Sunday, July 31, 2016

Raising the Minimum Wage

I knew a person who ran for a seat on the County Board of Supervisors in this past election.  This person is an avowed socialist and loudly advocates for a $15/hr minimum wage--whether the recipient lives in urban San Francisco or rural Susanville.  As I've stated so many times in the past, logic is not a strong suit of lefties.  Crazy Old Uncle Jerry already signed a $15/hr minimum wage into law in California, to be phased in over the next few years, but this potential county supervisor wants it implemented in Sacramento Country much more rapidly.

I know a woman whose husband died two years ago; since then she's kept his business afloat.  She employs half a dozen workers in a small business that netted less money last year than I did.  The woman, who now oversees the business and takes care of the books and payroll, is the lowest paid employee of the company (incorporation requires that she draw a salary).  I told the prospective politician that a $15/hr minimum wage would put the woman out of business--and her 6 employees out of work.  It's not that they don't make $15/hr already, but why would someone who makes $16/hr want to do a strenuous job when plenty of non-strenuous jobs will be available at about the same pay?  The prospective politician's reply was that of someone who only understands Marxist economics:  just raise prices!  His belief was that if all prices went up a little, the increased pay would help those on the lower end of the pay scale a lot.  I looked at him incredulously:  don't you think if she thought the market would bear increased prices, she'd already have raised them?  He stopped the debate at that point, having no response to my real-world application of his fantasy world economics.

He did not win the election.

We've read (and I've posted) many stories about businesses that shutter or leave California for lower cost environs, but the utopians press on.  "When the facts contradict your expectations, believe the facts"--but they don't, they believe only their own failed ideology, despite the evidence:
Bibliophile Kelley Ulmer closed her Almost Perfect Book Store on Wednesday after 25 years of business at Rocky Ridge Drive and Douglas Boulevard in Roseville, saying that the added expense from minimum-wage increases had made it impossible for her to continue operating.

“We used to joke that this was like the Hotel California: Once you got here, you’d never leave,” Ulmer said. “And realistically, it wasn’t a bad deal prior to the ever-increasing minimum wage. I had a profit-share with my employees, so at the end of the week, when they got their paychecks, whatever money didn’t go toward bills or whatever, I shared with them. They actually made more money at $7 an hour than they make at $10"...

Ulmer’s six employees have worked for her for 10 years or more. Jeffrey “Scott” Singley, who has worked there for 24 years, said that he’s still in shock over the closure and that he’s angry with lawmakers. “I’m going to take advantage of the government’s largesse since they put me in this position, so it’s unemployment as of tomorrow,” he said. “Or, at least I’m going to file as of tomorrow.”

Ulmer said she hasn’t had one unemployment claim in 25 years, but now the state will have six of them...

“I could either pay my employees or pay my rent. I paid my employees,” Ulmer said. “Now I can’t do either. It’s just too much. There’s literally no place to absorb the cost. They were like, ‘Well, the businesses can just absorb it.’ OK, where? Can we not pay our taxes? I get no government funding, no subsidies, no tax breaks, and I’m taxed at the same level that the big corporations are.”
Note that this stinging article comes from the major Sacramento newspaper, which is firmly left-wing.

Hat tip to reader MikeAT for the link.


mmazenko said...

Maybe ... but despite a soaring stock market and record corporate profits w/ historic lows of unemployment, the working class is suffering. And the reality is that low wages are the biggest drag on the economy when 75% of its strength is in consumer spending.

So, we can certainly debate whether a govt-set minimum is healthy or not, but we can't debate whether wage stagnation is the primary ill in the economy. As economic writer Robert Samuelson noted: "Henry Ford was smart enough to know he had to pay his workers well enough that everyone could buy a Ford. Walmart (ie. many corporate entities) by contrast pays their workers so poorly that they depend on public aid, Medicaid, and have no choice but to shop at Walmart."

It's not a healthy situation.

Darren said...

