Seattle approves $15 minimum wage, higher unemployment

June 3, 2014
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Seattle minimum wage proponent

I wrote about this last week, when it was still just a proposal, noting how some businesses were already slowing hiring and moving out of the city, and how even progressives were coming to have second thoughts.

Well, they did it:

Seattle’s city council on Monday unanimously approved an increase in the city’s minimum wage to $15 an hour, making it the nation’s highest by far.

The increase was formally proposed by Seattle Mayor Ed Murray, and his spokesman said he intends to sign the ordinance on Tuesday.

Washington already has the nation’s highest state-level minimum wage, at $9.32. That rate also applies to the city.

The current federal minimum wage is $7.25, and Democrats in Congress have been pushing for a gradual increase to $10.10, but so far to little effect.

The increase to $15 in Seattle will take place over several years based on a scale that considers the size of and benefits offered by an employer. It will apply first to many large businesses in 2017 and then to all businesses by 2021.

The first increase, on April 1, 2015, brings the minimum wage to $10 for some businesses and $11 for others.

While the law phases in increases starting only with “large businesses,” that designation includes franchises. In other words, if you’re a franchisee with only a couple of Taco Bells, you’re still considered a large employer because you’re part of a large chain; even though your revenue only comes from two locations, you’re still on the hook for $15 per hour starting in 2017. You’re welcome.

This is going to be a good experiment (and, dare I say it? A “teachable moment?”) for several reasons. Advocates of raising the wage say it’s only fair, that minimum wage earners aren’t paid enough to live on, and that the costs to society will be minimal as businesses adjust. And there is some little evidence for the latter, as we have indeed learned to live with the costs previous minimum wage increases. (Whether those wage increases have been worth the costs, however, is another argument for another time.) Advocates in Seattle argue that raising the wage will help around 100,000 people.

Critics, on the other hand (and including your humble correspondent), argue that the laws of economics cannot be repealed by legislative fiat: raise the cost of labor, and businesses will be faced with a choice from among four options — pass the costs on to the consumer; reduce labor costs by cutting hours or whole jobs; eat the costs and accept lower profits; or cease doing business in that jurisdiction, either by moving or closing shop. We’ve already seen in the Seattle case that some businesses are moving to nearby towns that have not raised their wage. And, here in California, where the wage was recently raised to $9 per our and there is a proposal to raise it statewide to $13, some businesses are closing, choosing to put their capital to work where they can get a better return on investment. In each case, these are jobs lost.

Critics also maintain that raising the cost of labor gradually prices out the unskilled, such as teens looking for their first jobs, where they can acquire valuable skills and habits for later, better-paying work. A very interesting piece at AEI (h/t Andrew Garland in the Sister Toldjah comments section) argues for this very point by examining the effects on teen hiring as the minimum wage rose 41% between 2007 and 2009:

And that’s exactly what happened when the minimum wage rose by 41% between 2007 and 2009 – it had a disastrous effect on teenagers. The jobless rate for 16-19 year olds increased by ten percentage points, from about 16% in 2007 to more than 26% in 2009.  Of course, the overall US jobless rate was increasing at the same time, from about 5% to 10%. Therefore, the graph attempts to better isolate the effects of the minimum wage increases between 2007 and 2009 on teenagers by plotting the difference between the teenage jobless rate and the overall jobless rate, i.e. “excess teen unemployment,” and the minimum wage.

During the 2002-2007 period when the minimum wage was $5.15 per hour, teenage unemployment exceeded the national jobless rate by about 11% on average. Each of the three minimum wage increases was accompanied by a 2 percentage point increase in the amount that the teenage jobless rate exceeded the overall rate, from 11 to 13% after the 2007 increase from $5.15 to $5.85 per hour, from 13% to 15% following the second hike to $6.55 per hour, and from 15% to 17% following the last increase to $7.25. The 17.5% “excess teen unemployment” in October 2009 was the highest on record, going back to at least 1972, and was almost 5 percent higher than the peak teen jobless rate gap following the last recession (12.7% in June 2003).

