h1

Cognitive dissonance strikes again

April 9, 2016

I’ve had my share of minimum-wage or low wage jobs; I’ve even held more than one at a time, years ago. I’ve been nickle & dimed, as Barbara Ehrenreich would call it.

So I’m all for people who work low-skill jobs getting all the pay they can. (For that matter, I’m all for people working any type of job to get all the pay they can.)

But letting the government set minimum wages is effectively saying that those people have no flexibility – they can’t bargain about wages because it becomes unlawful. That’s a nasty handicap if you’re new to the job market, or you’re new to a line of business, or you’re new to a particular area (see below).

I’ve mentioned before that Mark Twain claimed the best way to get the job you want is to go to work for free. When your value becomes apparent, the pay will follow. If it doesn’t become apparent, you’ve learned a lesson. That’s not possible when the law makes such a bargain illegal.

When did the U.S. repeal the law of supply and demand?

Back in October, The New York Times reported that the law of supply and demand still works. “Yes, Soda Taxes Seem to Cut Soda Drinking,” the newspaper told its readers, relating the results of Mexico’s new tax on sugary beverages. Mexico’s measure imposed a 10 percent tax on soft drinks, and so far has cut consumption from 6 percent to as much as 17 percent among the poorest Mexicans.

The efficacy of the soda tax comes as no great surprise. After all, as the news story noted, “the idea for the soda tax is in some ways modeled on . . . tobacco taxes. . . . A robust literature now exists showing that the resulting higher prices really did push down cigarette sales, particularly among young people.”

The paper’s editorial page soon came out in full cry demanding higher soda taxes for Americans, too. Noting that “a big tax on sugary drinks in Mexico appears to be driving down sales of soda,” the editors urged “lawmakers in the United States to consider comparably stiff taxes.”

Some already have. Soda taxes have become a chic cause in progressive enclaves, from Berkeley and San Francisco to Philadelphia and New York.

But if you want to make liberal heads in those same enclaves explode, dare to suggest that raising the minimum wage might reduce employment.

Thanks to legislation their governors signed Monday, California and New York are hiking their minimums to $15, the target hourly rate of a national campaign by labor activists. Earlier this year The Times encouraged Hillary Clinton to join Bernie Sanders in demanding a $15 minimum for the entire country. “Mrs. Clinton has argued that $15 might be too high for employers in low-wage states, causing them to lay off workers or make fewer hires,” the paper noted, but then argued: “There is no proof for or against that position.”

Sure there isn’t — not if you don’t remember the argument for soda taxes, anyway. […]

In San Francisco and Oakland, Calif., employment growth has been cut in half. In Seattle, job growth has plunged from 4.6 percent to 1.8 percent — even while restaurant hiring rose more than 6 percent for the rest of Washington State.
Sure, you can find studies that purport to show small hikes in the minimum wage don’t hurt jobs. You can find a lot more that say they do. But the more honest advocates for a higher minimum wage acknowledge that it will cost some people their jobs. But some argue that’s no big deal and might even be a feature, not a bug: “What’s so bad about getting rid of crappy jobs?” asks public-policy professor David Howell.

Which is easy to say if the job being gotten rid of isn’t yours.


Now here’s the interesting part. Gov. Jerry Brown says (my emphasis):

Brown, traveling to the state’s largest media market to sign the landmark bill, remained hesitant about the economic effect of raising the minimum wage, saying, “Economically, minimum wages may not make sense.”

But he said work is “not just an economic equation,” calling labor “part of living in a moral community.”

“Morally and socially and politically, they (minimum wages) make every sense because it binds the community together and makes sure that parents can take care of their kids in a much more satisfactory way,” Brown said.


In this same vein, here’s an account by Mitch Hall about his job search in Seattle (which I assume happened late last year).

70 Tries After Seattle Raised Its Minimum Wage, I Still Can’t Find A Job
States nationwide are beginning to join the ‘Fight for $15.’ My job experience in Seattle, Washington helps illustrate why that’s a bad idea.

Over the weekend, lawmakers and labor unions in California, the nation’s most populous state, reached a tentative agreement to gradually raise the minimum wage to $15 an hour over the course of the next several years. […]

Twenty-nine states have minimum wages that exceed the federally mandated $7.25 per hour. Heading into the 2016 election, the issue remains hotly contested and politically potent, with Republican presidential candidates in fierce opposition to, and Democratic candidates in strong support of, a dramatic increase in the federal minimum wage. […]

My opposition to minimum wage increases comes as a direct result of my own experience searching for jobs as a new resident of Seattle, Washington, a city that currently has one of the highest minimum wages in the nation. In June 2014, the Seattle City Council, composed of just nine members, unanimously voted to increase the city’s base pay to a whopping $15 an hour, to be gradually implemented over the course of several years.

I’ve spent the majority of the last two months stalking online job sites and entire days traversing the various neighborhoods of Seattle.

