(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:


(Video) Pop Quiz: Can government run the economy?

August 8, 2016

Okay, it’s a trick question. The answer is “yes” and “no.” Yes, the government has the power to regulate almost all the economy (especially since the horrific Wickard v. Filburn case).

But it is also an emphatic “no,” because government rarely does a good job. In fact, government regulation often does more harm than good. A much better alternative is to let the economy run itself in a free market.

For Prager University, Steve Forbes explains why:

Now put down your pencils, close your exam books, and turn them in as you leave.

Class dismissed.


Failing State: $15 minimum wage drives clothing manufacturer out of Los Angeles

April 17, 2016
"But at least we won the election! Obama!!"

“But at least we raised the minimum wage! Yay, Jerry Brown!!”

In my posts on the minimum wage and the Left’s push to raise it ever higher, I’ve tried to point out one key truth: 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.

The government of California recently decided to raise the state’s minimum wage to $15 an hour by 2022, an increase of 50% from today’s state-mandated rate. At the bill’s signing, the Governor said the measure didn’t make “economic sense.” (1)

One employer, at least, agrees with him:

Los Angeles was once the epicenter of apparel manufacturing, attracting buyers from across the world to its clothing factories, sample rooms and design studios.

But over the years, cheap overseas labor lured many apparel makers to outsource to foreign competitors in far-flung places such as China and Vietnam.

Now, Los Angeles firms are facing another big hurdle — California’s minimum wage hitting $15 an hour by 2022 — which could spur more garment makers to exit the state.

Last week American Apparel, the biggest clothing maker in Los Angeles, said it might outsource the making of some garments to another manufacturer in the U.S., and wiped out about 500 local jobs. The company still employs about 4,000 workers in Southern California.

“The exodus has begun,” said Sung Won Sohn, an economist at Cal State Channel Islands and a former director at Forever 21. “The garment industry is gradually shrinking and that trend will likely continue.”

When San Francisco raised the city’s minimum wage, a beloved bookstore closed shop because the cost of business had grown too high. Seattle has lost 700 restaurant jobs because the restaurant industry’s thin profit margins cannot support a $15 minimum wage.

And it’s not just current workers who are harmed: low-skill or unskilled youths looking for that first job are going to discover its harder to find one. Not only will fewer jobs be available out of the limited pool of funds set aside for hiring, but employers are going to want more for their money: employees who already have skills, who require less training. The unskilled 17 year old looking for his or her first job is going to be a lot less attractive.

Great work, legislature and governor, activists and union leaders.You’re driving businesses out of state, costing people jobs, and making it harder to find work. Well done.

They say the road to Hell is paved with good intentions. In this case, that road runs through Sacramento.

RELATED: Moe Lane notes that AA was bleeding cash from paying already-uneconomical wages.

Footnote:
(1) I leave it to the reader as an exercise to determine why a governor would sign a bill he says make no economic sense. Or, you can read the article.

 


Minimum Wage Mandates Help Workers…into the Unemployment Line

December 17, 2015

Progressive city councils (Hello, Seattle and Los Angeles!) and state governments (Hiya, California!) have a lot to answer for: pricing out of the job market the very people they claim to want to help — young people and the poor.

International Liberty

As you can see from this interview, I get rather frustrated by the minimum wage debate. I’m baffled that some people don’t realize that jobs won’t be created unless it’s profitable to create them.

You would think the negative effects of a higher minimum wage in Seattle would be all the evidence that’s needed, but I’ve noted before that many people decide this issue based on emotion rather than logic.

So even though we have lots of evidence already that wage mandates cause joblessness (especially for minorities), let’s add to our collection.

Here are some excerpts from a Wall Street Journal column by Professor David Neumark from the University of California Irvine.

Economists have written scores of papers on the topic dating back 100 years, and the vast majority of these studies point to job losses for the least-skilled. They are based on fundamental economic reasoning—that…

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Sporadic posting for the foreseeable future, but have some “Cornbread.”

November 23, 2015
And this is just the start.

And this is just the start.

I try to put up at least one post a day, even if it’s just a “Hey, look at this” post, but changes in the real world are going to make even that a difficult schedule to hold to. The changes are, in the main, good ones, but nonetheless they’ll eat into my time for reading the news and looking for the interesting bits.

Hopefully things will eventually stabilize and allow more time for posting, but, until then, do check out the sites listed in the sidebar to the right: they’re all good ones.

