Government-mandated minimum wages cost jobs

January 19, 2019

If only someone had warned us:

NYC restaurants cutting staff hours as minimum wage hits $15

The legal minimum wage for New York City employers with 11 or more workers rose more than 15 percent on Dec. 31, 2018, to $15 per hour from $13, giving fast-food, retail and other employees a bump in pay. But some New York City restaurant owners say the latest minimum wage hike is forcing them to cut workers’ hours just to stay afloat.

The article then makes an odd claim:

It’s not just a New York phenomenon, however: Minimum wages rose in 20 states with the new year, forcing businesses across the country to grapple with higher payrolls — and compete for workers with giants like Amazon that are already offering $15 an hour.

So, the need to “compete” for workers required the state to artificially raise wages beyond what many businesses can afford? This is helping how? 

The article then talks to someone “helped” by this new law:

“We lost control of our largest controllable expense,” he told CBS MoneyWatch. “So in order to live with that and stay in business, we’re cutting hours.”

Bloostein said he has scaled back on employee hours and no longer uses hosts and hostesses during lunch on light traffic days. Customers instead are greeted with a sign that reads, “Kindly select a table.” He also staggers employees’ start times. “These fewer hours add up to a lot of money in restaurants,” he said.

But the victims aren’t just the employees:

Bloostein said he has increased menu prices, too. “So as a result [of the minimum wage hike], it will cost more to dine out,” he said.

Meaning people on a budget will likely dine out less often. Great work!

As I’ve argued many times before, labor is a cost of doing business that businesses have to account for. When costs go up, these firms have only a few choices:

  1. They can pass on the cost to the consumer, risking the loss of customers’ business.
  2. They can cut labor costs by reducing hiring, cutting back hours, laying off employees, and automating.
  3. They can decide the reduced profit isn’t worth it and close shop, costing all employees their jobs.
  4. They can move out of the jurisdiction, probably costing local employees their jobs.

We’ve seen examples of this happening time and again in recent years, and the people who get hurt are the very ones these “enlightened” policies are supposed to help. Does a minimum wage of $15 per hour help when the jobs have been filled by order-taking kiosks and tablets?

Wages should only be determined by economic logic: what the business can afford to pay vs. the worker’s desired wage (and other benefits, such as learned skills, &c). If the business doesn’t pay enough for the work required, then they won’t find good employees: the business will suffer and they will be forced to raise wages to compete, if they want to stay in business.

Anything else is an attempt to impose utopia by people who don’t understand the way the world works, or by politicians looking for donations from unions.

h/t Mike LaChance at Legal Insurrection

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Markets, Choice, and the Economic Illiteracy of Bernie Sanders and Jeremy Corbyn

March 5, 2018

And it’s not just Sanders and Corbyn: most of the Left seems to have almost deliberately forgotten basic economics.

International Liberty

Not all leftists are alike.

I speculated a couple of years ago that there were four types of statists and put them on a spectrum. I put “rational leftists” at one end. If you wanted to pick a nation that represents this mindset, think Sweden. Nice, civilized, market-oriented, but plenty of redistribution.

On the other end of the spectrum were three less-palatable types.

  1. The “totalitarians,” which means a dictatorial state-run economy, as represented by the Soviet Union and China.
  2. The “socialists,” a democratically elected form of a state-run economy, as represented by post-WWII United Kingdom.
  3. The “crazies,” which I confess is a catch-all category to capture visceral, unthinking, and punitive intervention.

And for that final category, I listed Bernie Sanders and Greece as representatives.

And if you want to know why I listed Sanders, here’s some of Jeffrey Tucker’s FEE column from 2015.

Bernie Sanders, that sweet old…

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Is Trump Right about America Being the “Highest Taxed Nation”?

October 11, 2017

Many of Trump’s policy proposals are good ones, such as lowering the corporate tax rate. Trouble is, with his lack of self-control, he is his own worst enemy.

International Liberty

In my ideal world, we’re having a substantive debate about corporate tax policy, double taxation, marginal tax rates, and fundamental tax reform (plus spending restraint so big tax cuts are feasible).

Sadly, we don’t live in my ideal world (other than my Georgia Bulldogs being undefeated). So instead of a serious discussion about things that matter, there’s a big fight in Washington about the meaning of Donald Trump’s words.

Politico has a report on this silly controversy. Here are some of highlights.

