minimum wage increase

States that raised their minimum wages have seen a huge loss in job growth since the beginning of the year

The thirteen states that saw minimum wage increases on January 1 have kept a combined 129,200 workers out of employment opportunities since the beginning of the year, according to data published this week by the American Action Forum.

The bulk of the minimum wage hikes were automatic inflation adjustments already mandated by state legislatures. Four state legislatures, however, took specific action to raise their minimum wages, the increases of which range from 45 cents to $1 per hour.

“While many assume that it would come out of profits of large companies, in reality it only affects restaurants and retail businesses that have narrow profit margins,” Ben Gitis, a policy analyst at the American Action Forum, explains in the study. “They have no choice but to either reduce their current employment levels or put off plans to expand and make new hires. As a result, the cost of the minimum wage comes out of the pockets of unemployed workers who are denied an opportunity to work.”

The study looks specifically the impact of these minimum wage increases in the restaurant and retail industries. States that raised their minimum wages have seen an anemic 0.6 percent net-job growth in these two industries since the beginning of the year, while states that kept their laws unchanged saw a 2 percent increase in net-job growth.

Gitis concedes that an unusually cold winter may have had an impact on overall job growth, but notes that states that raised their minimum wages “experienced relatively warm weather” than states in which wage laws remained unchanged. He also points out that other factors may have come into play.

To Help The Poor, To Not Help The Poor

Republicans in the Senate blocked legislation this week that would increase the federal minimum wage. Currently, the federal minimum wage level is at $7.25 an hour and the failed proposed increase would have raised it to $10.10 an hour. Democrats promoting the bill claimed it was a strong way to combat poverty.

The expected outrage at the failure of the bill included sound bites from an angered Obama aimed at Republicans, saying, “They said ‘no’ to helping millions working their way out of poverty.” Republicans responded to the many criticisms citing the CBO report showing that 500,000 jobs were expected to be lost if the increase was passed.

Though that is a great argument to make since it is quite difficult to work your way out of poverty if you no longer have a job, it is not the only one. The options for a business owner that is presented with a forced increase to labor costs include raising prices and cutting hours as well as cutting jobs entirely.

So, from the view of a poverty stricken minimum wage worker these options look just as bad. They are faced with an increase in the prices of goods and services they need. Not to mention they now run the risk of having their hours cut or losing their job entirely.

How many people in poverty would see an increase in pay because of this bill? According to the Census Bureau, in 2012, nearly 60% of those living at or near the poverty level were not in the workforce, meaning an increase in wage would not help.

Surprise! Leftist minimum wage policy backfires in Seattle suburb

Seattle Minimum Wage

The Emerald City may witness the economic dangers of hiking the minimum wage to $15/hour sooner rather than later. SeaTac, a suburb of Seattle, hiked the minimum wage for certain service industry employees to $15 at the beginning of the year, and there are already signs that the sudden increase is having a negative impact.

Earlier this month, Seattle voted to raise its minimum wage gradually to $15 by the year 2020. Unlike the SeaTac wage hike, Seattle’s hike will apply to all businesses.

But 15 minutes south near the Seattle-Tacoma International Airport, employees are already seeing the negative effects of such a hike. A February report from the Seattle Times revealed:

At the Clarion Hotel off International Boulevard, a sit-down restaurant has been shuttered, though it might soon be replaced by a less-labor-intensive cafe…

Other businesses have adjusted in ways that run the gamut from putting more work in the hands of managers, to instituting a small “living-wage surcharge” for a daily parking space near the airport.

That’s not all. According to Assunta Ng, publisher of the Northwest Asian Weekly, some employees are feeling the pinch as employers cut benefits. She recalls a conversation she had with two hotel employees who have been affected by the wage hike:

“Are you happy with the $15 wage?” I asked the full-time cleaning lady.

Bill Gates concerned minimum wage hike would dampen demand for labor

Bill Gates

During a recent appearance at the American Enterprise Institute, Microsoft co-founder Bill Gates expressed concern about the effect a minimum wage hike would have on the demand for labor, intimating that the Earned Income Tax Credit as an anti-poverty measure makes more sense.

“You know, when people say we should raise the minimum wage, I know some economists disagree, but I think, boy, I worry about what that does to job creation,” Gates told a crowd gathered at the conservative think tank. “The idea that through the Earned Income Tax Credit, you would end up with a certain minimum wage that you’d receive — that, I understand better than potentially damping demand in the part of the labor spectrum that I’m most worried about.”

Though he’s a successful businessman, Gates isn’t a conservative. The multi-billionaire backed President Obama in 2012 and has expressed support for various parts of his agenda, including higher income and energy taxes. He’s even wished that President Obama had more power to get around political gridlock.