Though I do need to update that list…

In the meantime, let me leave you with some hot hard-bop jazz: the great Lee Morgan playing “Cornbread.”

And if I don’t post before Turkey Day, have a wonderful Thanksgiving one and all!


#RaiseTheWage – Applebee’s testing tablet ordering in California

November 22, 2015
"But at least we won the election! Obama!!"

“But at least we raised the wage!”

Action, meet reaction.

Last night I took my wife and our two young grandchildren to Applebee’s. It went great — our 4 and 2 year old charges were more decorous than half the patrons.

But I digress. Here’s what caught my attention: Applebee’s is testing a new ordering policy — using the technology that is rapidly becoming prominent in fast food restaurants. Every table had an online electronic tablet, with the menu, ordering and payment process built in. One can place the order and have the busboy bring your food.

For now, one can still use a waiter for service, but obviously the plan is to reduce or eliminate that service. That makes PARTICULARLY good sense in California, which is rapidly becoming the home of the $15 minimum wage. Moreover, California is one of only 7 states that requires “tip” employees to be paid a FULL minimum wage IN ADDITION TO all tips collected. That can make a meal too pricey — reducing the number of times patrons choose to dine out.

California’s minimum wage is currently $9 per hour and will rise to $10 in January. Here in Los Angeles, the minimum wage has been $15 dollars since June, and there is pressure to make that the statewide minimum.

The upshot? Expect to see more and more restaurants going to electronic ordering and payment systems, and more and more waiters and waitresses out of work, as progressive social justice warriors and the pols who appease them make it impossible to do business in the once-Golden State. Again, for those didn’t learn this in school, math wins:

Labor is a cost, because the business owner has to provide wages and, often, benefits that cost him more money. When a government mandate increases that cost, the business owner has three choices: pass the cost along to the customer, who may decide it’s too much and stop shopping there; cut employee hours and stop hiring to save on labor costs, thus costing potential jobs and putting a burden on workers still employed; and, finally, just decide it’s not worth it anymore and close up shop. In the low-margin bookseller business, Borderlands’ owner chose the last course as the only one viable.

San Francisco’s Borderlands bookstore chose to close its doors because it could no longer make enough money to make staying in business worthwhile. Applebee’s (and I’m sure other restaurants and fast-food establishments) are looking to cut back on labor hours in order to balance the increased cost of labor. In each case, employees have lost jobs as a consequence of government interference in the labor-management relationship. It’s only going to get worse, too as long as statists in government continue to act as if the laws of economics will bend to their will and that their actions have no consequences.

It must be nice in their fantasy world; it’s a shame others have to suffer because of those fantasies.


California loses another business, but at least we have a higher minimum wage

November 20, 2015
"But at least we won the election! Obama!!"

“But at least we raised the wage!”

It’s now widely regarded as legend and fable, but there once was a time when California created an almost unending wealth of jobs, leading to a good life and prosperity for her people.

Nowadays the progressives who run our state, enabled by their sheep-like voters who dominate the coast and the major urban areas, are doing all they can to run businesses (and jobs and prosperity) out of California, and California into the ground.

Just ask the owner of Woof & Poof:

One of the few things actually made in Chico may, sadly, no longer be made in Chico. Woof & Poof C.E.O. and owner Roger Hart said today, the company is having to cease production. Hart made the statement today at the annual warehouse sale.

Every year on the first Saturday of November a sale is held at the warehouse on Orange Street. Woof & Poof products include everything from stuffed collector dolls, blankets and door hangers to musical Santas for the holidays.

The unique, quality products are sold to more than 600 stores in the United States and Nordstrom’s. Woof & Poof has been in Chico for 40 years, but that’s about to end. Hart says a raise in minimum wage and workers compensation are just a couple of issues that have made it difficult to keep the business financially afloat here. Hart said, “The high cost of doing business in California coupled with ridiculous regulatory environment makes it virtually impossible to do business.” He says he has seen an 11% hike in payroll.

Time for another lesson in economics, kiddies:

Labor is a cost, because the business owner has to provide wages and, often, benefits that cost him more money. When a government mandate increases that cost, the business owner has three choices: pass the cost along to the customer, who may decide it’s too much and stop shopping there; cut employee hours and stop hiring to save on labor costs, thus costing potential jobs and putting a burden on workers still employed; and, finally, just decide it’s not worth it anymore and close up shop. In the low-margin bookseller business, Borderlands’ owner chose the last course as the only one viable.