On January 1, 2016, the newly mandated minimum wage rose to $13 for larger companies (those that have more than 500 employees in the United States), and $10.50 for smaller employers (those with fewer than 500 employees in the United States). On top of this, Washington state law now requires businesses to adhere to this minimum even for tipped workers, a rule that only six other states have on the books.

In December, I found myself needing a break from college, for a variety of reasons. So at the close of last semester, I decided (rather impulsively, as young people are wont to do) to take my spring semester off from the College of William and Mary and move out west to try my luck in Seattle, a place I had only visited once before. […]

Having a combined two years of serving experience and close to five years of total experience in the customer and food services industries (which is literally as much as you can ask for from a 20-year-old college student), I assumed I’d be able to find a restaurant gig in no time. So, after reassuring my parents all would be well in the financial department, I boarded a plane in Philly a few weeks later and made the move.

Yet seven weeks and more than 70 job applications later, I still have yet to land a part-time, minimum wage job. I’ve spent the majority of the last two months stalking online job sites and entire days traversing the various neighborhoods of Seattle, filling out applications and inquiring about job opportunities at any restaurant, coffee shop, retail store, or other service-oriented establishment I can find. […]

At first, I was utterly dumbfounded by my lack of success, and figured only bad luck was to blame. After all, I had been hired at every single one of my past serving jobs within only a day or two of searching and applying. I’d have to find something in Seattle eventually, I thought; I’m young, competent, and college-educated, and serving is by no means a highly skilled occupation that requires degrees or extensive training. I know how to make a good impression with prospective employers, and I already have years of experience in the food services industry. What more could these people want?

Employers, especially in the restaurant and food services industries, are far less willing to take chances on who they hire with so much money on the line.

But soon enough it became clear, through talking with potential employers and local college students also trying to find work, that my failure to land a job was likely due, at least in large part, to Seattle’s absurdly high minimum wage. […]


I think the real problem here is what to do about those who are seemingly stuck in low-skill jobs. I don’t think they’re the majority of people in those jobs, but they’re the chronic cases that seem to motivate the urge to raise minimum wages.

Here’s a graph from the Bureau of Labor Statistics (Dept. of Labor). It’s titled: Minimum wage workers account for 4.7 percent of hourly paid workers in 2012.

bls-minimum-wage-by-age

This report (at the Heritage Foundation) says the same thing: Who Earns the Minimum Wage? Suburban Teenagers, Not Single Parents.

Just eyeballing that graph above, my guess is that maybe a third of the people making minimum wage are heads of households. If I’m right, that’s 33% of 4.7% or 1.6% of the total labor force.

A better approach would be to address directly the needs of the adults stuck in those jobs rather than raising the bar for everyone, children included. Don Boudreaux and Nick Gillespie touch on these points in this interview.

Taking a cue from Governor Brown, is it "moral" to inflict hardships on a large class in order to relieve a small number of those people from other hardships? I’d disagree. I’d say that’s an immoral action by a government based on purely utilitarian grounds (greatest good for the greatest number).

Bear in mind that it’s a different case if particular individuals step up and volunteer for hardships in order to spare their peers or fellow citizens – in that case, the action may be admirable and moral. But when it’s legally compulsory, it’s just so much bullying by legislators.


Update: Now this I can believe. Based on what I read, I think that unions are trying to regain the political power they once exercised; so this explanation seems possible. But dang… it’s gotta sting to be a union member who’s making less than the minimum wage championed by your union. Where’s the brotherhood?

The Minimum Wage Con

If you thought that the union-backed #FightFor15 movement was really about making sure that all workers earned a living wage—rather than about using the government to enrich progressive interest groups—think again. The Guardian:

Los Angeles city council will hear a proposal on Tuesday to exempt union members from a $15 an hour minimum wage that the unions themselves have spent years fighting for.

The proposal for the exemption was first introduced last year, after the Los Angeles city council passed a bill that would see the city’s minimum wage increase to $15 by 2020. After drawing criticism last year, the proposed amendment was put on hold but is now up for consideration once again.

As it turns out, this practice is not uncommon. The WSJ reported last year that at least six municipalities have created special minimum wage carveouts for unions. The logic is straightforward: Kill non-unionized jobs, add more workers to the union rolls, and extract higher fees for union bosses. It’s not a minimum wage hike the labor movement is after, exactly: It’s a penalty on non-union employers, and a payout for modern-day Jimmy Hoffas. Expect unions in California and New York, which recently enacted statewide $15 minimums, to start lobbying legislators for their own sweetheart deals in the near future. […]


Update 2:
Here’s an interesting graph from Business Insider. It explains to some extent how California can get away with its hike in the minimum wage: it’s easy when you have one of the lowest minimum-wage work forces in the country.

heres-how-many-people-in-each-state-make-the-federal-minimum-wage-or-less

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: