Workers

Obama Uses Pen to Price Workers Out of the Market

President Obama made good on a threat…ah, promise…yesterday and, using that executive order pen he likes to talk about and wave around, raised the minimum wage for federal contractors from $7.25 to $10.10, representing a nearly 40% spike:

Mr. Obama said the federal minimum wage needs to be raised across the board because the current rate, due to inflation, “is worth about 20% less than it was when Ronald Reagan took office – 20% less, a fifth less.”

The move is the first step in a broader fight over the minimum wage being pushed by Democrats during an election year and part of the president’s effort to narrow the income inequality gap. (Our colleagues at the Real Time Economics blog take a look at who benefits from a higher minimum wage.)

Now, it’s just for federal contractors — with, to WSJ’s point, an eye toward a campaign issue — but it’s still not a very good sign because it’s likely a shallow move to gain political favor that sets a bad example for a couple of different reasons.

First, it’s yet another swipe at Congress who, as much as they are fairly maligned, are still the colleagues with whom our President must work. And quotes like this one are, frankly, rude and counter productive:

E-Verify is not comparable to voter ID

There are many thorny and complex issues in the immigration debate. In a lively Twitter discussion on Thursday, I was discussing work authorization, specifically E-Verify, the national electronic database whereby employers check prospective hires for work eligibility. Midway through this discussion, someone compared it to voter ID requirements, implying a consistent position would be to support both.

On its face this seems like a reasonable consideration. If you want to make sure people are legally authorized to vote, you should also want to make sure they are legally authorized to work, right? Upon futher reflection it becomes clear that these two measures aren’t really very similar, and arguments based on their comparison are dubious at best.

Voter ID is a requirement to access a public civic institution, but E-Verify is a mandate on private businesses. Employers have to screen every applicant for citizenship or work permit status before hiring them. One of the talking points of E-Verify opponents is that it makes every employer a de facto immigration officer and passes the buck of law enforcement to private entities. While actual border enforcement and maintenance of the E-Verify database would remain a federal responsibility, employers would face penalties, perhaps even worse than the unauthorized applicants themselves, for not using the system or violating it.

Defund ObamaCare: Showdown at the OK Corral

On March 23, 2010, Barack Obama signed into law his signature legislative achievement, the Patient Protection and Affordable Care Act, dubbed by friend and foe alike as “ObamaCare.” In doing so, Obama accomplished what socialist liberals before him, from Hillary Clinton to the Communist Party of America, had been unable to do…enact government-controlled, nationalized health care. It was a glorious moment for the government-is-god crowd, as they had finally attained the means to show the rest of us ignorant hoi polloi just how wonderful health care would be when run by a small, elite group of enlightened bureaucrats and bean-counters.

After waging a fierce battle in the courts, the Supreme Court eventually upheld the law, and specifically the legality of the “individual mandate” (which the Obama administration had alternately argued was a tax, and NOT a tax), with Chief Justice John Roberts discovering his inner emanations and penumbras in deciding that the individual mandate was indeed a tax, and therefore justified under Congress’s Article I taxing power.

Liberal Democrats had their victory, and ObamaCare would go forward as planned, and despite the fact that the law had never enjoyed majority approval by the American people, and despite the fact that it was passed without a single Republican vote (the only major legislation ever to be enacted without bipartisan support), Democrats would now be able to show the American people just how wonderful socialist, nationalized health care could be.

Except something unexpected (for them) and unfortunate (for us all) happened on the way to the victory parade…

Quit whining about the minimum wage

I’ve heard a lot recently about the minimum wage.  Fry cooks throughout the nation took to the streets to lament their dreadful lot in life.  Liberal wonks have taken to the airwaves to complain about how one just can’t live on $7.25 an hour, and it should be raise.  Some of these wonks say it should be doubled even.

Oh, cry me a freaking river.

Before I get into specifics, let me point out that as an entrepreneur, if I took how much I made running two businesses and divided it by the number of hours I work, I’d probably make less than $1 per hour, so don’t try to counter this as being “the rich looking down on the poor.”  I can barely pay my bills, so I hardly count as rich.  Also, for the record, only one of these businesses is mine, so don’t pull the “you own two businesses, so clearly you’re well off” crap.  My wife makes more than minimum wage, but not by a whole lot.  We have two kids.  We are scraping by, and just barely.

Now, about the minimum wage.  There are some things the wonks are right about.  One can not live on a minimum wage income — $7.25 per hour just isn’t enough to pay rent, a car payment, insurance on said car, utilities, and some kind of phone.

Of course, it’s also not meant to do that.

Minimum wage jobs aren’t skilled labor.  They’re entry level jobs.  That means they’re for people entering the workforce.  They’re for high school and college kids.  They’re for people who have left high school and are trying to figure out what they want to be when they grow up.  They’re for the young person trying to get established.  Hence the term “entry level.”

Obamacare’s employer mandate is hurting workers and businesses, and Harry Reid is stalling on a legislative fix

A little than a month after the Internal Revenue Service released guidance on Obamacare’s employer mandate, after prolonged delays unilaterally enacted by the administration, a coalition of business groups have launched a new campaign against the provision. The Hill explained the details in its “Overnight Regulation” newsletter at the end of last week:

A coalition of industry groups on Friday will announce a fresh attack on the Affordable Care Act’s definition of full-time employment. The campaign takes aim at the 30-hour threshold set out in ObamaCare’s employer mandate.