Borderlands was a bookstore that closed in San Francisco after the owner could no longer afford the minimum wage. That was the owner’s choice, and now Roger Hart has decided to join him. I’ve no doubt there have been others, nor that there will be many more like him who choose the same.

Chico, for those who don’t know it, is a small city in the north part of the state, an area that, like the interior east and south, has been treated as an exploitable colony by our coastal progressive elites and the pols the force on us. The damage their policies of “economic, social, and environmental justice” have laid waste to farmland and small towns and cities up and down the state, far from the trendy restaurants of San Francisco or Hollywood, where I bet none of the 30 workers losing their jobs at Woof & Poof could afford to eat.

No wonder there are secession movements.

via @hipEchik on Facebook

PS: One of the burdensome regulations that caused Mr. Hart to throw up his hands? A state font mandate. You read that right. Because he had used the wrong size of font on pillow tags, an inspector threatened to seize his entire inventory. Instead, he had to spend a lot of money to make corrections.

I’m surprised he wasn’t required to cut down a tree with a herring, too.


Revenge of #KeystoneXL: labor union starts donating to Republicans

November 9, 2015
Feeling rejected.

Hates union jobs

Last Friday at the White House, President Obama finally did what he’s wanted to do for many years: kill the Keystone XL oil pipeline that would have safely carried Canadian crude to ports along the Gulf of Mexico.

In the process, he also killed prospects for tens of thousands of good-paying jobs on the pipeline itself and in supporting industries. Naturally, the relevant union is not happy. How unhappy are they?

They’re giving money to Republicans:

One of the nation’s largest unions accused President Obama of betraying workers and the labor movement by blocking the Keystone Pipeline and is backing up its rhetoric with campaign donations to Republicans.

The Laborers’ International Union of North America said that Obama’s bow to environmentalists meant that he was more concerned with “elitists” and “his legacy” than with helping workers provide for their families.

“President Obama today demonstrated that he cares more about kowtowing to green-collar elitists than he does about creating desperately needed, family-supporting, blue-collar jobs,”said Terry O’Sullivan, the union’s president, in a release following Obama’s Friday announcement.

(…)

LIUNA represents about 500,000 workers in the construction industry, one of the sectors hardest hit by the 2008 economic collapse. Keystone, which was expected to create 42,000 construction jobs, has been awaiting approval for about seven years. O’Sullivan said that Obama’s attempt to minimize job gains demonstrated his “utter disdain” for blue-collar workers.

Dear LIUNA members, and, indeed, private sector union members across the nation: the President and the Democrats have just sent you a message loud and clear — they prefer the money given by Green billionaires such as Tom Steyer and the Hollywood glitterati to your donations. They are willing to sacrifice your jobs to keep those people happy.

We on the Right do care, however. I’m not saying we’re likely to ever be best friends –we disagree over things like free trade and closed-shop collective bargaining, after all– but, here’s the thing: We want you to have jobs. Good ones.

We want the nation to prosper, and when you prosper, so does America. If the Canadians are still willing to do Keystone when a Republican comes to office in 2017, it will take us about 20 seconds to approve it — and other measures that get the government out of the way of job creation in the energy field and other industries.

When election day comes next November, pause for a moment and remember just who threw you under that oh-so-crowded bus.

And then vote your interests.

via Moe Lane


Financial system compromised by Iran deal

July 20, 2015

Yet more fall out from this miserable deal.

Money Jihad

The deal with Iran doesn’t just give a murderous regime $100 billion in sanctions relief.  It gives them ongoing access to the international financial system.  It will make their funding of Hezbollah, Hamas, and the Islamic Revolutionary Guard Corps so much easier.  Expert analysis from Mark Dubowitz and Jonathan Schanzer writing in Foreign Policy last week:

It Just Got Easier for Iran to Fund Terrorism

Iran’s supreme leader, Ayatollah Ali Khamenei, did not enter into Tuesday’s historic deal with six world powers to reset relations with the West. It was the promise of more than $100 billion in sanctions relief, rather, that greased the wheels of the recently completed diplomacy in Vienna. And though the windfall of cash will certainly strengthen its position, the real prize for Iran was regaining access to a little-known, but ubiquitous banking system that has been off-limits to the country since March 2012.

