased unemployment among younger and lower-skilled workers. Those views were largely based on traditional economic notions of supply and demand: If you raise the price of something, you get less of it.  By 2000, however, just 46 per cent of the AEA’s members said minimum-wage laws increase unemployment, largely because of Prof. Card and Prof. Krueger’s research.  Prof. Card’s research also found that an influx of immigrants into a city doesn’t cost native workers jobs or lower their earnings, though earlier immigrants can be negatively affected. Prof. Card studied the labour market in Miami in the wake of Cuba’s sudden decision to let people emigrate in 1980, leading 125,000 people to leave in what became known as the Mariel Boatlift. It resulted in a 7-per-cent increase in the city’s work force. By comparing the evolution of wages and employment in four other cities, Prof. Card discovered no negative effects for Miami residents with low levels of education. Follow-up work showed that increased immigration can have a positive impact on income for people born in the country."
The libertarians are going to say that the Nobel prize is worthless. Then again, they love immigration

Facebook - "THE MISLEADING CLAIM: "McDonald's CEO makes 18 million dollars a year, therefore the company can afford to pay its workers $15 an hour.
THE REALITY: Ceteris Paribus, such a drastic increase would actually put most restaurant owners in debt within one year.
First understand that McDonalds - the corporation - generally doesn't employ frontline workers such as cashiers and cooks, etc.  So the CEO's pay is largely irrelevant. Instead, because most McDonald’s locations are franchised, the crew is hired and paid directly by the person who owns that particular location. So to understand the effect a minimum wage increase might have on a location, let’s look at some franchise economics... the average franchise owner earns just $174,594 a year from their store.  Now let's look at that "Crew Payroll" figure of $612,610 a year.  Since the average crew member at a U.S. McDonald's earns $10 per hour, if it were increased to $15 per hour, that would be an increase of 50%.  Therefore, we could reasonably estimate that a franchise's annual crew payroll would increase to roughly $918,915. That's an increase in expenses of $306,305 when the franchise owner was only profiting $174,594. Thus, the restaurant owner would actually finish the year in debt by $131,711. So no, they literally could NOT afford an increase to a $15 minimum wage. (At least not without drastic changes to offset that cost).
Now back the CEO income. As stated above, the corporation doesn't usually pay for the crew, so the CEO's income is a bit irrelevant. But even if it weren't, it still barely matters. Mcdonald's directly employs roughly 205,000 people worldwide and roughly 1.7 million people if you count the franchise employees that it technically doesn't directly hire.  For the sake of argument, if they divided their CEO's income and gifted it to each direct employee, said employees would only get about $87.80 a year extra. If they instead gifted it to ALL employees (including the franchise workers), employees would only receive about $10.60 a year extra. Not an hour. A year."

Canada-based Freshii Hires Call Center Virtual Workers - "If you didn’t think automation could get any more soul-crushing, a Canada-based health-food company is testing out if it can replace cashier workers with foreign call center employees, allowing them to pay them next to nothing in the process.  Video-based cashier systems were spotted by reporters in Canadian Freshii locations, allowing customers to ring up their products with the help of a video call support person on a screen. Unlike self-checkout systems that have become ubiquitous in supermarkets across North America, this system doesn’t even require a person to be standing guard, or even somebody working in the same country. Two of those cashiers were apparently working in a Nicaraguan call center."

href="https://ifunny.co/picture/we-need-a-high-minimum-wage-that-big-business-can-7vnn1AmU9">Meme - "We need a high minimum wage that Big Business can afford easily but small businesses can't"
"We need expensive regulations on businesses that start ups and small competitors can't afford to deal with"
"We need the government to lock small businesses down during pandemic but leave big ones open"
"Companies like Amazon are too big. Capitalism has failed"

href="https://archives.cjr.org/the_audit/the_minimum_wage_and_the_danis.php">The minimum wage and the Danish Big Mac - "According to Bloomberg View’s Caroline Baum, such a high minimum wage should mean that scads of Danes can’t find work because it “violates the most basic principle of economics”: the law of supply and demand.  Of course, Baum is empirically wrong. Denmark’s unemployment rate is 6.8 percent, despite its close ties to the depressed eurozone. That’s well below the 7.4 percent rate in the US, where the minimum wage is $7.25. The labor participation rate for working-age Danes is 64.4 percent, which means Danes are more likely to work (despite their super-generous welfare state, which includes earlier retirement) than working-age Americans, 63.6 percent of whom work. And amongst teenagers and those aged 20 to 24—the group most likely to have low-paid jobs—far more Danes work than Americans... Baum ignores the fact that higher wages for lower workers means dramatically increased demand for goods and services from them, and it incentivizes work. McDonald’s Corporation itself understands this, though it would never, ever say it in English."

href="https://www.newshub.co.nz/home/money/2022/03/middle-income-workers-will-also-expect-pay-rises-when-minimum-wage-goes-up-economist-brad-olsen.html?cid=soc3:newshubfb">Middle income workers will also expect pay rises when minimum wage goes up - economist Brad Olsen

href="https://foxbaltimore.com/news/nation-world/us-house-candidate-wants-housing-for-all-suggests-breaking-in-to-homes-to-pressure-feds-representative-washington-housing-all-rebecca-parson-socialist-squatting-squatters-homeless-homelessness">House candidate suggests breaking into empty homes to push 'Housing for All' bill - "Her housing bill idea isn’t the first time her proposals have raised eyebrows. Earlier this month, Parson tweeted that the minimum wage should be increased to $30 an hour."
A $90/hr minimum wage would be 3x as good

Target raised wages. But some workers say their hours were cut, leaving them struggling
Maybe the corollary of no business which can't afford to pay a living wage doesn't deserve to be in business is no worker who can't justify a living wage doesn't deserve the job. And that doesn't mean they don't deserve to live: working in your current job is not the only way to earn a living. Alternatives include changing job, reducing expenses, welfare, UBI and living off other people

The Impact of a City-Level Minimum Wage Policy on Supermarket Food Prices by Food Quality Metrics: A Two-Year Follow Up Study - "Local area supermarket food prices were not impacted by Seattle's minimum wage policy 2 years into policy implementation and after the first increase to $15/h overall or by sub-classification. Low-income workers may be able to afford higher quality diets if wages increase yet supermarket prices stay the same."

Facts Over Fear - Posts - "The Bureau of Labor Statistics first collected the data as to what percentage of American workers earned the minimum wage in 1979, when it was 13.4%. It has been falling since and was at 2.1% in 2018. It is actually much lower when you exclude teens. For adults over the age of 25 only 1% earn the minimum and most are part-time workers. In many states such as Texas, Mississippi, Louisiana the rates are much higher and that pushes up the national average but in places such as California, and Washingotn, it is at 1% or below. Almost all the minimum wage earners are single because most of them are teenagers, not the provider for a family."

Minimum Wage: Teen Unemployment - "Teen unemployment is three times the national unemployment rate. The percentage of teens classified as “unemployed” — those who are actively seeking a job but can’t get one — is more than three times the national unemployment rate, according to the most recent Department of Labor statistics... Various studies have found that the minimum wage leads to higher unemployment for teens."
Liberals are very upset at lower minimum wages for younger people and still claim that it's exploitation

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