“We are the highest taxed nation in the world,” President Donald Trump has repeated over and over again. …He said it at a White House event last Friday. He’s tweeted it, repeated it in television interviews and declared it at countless rallies. It is his go-to talking point, his favorite line… It is also false — something fact checkers have been pointing out since…

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More Dishonest “Poverty” Research that Doesn’t Measure Poverty

June 25, 2017

Key point: “A country where everyone is impoverished will have zero or close-to-zero poverty because everyone is at the median income. But as I’ve explained before, a very wealthy society can have lots of “poverty” if some people are a lot richer than others.”

International Liberty

I periodically share data showing that living standards are higher in the United States than in Europe.

My goal isn’t to be jingoistic. Instead, I’m warning readers that we won’t be as prosperous if we copy out tax-and-spend friends on the other side of the Atlantic (just like I try to draw certain conclusions when showing how many low-tax jurisdictions have higher levels of economic output than the United States).

I’m sometimes asked, though, how America can be doing better than Europe when we have more poverty.

And when I ask them why they thinks that’s the case, they will point to sources such as this study from the German-based Institute of Labor Economics. Here’s some attention-grabbing data from the report.

The United States has the highest poverty rate both overall and among households with an employed person, but it stands farther away from the other countries on its in-work…

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(Video) Does the minimum wage prevent poverty?

May 22, 2017

Hint: No. In fact, I would argue that raising the minimum wage makes  becoming trapped in poverty more likely, because it become less and less affordable to hire the unskilled and marginally skilled and then train them, as opposed to hiring someone who already has the skills.

But that’s economics, something the Left thinks it can bend its will. Think again.

Anyway, here’s a short video from Prager University on the topic:


Welfare, Taxes, the Nanny State, and Supply-Side Economics

March 10, 2017

Remember, welfare traps people in poverty. It’s not a hand helping you up: it’s a hand grabbing your ankle and holding you back.

International Liberty

What’s the right way to define good tax policy? There are several possible answers to that question, including the all-important observation that the goal should be to only collect the amount of revenue needed to finance the legitimate functions of government, and not one penny above that amount.

But what if we want a more targeted definition? A simple principle to shape our understanding of tax policy?

I’m partial to what I wrote last year.

the essential insight of supply-side economics…when you tax something, you get less of it.

I’m not claiming this is my idea, by the way. It’s been around for a long time.

Indeed, it’s rumored that Reagan shared a version of this wisdom.

I don’t know if the Gipper actually said those exact words, but his grasp of tax policy was very impressive. And the changes he made led to very good results

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The forgotten lesson of Thanksgiving

November 24, 2016

Happy Turkey Day, everyone.

I remember in grammar school we used to be taught the “lessons of Thanksgiving,” including such wonderful things as sharing and gratitude. It seems one lesson never gets taught, though, and so reporter John Stossel wrote to remind us of it in this 2010 article:

Had today’s political class been in power in 1623, tomorrow’s holiday would have been called “Starvation Day” instead of Thanksgiving. Of course, most of us wouldn’t be alive to celebrate it.

Every year around this time, schoolchildren are taught about that wonderful day when Pilgrims and Native Americans shared the fruits of the harvest. But the first Thanksgiving in 1623 almost didn’t happen.

Long before the failure of modern socialism, the earliest European settlers gave us a dramatic demonstration of the fatal flaws of collectivism. Unfortunately, few Americans today know it.

The Pilgrims at Plymouth Colony organized their farm economy along communal lines. The goal was to share the work and produce equally.

That’s why they nearly all starved.

They nearly starved because too few people were willing to work hard to make the land productive enough to feed everyone, knowing they could still draw from the communal pot regardless of their (lack of) effort. Hence, not enough food was produced and the Colony nearly died.

But it didn’t. Having seen the failure of communalism and a planned economy, the colony’s leaders decided to divide the land into plots of private property and make each family responsible for their own livelihood. The results, as reported by Governor Bradford were amazing:

“This had very good success,” Bradford wrote, “for it made all hands very industrious, so as much more corn was planted than otherwise would have been. By this time harvest was come, and instead of famine, now God gave them plenty, and the face of things was changed, to the rejoicing of the hearts of many.”

In other words, private property and a free market made prosperity possible, while Socialism nearly got everyone killed.

Read the rest before you settle down to turkey and football (and the inevitable food coma), and let’s keep this forgotten lesson in mind.

Enjoy the day, folks!

(Crossposted at Sister Toldjah)