SWIFT, the…

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Los Angeles: union hypocrisy on parade #RaiseTheWage

May 27, 2015
x

Union economics adviser at work

You have to love the moxie of these racketeers: demand a economically nonsensical minimum wage, $15 per hour, and then, when the city is about to implement it, demand an exception for union members because business owners have threatened to do the logical thing: cut jobs.

From The Los Angeles Times:

Labor leaders, who were among the strongest supporters of the citywide minimum wage increase approved last week by the Los Angeles City Council, are advocating last-minute changes to the law that could create an exemption for companies with unionized workforces.

The push to include an exception to the mandated wage increase for companies that let their employees collectively bargain was the latest unexpected detour as the city nears approval of its landmark legislation to raise the minimum wage to $15 an hour by 2020.

For much of the past eight months, labor activists have argued against special considerations for business owners, such as restaurateurs, who said they would have trouble complying with the mandated pay increase.

But Rusty Hicks, who heads the county Federation of Labor and helps lead the Raise the Wage coalition, said Tuesday night that companies with workers represented by unions should have leeway to negotiate a wage below that mandated by the law.

Let’s review a basic lesson in economics, shall we, from another progressive, heavily unionized city:

Like I’ve said many times before: 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. Ritu Shah Burnham may have loved her business, or she may have hated it. But, regardless, she’s come to the conclusion it isn’t worth staying in business in Seattle. She isn’t the first, and other small businesses in other progressive cities have made the same choice.

Apparently Rusty Hicks understands economics better than the Los Angeles city council and realizes he stands to lose union (dues-paying) jobs when the minimum wage goes up. So, he wants the freedom to negotiate a lower wage, more in line with economic reality. Fine. He’s pursuing his members’ interests.

How odd that he doesn’t want to allow that same freedom to all workers and business owners.

Afterthought: There is actually a sneaky benefit to this for the unions, besides preserving jobs. If unions can negotiate lower wages, there would then be an incentive for non-union businesses to unionize. That would lead to more union jobs and more dues coming into the union’s coffers. Oh, Rusty. You sly dog, you.

via Michael Strain


EPA’s draconian new plan: Is a 1% Cut in CO2 emissions worth $50 billion and 15,000 jobs annually?

May 14, 2015

We have met the enemy, and it is the EPA.

Watts Up With That?

Guest essay by Steven Capozzola, CAP Media

The Environmental Protection Agency (EPA) is preparing to finalize its Clean PowerPlan, which aims to reduce power plant carbon dioxide emissions by 30% from 2005 levels over the next 15 years.

Looking at some of the best-case scenarios for CO2 reductions, the plan could potentially cut roughly 300 million tons of CO2 annually.

Because global man-made CO2 emissions reach roughly 30 billion tons annually, it’s estimated that the EPA plan could result in a possible 1% reduction in annual man-made CO2.

Overall, man-made CO2 accounts for only 4% of total atmospheric CO2. So the true atmospheric reduction in CO2 from the EPA plan would be approximately 0.04%.

The cost for this plan is estimated at $50 billion annually, with the loss of roughly 15,000 U.S. jobs each year. Increases in household utility billscould reach $100 billion annually.

These high costs have…

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#RaiseTheWage – Seattle pizzeria to close thanks to economic ignorance

April 29, 2015
"But at least we won the election! Obama!!"

“But at least they raised the wage!!”

To paraphrase Mark 8:36, “For what good does it do a city to raise the wages of it workers, yet forfeit the jobs?” In Seattle, San Francisco’s northern soul-mate, they may well be asking that very question:

It may be one of the first casualties of Seattle’s new minimum wage law. The owner of Z Pizza says she’s being forced to close her doors, because she can’t afford the higher labor costs.

Devin Jeran was happy to get a raise, when Seattle’s minimum wage went up to $11 an hour at the beginning of the month.

“I definitely recognize that having more money is important,” he says, “especially in a city as expensive as this one.”

Unfortunately, he’ll only enjoy that bigger paycheck for a few more months. In August, his boss is shutting down Z Pizza and putting him and his 11 co-workers out of work.

“Fortunately she keeps us in the loop, she didn’t just tell us last minute.”

Ritu Shah Burnham doesn’t want to go out of business, but says she can’t afford the city’s mandated wage hikes.

“I’ve let one person go since April 1, I’ve cut hours since April 1, I’ve taken them myself because I don’t pay myself,” she says. “I’ve also raised my prices a little bit, there’s no other way to do it.”

