Obama minimum wage edict leads to job losses at military bases

April 29, 2014
"But at least we won the election! Obama!!"

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

Democrats and their Leftist allies are desperate to find any issue to run on in the coming elections, other than Obamacare. One of their tactics has been to try to gin up class warfare based on raising the minimum wage. They argue that it will help the poor, raise living standards, and, of course, be more “fair.” Republicans, conservatives, and libertarians, on the other hand, contend that increasing the cost of labor will only mean higher prices to the consumer, fewer jobs for the marginally skilled, and be particularly harmful to minorities. This video is a good example of how minimum wage laws kill jobs.

Needless to say, I come down on the side of those opposed to the Democrats’ demands for a minimum wage increase. But honest, intelligent people (1) can reasonably disagree.  To help solve this disagreement, a real-world, real-time example would be nice. Fortunately (or unfortunately, as the case may be), we have one. As Byron York reports in The Washington Examiner, President Obama’s edict raising the minimum wage for federal contract employees on military bases is leading to the closure of fast-food restaurants on those bases, thus costing jobs:

Obama’s order does not take effect until January 1, 2015. But there are signs it is already having an effect — and it is not what the president and his party said it would be.

In late March, the publication Military Times reported that three McDonald’s fast-food restaurants, plus one other lesser-known food outlet, will soon close at Navy bases, while other national-name chains have “asked to be released from their Army and Air Force Exchange Service contracts to operate fast-food restaurants at two other installations.”

Military Times quoted sources saying the closures are related to the coming mandatory wage increases, with one source saying they are “the tip of the iceberg.”

And increasing the minimum wage isn’t the only way Washington is increasing the cost of labor:

The administration is making it very expensive to do business on military bases, and not just because of the minimum wage. Under federal contracting law, some businesses operating on military installations must also pay their workers something called a health and welfare payment, which last year was $2.56 an hour but which the administration has now raised to $3.81 an hour.

In the past, fast-food employers did not have to pay the health and welfare payment, but last fall the Obama Labor Department ruled that they must. So add $3.81 per hour, per employee to the employers’ cost. And then add Obama’s $2.85 an hour increase in the minimum wage. Together, employers are looking at paying $6.66 (2) more per hour, per employee. That’s a back-breaking burden. (Just for good measure, the administration also demanded such employers provide paid holidays and vacation time.)

As I wrote above, the natural business response to this is to either raise prices for the consumer, or cut back on employee hours — or cut jobs altogether. Well, guess what? York reports that military contracts do not allow the businesses to raise their prices above what’s common in the outside community. So, even though Obama is raising wages well above the prevailing standard, employers are forbidden to recoup their costs. What does that leave?

Closing the business altogether.

If there’s no chance for profit, why stay open? When you add up the numbers for all four major services, we’re looking at potentially 10,000 jobs going up in smoke. Not to mention the ripple effect in the outside communities.

Here we have a current, ongoing example of how raising the minimum wage harms people by killing jobs. (3) How then, is the Democratic proposal a good idea?

I’m waiting. smiley well I'm waiting


(1) Thus excluding Democratic pols and activists.
(2) How fitting.
(3) Yes, military contract law made the situation worse by forbidding compensatory price increases. So, increasing costs for the consumer –including minimum wage earners!– is a good thing? And what’s to say the Obama administration, if they got their way on the minimum wage, wouldn’t try to extend price controls when the inevitable complaints arose? We are talking dyed-in-the-wool statists, after all. One bad policy, raising the minimum wage, inevitably leads to more bad policy. Just look at the history to-date of Obamacare.

(Crossposted at Sister Toldjah)

Greetings from Obamaland…Oops, I Mean Greece

March 29, 2014

Phineas Fahrquar:

It’s easy to mistake the two; Obama has us well down the same road.

Originally posted on International Liberty:

As much as I condemn American politicians for bad policy, things could be worse.

We could be Greek citizens, which would be very depressing. Indeed, you’ll understand why I put Obamaland in the title after you read today’s column.

Simply stated, Greece is a cesspool of statism. The people seem to be wonderful (at least outside of polling booths), but government intervention is pervasive and atrocious.

Here’s an example. As I was coming in a taxi from the airport to the city yesterday, we passed some sort of protest. There were a couple of hundred people at the rally and probably about 50 riot cops.

I naturally wondered about the situation, expecting that it was radical statists or some of the crazies from Golden Dawn. But the cab driver explained that it was pharmacists.

So why are pharmacists protesting? I found out from some of the locals at…

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Time for a Free-Market Postal System

March 25, 2014

Phineas Fahrquar:

Revisiting one of my pet peeves: privatizing our hugely inefficient and money-losing postal service. In this case, Mitchell presents Britain’s success at doing just that.

Originally posted on International Liberty:

It’s not often that I agree with the Washington Post, but a government-run monopoly is not the best way to get mail delivered.

Moreover, it’s not often that I agree with the timid (and sometimes reprehensible) Tory-led government in the United Kingdom, but they just put the Royal Mail into the private sector. And that’s something deserving of loud applause.

Here’s a slice of the big news from the Financial Times.