This part-time worker needs a second job, not a wage hike

The Seattle Weekly News recently ran a piece in which they lead with the story of Jason Harvey, a man who has worked a part-time, minimum wage job at Burger King for eight years, and his struggle to make ends meet, part of the publication’s case for a living wage:

A checked flannel jacket thrown over his Burger King uniform and scrunched-up shopping bags under his arm, Jason Harvey clocks off work at 3 o’clock one drizzly January afternoon and sets out to get groceries for the week. His destination: the Ballard Food Bank.

Using shortcuts he’s learned over the years, it takes Harvey 10 minutes to walk to the food bank from his Market Street workplace, where he earns the minimum wage, which rose slightly in the new year to $9.32 an hour. He finds that neither his salary nor the $120 a month he receives in food stamps is enough to feed himself. Hence his trip to the food bank.

Keep in mind that the minimum wage in Washington state is more than $2 higher than the federal minimum wage, currently at $7.25 per hour. So a full-time worker earning minimum wage in Washington would bring home around $373 per week before taxes.

But Harvey doesn’t work full-time. As a result of his employer cutting workers’ hours to avoid Obamacare’s employer mandate tax, he works just 28 hours, earning a just under $261 a week before taxes (emphasis added):

Obama’s minimum wage hike could kill 1 million jobs

No matter how many times President Obama says we’re in a recovery, we just don’t have a lot to make us really feel like we’re rebounding from the world economy since the Great Depression.  Recent unemployment numbers were less than expected, with a staggering number of Americans who just pulled themselves out of the job market entirely.  It just doesn’t feel like an economy on the rebound, does it.

In a down economy, combating poverty always seems to become a priority.  President Obama’s answer seems to be not just extending unemployment benefits — a measure that Republicans don’t actually oppose, they just want to identify cuts to pay for the extension — but also raising the minimum wage.

Of course, that’s not a problem if you don’t mind killing around 1 million jobs in the process:

The Obama administration’s proposal to raise the minimum wage to $10.10 an hour could result in as many 1,084,000 jobs eliminated from the work force, according to a new study conducted by the Employment Policies Institute (EPI)

Democrats, Big Labor plan state-based minimum wage initiatives in 2014

Well, this is entirely unsurprising. With Obamacare looking like a political liability for Democrats in the 2014 mid-term election, the White House and its Leftist allies are looking to launch initiatives to raise the minimum wage in states where vulnerable incumbents face tough bids for re-election:

Democratic Party leaders, bruised by months of attacks on the new health care program, have found an issue they believe can lift their fortunes both locally and nationally in 2014: an increase in the minimum wage.

The effort to take advantage of growing populism among voters in both parties is being coordinated by officials from the White House, labor unions and liberal advocacy groups.
[…]
“It puts Republicans on the wrong side of an important value issue when it comes to fairness,” said Dan Pfeiffer, the president’s senior adviser. “You can make a very strong case that this will be a helpful issue for Democrats in 2014. But the goal here is to actually get it done. That’s why the president put it on the agenda.”
[…]
At the same time, Democratic campaign officials and liberal activists — conceding that Democrats face tough prospects in some Senate races — are working to put minimum-wage increases on the ballot next year in places like Arkansas, Alaska and South Dakota. The hope is to stoke Democratic turnout in conservative-leaning states where the party’s Senate candidates have been put on the defensive by the mishandled rollout of the Affordable Care Act.

Why we’ll see a minimum wage increase, whether we need it or not

Folks, there is going to be a minimum wage increase.  Despite the fact that only a fraction of workers actually draw minimum wage, and despite the fact that folks are actually living better on minimum wage than they did 20 years ago, we are going to see the minimum wage increase.

One of the problems with democracy is that the rule by the masses means that those who feel they have a tough spot in life will automatically vote with anyone who offers to make it better, while those who feel sorrow for such people will often vote along the same lines out of either guilt or pity.  This is why we have entitlement programs that, while having done absolutely nothing in the war on poverty, are here to stay.

Support for increasing the minimum wage is high.  In a recent report from the Wall Street Journal:

Americans strongly favor boosting the federal minimum wage to $10.10 an hour but oppose raising it above that, a Wall Street Journal/NBC News poll finds. In the survey, 63% supported a rise to $10.10 from the current $7.25 rate. Senate Democrats have proposed an increase of that size and it is supported by President Barack Obama.

In the poll, 43% said they backed an increase to $12.50 an hour. Only 28% backed a $15 wage—the rate sought by union-linked demonstrators at fast-food restaurants across the country.


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