Like I’ve said many times before: 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. Ritu Shah Burnham may have loved her business, or she may have hated it. But, regardless, she’s come to the conclusion it isn’t worth staying in business in Seattle. She isn’t the first, and other small businesses in other progressive cities have made the same choice.

And their workers have wound up looking for work.

What’s especially galling about this, aside from the hubris of thinking one can bend economic laws to one’s will, like a financial Lysenko, is that the progressive, social justice warrior-pols passing these laws don’t have to live with the immediate consequences: it’s not their profits that get hurt, not their business that becomes unsustainable, not their job that’s lost. They’re not the kid looking for his or her first job, only to learn the employer has cut back on hiring because he can’t afford as many employees as he used to. But these politicians do it while appealing to the god “Fairness,” assuming that it will all work out in the end with a wave of the hand, or that it will be the next guy’s problem. Whatever. They still get to hug themselves for being such wonderful people.

Their self-righteous arrogance is astounding and infuriating. It’s genuinely harming people


California: SEIU demands increase in minimum wage, jobs be damned

April 16, 2015
"But at least we won the election! Obama!!"

“But at least we raised the minimum wage! Obama!!”

Fresno is fifth-largest city in California, the largest that’s not on the coast, and the largest in the Central Valley, that agricultural cornucopia that’s being destroyed by drought and environmentalist idiocies.

But don’t get me started on that.

Anyway, just by its position and population Fresno is important to the state’s economy, particularly our agricultural sector. (Where do you think your raisins come from?) But, like much of the Central Valley, it’s suffered more than the rest of California from the 2008 recession and the pathetic recovery: unemployment in the Fresno area in 2014 was still over 11%, well above California’s statewide average of 7.1% at the end of that year.

So, when your city is suffering from a lack of jobs, what’s the first thing you think of to increase opportunities for work?

That’s right! You demand an increase to the cost of labor!

On Wednesday, according to the Fresno Bee, over 150 people joined other workers around the country marking Tax Day by marching in rallies organized by unions as they demanded the current federal minimum wage of $7.24 an hour be raised, as well as the California $9 minimum wage.

Standing in front of a McDonald’s, the protesters–comprised of home and child care workers, county and state workers, students and community leaders, but no fast-food workers–chanted, “Hold the burgers, hold the fries. Make our wages super-sized.”

Union members from the Services Employees International (SEIU) helped lead the way; one member, Beau Reynolds with SEIU Local 100, told the Bee, “We’re here to stand up. We’re here to join forces and we are here to demand better. To demand better wages, to demand better benefits and to demand the right and respect that all working families deserve.”

Notice that none of those protesting in front of McD’s actually work there: they’re just there in service of SEIU’s political goal, which is to get a general increase in the minimum wage, which would include the union’s members, leading in turn to higher dues-revenues for the union to spend on politics. (And union bosses’ salaries…)

But the fast-food workers on the inside? The ones inside who didn’t march, the supposed beneficiaries of SEIU’s fight for economic justice? Apparently they know what happens when you raise labor costs too high:

Welcome to the future

Welcome to the future

In other words, when government raises the cost of doing business —and labor is a cost!— business owners have just a few choices: pass the cost to the consumer and risk losing their custom; reduce profits to perhaps unacceptably low levels; reduce labor costs by cutting back hours, letting people go, and not hiring; or just getting out of the business. They’re already learning this in progressive Seattle, and it looks like the Fresno McDonald’s workers understand basic economics, too, unlike SEIU.

Or maybe SEIU just doesn’t care that fast food workers can be replaced with kiosks, as long as they themselves get their cut.

Either way, they’re not helping Fresno county’s unemployment problem.

(Crossposted at Sister Toldjah)


The Case Against the IRS and the “Progressive” Income Tax

December 16, 2014

Tax reform along the lines of some sort of flat tax or a national sales tax, along with reduction in the size of government, would go a long way towards generating prosperity here again. It would also make statist heads explode — a win-win situation!

International Liberty

Genuine tax reform would be the second-best fiscal policy reform to boost economic growth.*

With a simple and fair tax system, we could get rid of high tax rates that penalize productive behavior. We could eliminate the double taxation that discourages saving and investment. And we could wipe out the rat’s nest of deductions, credits, exemptions, preferences, exclusions, and other loopholes that bribe people into making economically unwise decisions.