It's hard to take you seriously when you talk about "historic lows of unemployment". Intentionally ignoring the labor participation rate is the *only* way to fudge the statistics enough in order to get those "historic lows".

Pseudotsuga said...

Historic "lows" of unemployment? *eyeroll* Only as measured by the cheerleaders and partisans on the Left, as they drink gallons of Kool-Aid as they toast the era of "racial healing" of the Obama era.
I have three local politicians (from the D party) who think raising the minimum wage is a great idea. They all seem to think that everybody is employed by Scrooge McDuck, who just happens to have a big bin of extra money that he is hoarding, and that the government needs to force the tightwad to give up some of that surplus cash to his hard-working, poor employees.
None of them will get my vote.

BB-Idaho said...

'..logic is not a strong suit of lefties..' Well, at least we
can spell. For example, "to be fazed in" should probably be 'to
be phased in'. IMO, wages, salaries, compensation in a free market
has always been 'how can I make more and do less' vs 'how low can
I pay people and keep them for at least a month. In my 75+ years
the concept of labor has diminished to one of the few expenses that can actually be shrunk. Hence a corporate layoff invariably raises that corporation's stock value. So, times change...we recall the
first Republican president-
"Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration." -A. Lincoln, State of the Union 1861 for faze/phase, no big deal, I'm guilty of the same kind of

Darren said...

Good catch on the fazed/phased--stream of consciousness typing.

Abraham Lincoln said lots of things, and I don't consider myself bound to each of them. Clearly his knowledge of economics wasn't superior, as without capital, labor is reduced to pre-industrial-revolution methods.

Anonymous said...

Henry Ford did not raise/set his wages so every employee could afford one of his cars. Wages were set at the lowest amount that would stop employee turnover. This is an old wives tale. Please study history before giving these totally wrong statements

Darren said...

My not quite an old wives' tale, but certainly one of those historical legends, Anonymous, like Plymouth Rock. For those who are mortified at having this piece of "history" challenged, let's think for a moment: even if *every* Ford employee bought a Ford, then what?! No, the number of Ford employees was too small compared to the overall car market to make a dent at all, and besides, there's no record that Ford ever said that was why he priced his cars thusly.

Pseudotsuga said...

If I remember correctly, Ford's payment was about double what the other manufacturers were paying, which meant that he could "poach" the best workers and keep them (instead of them moving on after a few months) around. He didn't have to keep retraining people.
Also, I remember reading that at first his wages *also* depended on the employee agreeing to hold to certain moral standards. The horror! Most modern lefties would scream bloody murder at such a thing. This situation didn't last for more than a few years, I think, before Ford reluctantly gave it up.

Steve USMA '85 said...

Actually, there is Darren.

It was documented that Ford believed that it was important that workers be paid enough so that they could afford the products.

Darren said...

That appears to be an explanation *after the fact*, when the article is clear that at the time he had no such intentions:
"He recalled asking Ford why he raised wages when every other manufacturer was trying to reduce wages to the lowest acceptable figure. Ford believed he was buying higher quality work from all his employees...Higher wages were necessary, Ford realized, to retain workers who could handle the pressure and the monotony of his assembly line."

Darren said...

It was several years later before Ford said, “The owner, the employees, and the buying public are all one and the same, and unless an industry can so manage itself as to keep wages high and prices low it destroys itself, for otherwise it limits the number of its customers. One’s own employees ought to be one’s own best customers.” Good salesmanship and grandstanding, but nothing more.

Mike Thiac said...

"He recalled asking Ford why he raised wages when every other manufacturer was trying to reduce wages to the lowest acceptable figure. Ford believed he was buying higher quality work from all his employees...Higher wages were necessary, Ford realized, to retain workers who could handle the pressure and the monotony of his assembly line."

Darren, do you realize the radical concept you are putting out. You are actually saying the market sets a fair value of a commit, in this case labor. Get your self to a psych ward, you need retraining in the new normal! :<)