Bottom Line: Artificially raising wages for unskilled workers reduces the demand for those workers at the same time that it increases the number of unskilled workers looking for work, which results in an excess supply of unskilled workers. Period. And another term for an “excess supply of unskilled workers” is an “increase in the teenage jobless rate.”

It will be interesting and edifying how Seattle’s experiment in progressive labor law plays out. I suspect it won’t have nearly the benefit that advocates like Seattle Mayor Murray or California State Senator Leno predict.

And it’s a shame others have to suffer for their hubris.

RELATED: This Center for Freedom and Prosperity video provides a good overview of why minimum wage laws are job killers.

(Crossposted at Sister Toldjah)


Glorious #Obamacare Victory: lost hours and decreased wages!

February 4, 2014
"But at least we won the election! Obama!!"

“But at least we won the election! Obama!!”

Heckuva job, Democrats:

A historically high number of people will be locked out of the workforce by 2021, according to a report by the Congressional Budget Office released Tuesday.

President Barack Obama’s signature health-care law will contribute to this phenomenon, the CBO said, citing new estimates that the Affordable Care Act will cause a larger-than-expected reduction in working hours—eliminating the equivalent of about 2.3 million workers in 2021.
In 2011, the CBO estimated the law would cause a reduction of about 800,000 full-time equivalent workers.

“CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 to 2 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor—given the new taxes and other incentives they will face and the financial benefits some will receive,” said the report.

As Bryan Preston points out, this is the equivalent of losing almost the entire workforce of Nevada.

But, hey, it’s worth it if it brings wonderful new benefits to people, such as creating jobs… Oops!, I mean saving people money, right??

Well, about that promise

A new study finds that Obamacare’s redistribution will be stunningly lopsided. Scholars at the liberal Brookings Institution have discovered that Obamacare will increase the income of Americans in the lowest 20 percent of the income scale, and especially in the lowest ten percent. But all other income groups — even people who make very modest incomes in the $25,000 to $30,000 range, as well as all income brackets above that — will experience a decline in income because of Obamacare.

In other words, Obamacare is going to cost some of the very people it was designed to help.

So, not only will Obamacare inflict people with higher premiums, bigger co-pays, and smaller provider networks, but it will on top of all that reduce most people’s income.

Genius. I hope the voters remember to reward the Democrats in November for all their hard work.

(Crossposted at Sister Toldjah)


Obama Administration Urges More Unemployment

November 17, 2013

Phineas Fahrquar:

Setting more welfare traps for people out of work.

Originally posted on International Liberty:

President Obama has presided over a terrible jobs market.

Unemployment is more than two-percentage points higher today than the White House claimed it would be if the so-called stimulus was enacted.

Even more worrisome, the employment-population ratio seems to have permanently fallen, which is bad news for economic performance since our output is a function of how much capital and labor is being productively utilized.

So what’s the response from the Obama Administration? Well, they want to further subsidize people for not working.

I’m not joking. Here’s some of what has been reported by the Huffington Post.

The Obama administration on Friday came out strongly in support of extending long-term unemployment insurance past its current expiration date. …”We have always done so when unemployment is this high and would make little sense to fail to do so now when we are still facing the burdens of the worst…

View original 681 more words


The Obamacare Chronicles: 129 laid off from Missouri hospital due to wonderful new health bill

May 15, 2013

"But at least we won the election! Obama!!"

“But at least we won the election! Obama!!”

At this point, there’s not much we can do about it, folks. Losing a Supreme Court decision and the 2012 election guarantees that Obamacare will go into full effect on January 1st, 2014 — Happy New Year!

All we can do for now is observe and take note of the pain (some of it our own) as businesses make their plans to deal with the forthcoming train wreck, plans that include laying people off to cover the new, federally-imposed expenses:

From Channel 41 Action News (1), Kansas City, Missouri:

I’ve reported on the consequences of Obamacare before, and we’re going to see more and more as we approach 2014 and enter our Brave New World of government-controlled health care. The PPACA imposes immense burdens on businesses, and they will have to act rationally in response, whether by passing on costs to the consumer or cutting costs elsewhere — by layoffs, for instance.

People who voted for the Democrats since 2008 are, in effect, getting exactly what they voted for, even if they refused to see it at the time.  (2) To use the cliche, “elections have consequences.”