When pushing for tax reform, I normally cite the flat tax, but there are many roads that lead to Rome. I’ve also pointed out that other tax reform plans have similar attributes. Here’s what I wrote, for instance, when comparing the flat tax and national sales tax.

In simple terms, a national sales tax (such as the Fair Tax) is like a flat tax but with a different collection point.the two plans are different…

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Aussie Renewable Target: Everyone Gets an Exemption

October 9, 2014

Sounds like Obamacare: if so many exceptions are needed, maybe the law itself is the problem. In this case –say it after me– fighting a problem that does not exist. Only, in this case, the Green Let’s self-indulgence is costing real people real jobs.

Watts Up With That?

exempt-scrabbleEric Worrall writes – The increasingly farcical Australian Renewable Target just took another body blow today, with mounting pressure on the Labor Party, from Aluminium Industry union delegates, to exempt yet another industry from green energy tariffs.

According to The Australian, a major Aussie daily newspaper;

“THE Australian Workers Union has called for the aluminium ­industry to be exempted from the renewable energy target, a move that will increase pressure on Labor to negotiate a bipartisan deal with the Coalition on changes to the scheme. AWU national secretary Scott McDine warned that the RET maintained in its current form would lead to thousands of jobs shifting overseas with no ­environmental gain.”

http://www.theaustralian.com.au/business/powering-australia/awu-joins-bid-for-renewable-energy-target-reform/story-fnnnpqpy-1227060838447

The main domestic political opposition to Aussie Prime Minister Tony Abbott’s dismantling of carbon pricing and job destroying environmental laws, is a coalition of Greens and Labour in the Australian Federal Senate. But the uncertain Aussie jobs market…

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Nation’s Leader Rejects Keynesian Economics, Acknowledges that Real Jobs Are Created by the Private Sector

October 3, 2014

It’s Finland, sadly, not the US. We can only hope that, in the next administration, the idea of capitalism will catch on… in the USA. :/

International Liberty

You’re probably surprised by the title of this post. You may even be wondering if President Obama had an epiphany on the roadto Greece?

I don’t mean to burst your bubble, but the leader we’re talking about isn’t the President of the United States.

Instead, we’re talking about the Prime Minister of Finland and he deserves praise and recognition for providing one of the most insightful and profound statements ever uttered by a politician.

He explained that the emperor of Keynesian economics has no clothes.

As reported by Le Monde (and translated by Open Europe), here’s what Alexander Stubb said when asked whether European governments should try to “stimulate” their economies with more spending.

We need to put an end to illusions: it’s not the public sector that creates jobs. To believe that injecting billions of euros [into the economy] is the key to growth is an idea…

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Progressive victory: since 2008, Illinois has created more food-stamp recipients than jobs

September 16, 2014

seal of Illinois

Another mile-marker on the road to state financial collapse, courtesy of the Big Government Liberalism:

Illinois’ sluggish jobs recovery is coming at a tremendous cost. For every post-recession job created in Illinois, nearly two people have enrolled in the Supplemental Nutrition Assistance Program, commonly known as food stamps.

In the recession era, the number of Illinoisans dependent on food stamps has risen by 745,000. Without adequate job creation in the state, Illinois families have had no choice but to depend upon food stamps to put bread on the table.

The Prairie State has had the worst recovery from the Great Recession of any state in the U.S. There are nearly 300,000 fewer Illinoisans working today than in January 2008, and 170,000 fewer payroll jobs.

This couldn’t be the result of a decades-long toxic mix of progressive government and Big Labor exploiting the heck out of taxpayers and creating a corrupt, over-regulated mess that has the most productive people and companies fleeing the state, could it?

Nah. What happened in Detroit was mere coincidence.

Scary thing is, California isn’t all that far behind them.

via… Someone on Twitter. Sorry, lost the link.


Canada pulls the plug on the U.S. Keystone Pipeline – will send oil to Asia

June 29, 2014

This makes me so mad, I could chew nails. Tens of thousands of good jobs lost, a needed economic boost from cheap oil thrown away. Heckuva job, Greens.

Watts Up With That?

Approves Asia Supply Route, Ignores US Route

H/T Eric Worrall and Breitbart – Obama’s inability to make a decision on Keystone has finally yielded a result – Canada has made the decision for him.

Breitbart reports Canada has just approved the Enbridge Northern Gateway Project – a major pipeline to ship Canadian oil to Asia.