The goal of privatising Royal Mail had defeated governments for 40 years. …Even prime minister Margaret Thatcher balked at the political risk of selling off a public service that carried the Queen’s head on its stamps. This time, the legislation went through parliament.

My Cato colleague, Chris Edwards, is suitably impressed.

Here’s some of what he wrote for Cato-at-Liberty.

Britain privatized its Royal Mail in 2013, proceeding with an initial public offering of shares that raised about…

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Social Democratic Sweden headed for private health insurance?

January 22, 2014
Wave of the future?

Wave of the future?

The poster-child for European social democracy seems to be learning that government-controlled healthcare just doesn’t work. Via Reason:

According to Sweden’s insurance trade industry organization, Svensk Försäkring:

“The number of private health care insurance policies has increased in recent years. In 2011 about 440,000 people had private health care insurance. Most of these people have their policy paid by their employer.”

The trend continues, with the English-language The Local reporting last week that “One in ten Swedes now has private health insurance.” The site also says, “More than half a million Swedes now have private health insurance,” though that seems to refer to the growth in the number of policies, with many more of the country’s 9.5 million people actually covered by private insurance.

Why the growth? From The Local:

“‘It’s quicker to get a colleague back to work if you have an operation in two weeks’ time rather than having to wait for a year,” privately insured Anna Norlander told Sveriges Radio on Friday. “It’s terrible that I, as a young person, don’t feel I can trust the health care system to take care of me.'”

In a separate article about Sweden’s shrinking welfare state, The Local also noted that “visitors are sometimes surprised to learn about year-long waiting times for cancer patients.”

There’s more about Sweden’s move away from Socialism and toward free-market solutions. I’ve written about this trend myself, with regard to education and prosperity in general.

Like many people living on either coast, I have friends who are downright Europhiliac — anything Europe does is better, wiser, and more fair than what’s done in the United States, and we should move toward their model.

I can’t wait to tell my progressive friends how Sweden proves they’re right.

(Crossposted at Sister Toldjah)

A Manifesto for Free Markets in Health Care

December 27, 2013

Phineas Fahrquar:

A radical proposal, but I’m willing to give it a shot.

Originally posted on International Liberty:

Not counting humor-oriented pieces such as this and this, it’s been nearly a month since I’ve written about Obamacare.

To make up for this oversight, today we’re going to look at a way out of the Obamacare mess.

But the goal isn’t simply to repeal the President’s bad policy. That merely gets us back to where we were in 2009. We need to figure out how to restore market forces to healthcare, and that means undoing decades of misguided government intervention.

Fortunately, we have a roadmap thanks to John Cochrane, a Cato adjunct scholar and Professor at the University of Chicago. Writing in the Wall Street Journal, he explains how radical deregulation is the right approach.

He starts with an essential point that “settled law” doesn’t mean unchangeable law.

…proponents call it “settled law,” but as Prohibition taught us, not even a constitutional amendment is settled…

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The Chilean Miracle Shows that Economic Liberty is the Best Way of Helping Ordinary People

June 9, 2013

Phineas Fahrquar:

But try to explain to progressives that privatized Social Security accounts, school choice, and other free market are empirically far better for the average citizen than statist solutions, and they’ll look at you as if you’re at best mad and, more likely, downright evil.

Originally posted on International Liberty:

I’m in Vienna, Austria, for the annual European Resource Bank meeting.

I had the pleasure last night of listening to Jose Pinera speak about economic reform in Chile, particularly the system of personal retirement accounts.

He shared a chart that conclusively shows why good economic policy makes a difference.

Chile Miracle

Wow. Look at how much faster the economy has grown since the communists were ousted in 1975 and replaced by a pro-market government.* And the poverty rate has plummeted from 50 percent to 11 percent!

Simply stated, economic reform has been hugely beneficial to poor and middle-class people in Chile. Something to remember as we try to rein in the welfare state in America.

Let’s look at some more data. A couple of years ago, I shared this chart showing how Chile had out-paced Argentina and Venezuela. In other words, Chile’s performance is ultra-impressive, whether examined in isolation or…

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March 30, 2013

Phineas Fahrquar:

This is a very interesting study. I’m sorry to say my beloved California comes in only at second place in “most un-free” states, behind New York. Come on, Sacramento! I’m sure you can do more to screw this place up! I have faith in you.

Originally posted on International Liberty:

Sometimes I myopically focus on fiscal policy, implying that the key to prosperity is small government.

But I’ll freely admit that growth is maximized when you have small government AND free markets.

That being said, our goal should be to expand freedom, not merely to have the largest possible GDP.

Which is why the Freedom Index is a good complement to Economic Freedom of the World.

It shows, for instance, that Singapore may be ranked #2 for economic freedom, but it is only #39 when you look at all freedoms.

We also have a comprehensive ranking of economic and personal freedom for the 50 states.

Here are the full rankings from the newly released Freedom in the 50 States from the Mercatus Center, showing North Dakota as the state with the most freedom, with South Dakota (#2), Tennessee (#3), New Hampshire (#4), and Oklahoma (#5) also deserving…

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