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June 10, 2014

More Good News from the Land of the Living Wage

Mein Gott im Himmel! Who could have predicted these outrages!!!!

... how do the businesses that employ people at or near the minimum wage absorb their now-higher labor costs? CEPR, to its credit, offered some answers:
"Some employers may cut hours; others, fringe benefits; still others, the wages of highly paid workers. Some employers may raise prices (particularly if their competitors are experiencing similar cost increases in response to the minimum wage). Some employers may see their profits fall (along with those of their competitors), while others may reorganize the work process in order to lower costs."

In other words, the workers will simply lose out elsewhere. Meanwhile consumers will pay higher prices and the businesses will see lower profit margins.

The Seattle Times has reported that some hotels have already laid off workers. Some Seattle hotel workers told the Northwest Asian Weekly they had already lost their 401(k)s, health insurance, paid holidays, vacations and free parking as a result of the change. "It sounds good, but it's not good," an anonymous cleaning lady said.

Those aren’t the only unintended consequences of raising the minimum. It may actually help the corporations progressives think they are punishing.

The D.C. city council tried last year to raise the minimum wage for big retailers, and only big retailers, to $12.50, only to be vetoed by Mayor Vincent Gray. Walmart, which was in the process of opening six locations in the city, lobbied hard for the veto.

But when the council subsequently moved to raise the minimum wage across the board to $11.50, Walmart did not object. Why? Because they can afford to pay that, but their smaller competitors may not. Back in 2006, the retail giant even endorsed a federal minimum wage hike.

Seattle has tried to account for this imbalance by phasing in the increases in four different multi-year schedules according to business size. That is still going to be tough for businesses facing thin profit margins.

Still, such micro-managing shows that even Seattle is worried about the practical impact of its hike.

The Editorial Staff have long argued that focusing on supposedly stagnating wages and ignoring the total benefits package is inherently misleading (if not downright dishonest). It doesn't take a genius to predict how businesses that depend on unskilled, minimum wage employees are likely to react to a steep hike in the minimum wage.

Only someone who understands profit, loss, and competitive pressure.

Posted by Cassandra at June 10, 2014 06:56 AM

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If only someone had pointed out the entirely predictable dangers of raising the wages of unskilled workers! But absolutely nobody saw this coming!

[sotto voce]Well... the conserva-[/sotto voce]


Posted by: MikeD at June 10, 2014 09:28 AM

All it does is prove the evil of the unregulated market.

What's needed is another law making it illegal to not offer insurance, paid time off, and 401(k)s.

*businesses offer crappy insurance, 8 hours of PTO, and a 401(k) with no match and a historical 0.5% ROI*

See! I told you the market was evil.

What we need is another law specifying the minimum insurance converage, 20 days PTO, a 3% match on 401(k) with a 5 year ROI > 8%!

*business invest in robots to replace workers completely*

Dammit! Does the market have no limits to its evil?

Now we must make it illegal for a business to buy robots!

*looks around* Hey, where'd my ATM go?

Posted by: Yu-Ain Gonnano at June 10, 2014 09:45 AM


Posted by: DL Sly at June 10, 2014 12:25 PM

YAG -- rotflmao!

Posted by: htom at June 10, 2014 02:10 PM

WalMart is offering over $17/hour for entry-level positions in the Bakken (N. Dak.), including things like shelf-stockers. Meanwhile, 250 miles away, in the Standing Rock Sioux Reservation, unemployment is at 86%.

Price-fixers gotta price-fix, though, I guess. It's never worked in the history of the universe, but we can't stop trying.

Posted by: Texan99 at June 10, 2014 04:59 PM

People keep over simplifying "price - supply - demand" into "price - supply", or "supply - demand", or "price - demand" and thinking that is how economies are controlled. Probably why third parties get nowhere, too.

Posted by: htom at June 10, 2014 05:57 PM

Well, I have to admit that by the time I get to the third party, I'm pretty sh!t-faced and really shouldn't go anywhere either.

Posted by: DL Sly at June 10, 2014 06:24 PM