The Canadian oil will still be burnt – in Asia, instead of America.

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Seattle approves $15 minimum wage, higher unemployment

June 3, 2014
x

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)


California Senate passes $13 minimum wage, jobs flee in terror

June 1, 2014
"But at least we won the election! Obama!!"

“But at least they raised the minimum wage!”

Perhaps they didn’t want to be left behind by their progressive friends in Seattle, but the California State Senate last Wednesday passed a bill that would raise the minimum wage to $13 per hour by 2017. From the legislative analyst’s summary:

SB 935, as amended, Leno. Minimum wage: annual adjustment.

Existing law requires that, on and after July 1, 2014, the minimum wage for all industries be not less than $9 per hour. Existing law further increases the minimum wage, on and after January 1, 2016, to not less than $10 per hour.

This bill would increase the minimum wage, on and after January 1, 2015, to not less than $11 per hour, on and after January 1, 2016, to not less than $12 per hour, and on and after January 1, 2017, to not less than $13 per hour. The bill would require the automatic adjustment of the minimum wage annually thereafter, to maintain employee purchasing power diminished by the rate of inflation during the previous year. The adjustment would be calculated using the California Consumer Price Index, as specified. The bill would prohibit the Industrial Welfare Commission (IWC) from reducing the minimum wage and from adjusting the minimum wage if the average percentage of inflation for the previous year was negative. The bill would require the IWC to publicize the automatically adjusted minimum wage.

The bill would provide that its provisions not be construed to preclude the IWC from increasing the minimum wage to an amount greater than the calculation would provide or to preclude or supersede an increase of the minimum wage that is greater than the state minimum wage by any local government or tribal government.
The bill would apply to all industries, including public and private employment.

(h/t California Political Review)

“Leno” is Senator Mark Leno, whose district includes, naturally, San Francisco. You can kind of guess his politics. (He also backed a bill allowing children to have more than two parents. Yes, you read that right.) He’s also a prime example of Thomas Sowell’s observation about politicians who don’t have to suffer the consequences of decisions they impose on others. In this case, causing the cost of labor to skyrocket forces business owners to decide whether to pass on the cost to consumers, cut workers’ hours or whole jobs, or go out of business. As the head of CKE Restaurants told CNBC, people are doing all three:

CKE Restaurants’ roots began in California roughly seven decades ago, but you won’t see the parent company of Carl’s Jr. and Hardee’s expanding there much anymore.

What’s causing what company CEO Andy Puzder describes as “very little growth” in the state?

In part it’s because “the minimum wage is so high so it’s harder to come up with profitable business models,” Puzder said in an interview. The state’s minimum wage is set to rise to $9 in July, making it among the nation’s highest, and $10 by January 2016.

In cities in other states where the minimum wage has gone up considerably, Puzder said “franchisees are closing locations” after riding out lease expirations.

If the federal minimum hourly pay shoots up to $10.10 from the current $7.25—as many lawmakers and President Barack Obama are advocating—Puzder predicts fewer entry-level jobs will be created. If this happens, CKE would also create fewer positions, he forecast.

A recent nonpartisan Congressional Budget Office study also predicted mass job losses, estimating that a hike to $10.10 could result in a loss of about half a million jobs by late 2016, even as it lifted many above the poverty line.

(h/t California Political Review)

For some reason, I don’t think those who lose their jobs because of the wage increase will see themselves as “lifted out of poverty.”

Minimum-wage jobs are not meant to be lifelong careers. For people just entering the labor market, they’re ways to acquire skills needed to move on to better-paying jobs. For others, they’re a means to bring in additional, supplementary income into the household. The pro-increase arguments distort facts and wrap them in myth, all to disguise what is really a wealth redistribution program.

CKE’s Puzder goes on to relate how, when minimum wage increases are combined with the added expenses imposed by Obamacare, franchisees have chosen not to open new restaurants or have even closed locations, meaning these are jobs lost. But they do it because they can get a better return on their investment money elsewhere, such as by putting it in bonds.

It’s called economic common sense, something Senator Leno and his colleagues are woefully lacking in.

PS: SB 935 has now gone to the Assembly, and I will be shocked if it doesn’t pass. It’s frightening to think we have to rely on Governor Brown to be the sane one in the room and veto this bill when it shows up on his desk.

(Crossposted at Sister Toldjah)