But so do bad laws, and the people can always fix their mistakes in the next election. Obamacare is the “Mother of Bad Laws,” and I predict its myriad problems are going to cost the Democrats dearly as voters harmed by Obamacare first get worried, then annoyed, then angry, and then royally ticked off. Democrats are already so worried that some are retiring to avoid facing the voters in 2014.

Elections have consequences for the ruling class, too.

via Jim Geraghty’s Morning Jolt

Footnotes:
(1) For any Obamacare apologists in the audience, before your knee jerks too much, note that Channel 41 is an NBC affiliate, not the evil FOX. When you’ve lost NBC…
(2) No, I’m not saying the people laid off in Missouri all voted for Obama and thus got what they deserved. Some almost certainly did, but we don’t know who or how many. Presuming innocence, they all have my sympathy.  But the broad electorate voted for people who used anti-constitutional means to pass a horrendous law in expectation of getting Free Stuff(tm), in violation of all the laws of economics. To them, I can only quote the words of the late, great Mayor Ed Koch: “The People have spoken … and they must be punished.”

(Crossposted at Sister Toldjah)


The April jobs report and the part-time recovery

May 3, 2013
"But at least we won the election! Obama!!"

“But at least we won the election! Obama!!”

The Bureau of Labor Statistics released it’s report for April today, showing numbers that should at least be slightly good news for the administration: unemployment down to 7.5% and 165,000 jobs added. Recovery!!

AEI’s James Pethokoukis says “not so fast:”

US job growth in April beat economist expectations as nonfarm payrolls rose 165,000, and the jobless rate fell to a four-year low of 7.5%. But the report contained worrisome signs that President Obama’s health care reform law is hurting full-time, high-wage employment.

While the American economy added 293,000 jobs last month, according to the separate household survey, the number of persons employed part time for economic reasons — “involuntary part-time workers” as the Labor Department calls them – increased by almost as much, by 278,000 to 7.9 million. These folks were working part time because a) their hours had been cut back or b) they were unable to find a full-time job. At the same time, the U-6 unemployment rate — a broader measure of joblessness that includes discouraged workers and part-timers who want a full-time gig – rose from 13.8% to 13.9%.

What’s more, there wasa  0.2 hour decline in the length of the average workweek. This led to 0.4 percentage point drop in the index of average weekly hours, “equaling the largest declines since the recovery began,” notes economist Dean Baker of Center for Economic and Policy Research.

Let’s see, more part timers and fewer hours worked. Economist Douglas Holtz-Eakin says what we’re all thinking: “This is not good news as it reflects the reliance on part-time work. … the decline in hours and rise of part-time work is troubling in light of anecdotal reports of the impact of the Affordable Care Act.”

Jim adds that, if the Labor Force Participation Rate were the same now as it was when Obama took office, then BLS would be reporting unemployment of between nine and ten percent. (And see this for a graphic chart of how the LFPR has gone down under Obama)

It’s not that unemployment is going down, it’s that the number of people who’ve given up looking for a job is growing, and an increasing number of those who have a job are limited to part-time work, thanks to Obamacare.

Such is the nature of the Obama “recovery,” the worst since the Great Depression.

(Crossposted at Sister Toldjah)


Huzzah!! Another @BarackObama milestone!

February 25, 2013

Admit it, you’re impressed:

Obama unemployment achievement

That’s right, kiddies: we’ve had more high unemployment under Barack Obama than under any president since Harry S. Truman… combined.

Well done, sir. Well done. smiley applause

But, still, his fans are happy:

"But at least we won the election! Obama!!"

“But at least we won the election! Obama!!”

Sigh.

via Denis through AH Malcolm

(Crossposted at Sister Toldjah)


Welcome to Obama’s America, and here’s your layoff as your prize!

November 8, 2012

“But at least we won the election! Yay, Obama!!”

We tried to warn people that the costs laid on business by ObamaCare and other burdensome regulations and taxes meant to make things “fairer” would only lead to lots of people losing their jobs. But, did they listen? No. Not nearly enough did. And now… it’s on!

Don’t believe me? Check this, too.

Really, what were you people thinking?


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