The provision has roiled businesses and congressional Republicans who say the standard defies the conventional view that 40 hours on the job constitutes full-time work. Further, they charge, the looming rules have led employers to switch full-time workers to part-time schedules in order to avoid the cost of providing health insurance.

The employer mandate, which generally requires businesses to offer health coverage, has been the subject of multiple delays. It will take effect in January for larger firms and a year later for more medium-sized companies – unless its opponents have their way.

The employer mandate is a provision of Obamacare that originally required businesses with 50 or more full-time employees, defined as someone who works at least 30 hours a week, to offer health insurance benefits or face a punitive per worker tax.

No, Barack Obama, the United States should not be more like France

President Barack Obama has an idea, you guys. In his latest pivot on the economy, because everything else his administration is doing failing so spectacularly, he said the United States should offer the same sort of benefits that France requires businesses to offer their workers:

Extolling the business virtues of helping workers balance family and employment demands, including providing paid time off for the birth of a child, Obama said that if France can provide the benefits, so can the United States.

“Other countries know how to do this,” Obama said. “If France can figure this out, we can figure it out.”
[…]
Obama made the comment at the first White House summit for working families, which sought to amplify issues like paid maternity leave and the ability to take paid leave to take care of elderly loved ones.

“Many women can’t even get a paid day off to give birth,” Obama said. “There is only one developed country in the world that does not offer paid maternity leave, and that is us. And that is not a list you want to be on, by your lonesome.”

The White House hosted the summit jointly with the Center for American Progress, a liberal think tank, and it served in part as a campaign pep rally focused on turning women voters out in November.

Shocker: Leftist minimum wage policy forces businesses to pass costs to consumers

MasterPark Airport Parking

Travelers who park their cars at Seattle–Tacoma International Airport, located in the town of SeaTac, Washington, will see first-hand how the city’s $15 minimum wage is being passed onto consumers in addition to negatively impacting workers, as Matthew Hurtt recently explained.

MasterPark Airport Parking, a valet parking service, is charging customers a 99-cent per day “living wage surcharge,” listing it on receipts with taxes and other fees patrons pay, according to the Washington Policy Center:

Many SeaTac businesses have tacked on an additional fee to mitigate the increased cost of labor. On the receipt below, a $6.93 “living wage surcharge” was added to a $84.00 parking charge. That is the equivalent of a 8.25% tax.
[…]
Contrary to what supporters claim, increasing the minimum wage does not create jobs and stimulate the economy. The higher wages are not free money. The increased cost must either be absorbed by the employer, which is impossible for many who already operate on shoe-string profit margins, or it must be passed on to workers, in the form of reduced hours and benefits, and consumers, in the form of higher prices. Either way, someone pays.

MasterPark explains the surcharge on its website, pointing out that it “covers a portion of the resulting increase in operating costs.” Here’s the copy of the receipt that a customer recently received:

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.

Economists speak out against minimum wage increase

More than 500 economists, including three Nobel laureates, have signed a letter warning lawmakers of the “serious consequences” of raising the federal minimum wage to $10.10 an hour, a policy being pushed by President Barack Obama and most congressional Democrats.

“One of the serious consequences of raising the minimum wage is that business owners saddled with a higher cost of labor will need to cut costs, or pass the increase to their consumers in order to make ends meet,” the letter states (PDF). “Many of the businesses that pay their workers minimum wage operate on extremely tight profit margins, with any increase in the cost of labor threatening this delicate balance.”

The economists point to the recent Congressional Budget Office (CBO) report on the $10.10 minimum wage proposal. The CBO estimated that such a significant increase in the minimum wage would cost the economy 500,000 jobs, perhaps as many as 1 million, over the next two years. “Many of these jobs,” the letter notes, “are held by entry-level workers with limited experience or vocational skills, the very employees meant to be helped.”

The economists explain that the minimum wage is “a poorly targeted anti-poverty measure,” noting that [e]xtra earnings generated by such an increase in the minimum wage would not substantially help the poor,” again pointing to the findings of the CBO report.

Labor union: Obamacare will make economic inequality worse

It’s no secret that many labor unions aren’t pleased with Obamacare, and have unsuccessfully lobbied the White House for an exemption. But a recently released report from one major labor union, UNITE HERE, took a different angle on law, claiming that it will actually make income inequality worse.

In its report, The Irony of ObamaCare: Making Inequality Worse, UNITE HERE argues that subsidies provided through the law are “one of the largest transfers of public wealth to private hands ever.” The report also noted that the law has lead employers to cut workers’ hours to avoid costly mandates.

“Ironically, the Administration’s own signature healthcare victory poses one of the most immediate challenges to redressing inequality,” the report said. “Yes, the Affordable Care Act will help many more Americans gain some health insurance coverage, a significant step forward for equality.”

“At the same time, without smart fixes,” the report continues, “the ACA threatens the middle class with higher premiums, loss of hours, and a shift to part-time work and less comprehensive coverage.”

UNITE HERE represents some 265,000 in various industries, including hotel, food service, and gaming. Its report on the effects of Obamacare was first reported last week by Nevada-based journalist Jon Ralston.


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