Sunday, November 8, 2020

Seems Florida Voters Aren't The Only Suckers for Minimum Wage Laws

According to a story from FEE, the Foundation for Economic Education, voters in Portland, Maine, approved a minimum wage law that could make minimum wage $18/hr almost instantly.  
One of those cities was Portland, the largest city in Maine. The referendum sought to increase the minimum wage from $12 an hour to $15 by 2024. The measure also mandated that workers receive time and a half during a civil emergency (like, say, a pandemic).
Since the state of Maine has declared a state of civil emergency, as soon as next month the minimum wage could jump to $18/hr (time and a half at $12/hr).  Maine voters also voted in Rent Control, a policy so destructive to its aims that even the communist North Vietnamese called it the biggest mistake they made.  (“The Americans couldn’t destroy Hanoi, but we have destroyed our city by very low rents. We realized it was stupid and that we must change policy.”)  Even Paul Krugman acknowledges rent controls decrease the quantity and quality of rental units.  Last week, Californians rejected rent controls.  Congratulations, Maine!  That is world class stupidity. 

Portland's minimum wage increase is a bit wackier than Florida's law, which raises minimum wage from $8.56 (already more than the Federal min wage) to $10 next September 30th and then increases $1/hr every September 30th until $15 is reached in 2026.  In 2027 and beyond, the raises become more randomized.  Florida's new law has no mention of mandating time and a half during an emergency.   

As you expect, businesses that are already reeling from the effects of the lockdowns are trying to figure out if they can survive. 
"In the last 7 months business has dropped from 30 to 50 percent and food costs have skyrocketed. This added increase on a business already depressed due to the pandemic is tough,” one Portland business owner who declined to speak on camera told WCSH, an NBC-affiliate. “We may have to either cut employee hours or cut back on business hours."
An economic paper I read on FEE a few weeks ago gave me an increased perspective on min wage laws.  I had always assumed that if a business could afford labor that was 25% of its costs, say, and labor went up by 17% (Florida's current $8.56 to $10), their prices went up to cover the cost of labor.  In this case, labor went up from 25% to 29.2% of their costs, so their prices went up to bring it back down to what they could afford.  What the FEE paper pointed out is that prices aren't always as changeable, also called elastic.  Let's say you're just inside the city limits.  Your costs suddenly go up, but the restaurant across the street and just outside the city limit doesn't have to raise their prices.  That means you're likely to lose business if you raise your prices.  What happens in this situation?  In the FEE article, they argue that labor pays for the minimum wage raise.  This can be done by forcing full time employees onto part time thereby reducing the costs of benefits, demanding employees get more done, and whole bunch of other ways. 

Don't get me wrong, these laws cause all sorts of adjustments, and the people that they're supposed to be helping end up paying for everything.  If the business closes, or has to cut employees, who gets hurt the most?  The low-skilled workers, usually on minimum wage.

I've written about this topic forever because of the truism I've been saying forever.  Every time one of these min wage debates come up, we tell them they're only going to hurt the people they want to help.  Every time they pass the law anyway.  Every time our warnings are proven true.  A few years later we repeat the whole process. 

Everyone neglects that right now there are a lot of people in Florida (or Portland) who went off and tried to better themselves by getting training or a certification in various things.  Anything from pet grooming to manicurists to hair braiding, to being an EMT.  Right now, they're making between the current min wage and the coming $15/hr.  Those people are going to be lumped in with everyone else.  If they're making 50% more than minimum wage now, they won't be by the time it's $15/hr.  The people who propose these laws think everyone will get a raise.  It doesn't; it can't work that way.  The people behind the laws have disincentivized people improving their skills to improve their lot in life.  Now imagine how those people are going to think of the time and effort spent getting training - maybe going to school at night while working. Why bother?


Of course, a lot of businesses simply won't be able to make it and will hang out one of these signs for good.  Image credit: Pexels from the FEE article

This is going to fuck up Florida so bad I can't imagine.  Portland, too, but I've never been there and have run out of fucks to give.



16 comments:

  1. An astute article. Add to that the Biden Harris/Harris Biden Plan to open the border, come one, come all to the USA. How does that impact labor participation at the bottom rung? Add to that the promise of Medicare-for-All without the capacity to pay for it.

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  2. Everyone will get a raise.

    Cranking up the bottom level of wages simply superheats inflationary pressures. Inflation goes up, everything costs more, everyone gets a raise to keep up EXCEPT minimum wage.

    Minimum wage returns to the exact same buying power it had before it was increased. Look it up. 7-9 hours of Florida minimum wage has bought you a day at Disney for the last 30 years.

    A soda from a vending machine has been about 1/7 an hour of minimum wage for as far back as I've looked.

    A meal at MacShack runs about an hour of minimum wage.

    It's a constant.

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    1. But what's the point? At the best, everyone gets back to exactly where they were. Except for the people that lose their jobs. They make more dollars but since the price of everything goes up, their standard of living hasn't gone up at all. Why? People feel better because they have more dollars in their wallets when they still can't buy the things they need?

      The places around the country that have jumped to $15 hr have had entry level jobs shut down. Companies go out of business.

      This is something that that the vast majority of economists (like 75% to 85%) agree on. Min wage increases hurt young people going for their first jobs. It hurts low skill workers. It tends to reduce family income.

      At best, it does nothing.

      Delete
    2. What's the point? The point is to destroy the economy and throw everyone onto the government dole. To transfer wealth from the poor to the uber-riche.

      This $15/hr is a death-knell to Florida. We're forked. Hosed. Gone. This will kill fast food, supermarkets, mom&pops, everything.

      And, really, where the Fork did this come from. I live in Gainesville, liberal hell so to speak and the first I heard of this was when it was on the proposed ballot sent by the local supervisor of elections. No tv time, no discussion, just, 'Pooof' there it is.

      I mean, even the maggoty toe-jam suckers that pushed 'medical marijuana' were at least out there for 8 months or more before it showed up on the ballot. But this? WTF?

      I sure wish the FL supremes could declare it unconstitutional. Or just stupid.

      Min Wage? Min Wage should be $0.00. That's the min wage. Work up from there. Or start with the Fed amount. Companies will find they need to pay a relatively decent wage (not $15/hr, which furks all the retirees and people on social security in Florida (because of increases in prices)) but nobody will start a completely untrained scroat at $15.

      Fed poverty level for 1 person is around $13K. Divide that by 2080 hours a year and that's what min wage should relatively be at, roughly $6.25/hr. These idiots are saying min-wage should be at 250% of the poverty level.

      Screw them. Screw them all.

      Florida is now dead. Shows how much damage the 'medical marijuana' passage has done to this state.

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  3. The 'bus towards a cliff' analogy is very accurate now. When Horizontal Harris takes over....and you just KNOW she's the moving force behind Basement Biden's "plan".....he's lucky to keep from peeing on his shoes.....she's going to stamp on the accelerator to drive the America bus right over the edge to destruction. Destroying our economy is a surefire way to allow the left to STAY IN POWER FOREVER. And staying in power is really all they care about. The rest of us starving isn't even a second thought to them.

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  4. This is the canary in the coal mine. The communists have now have a foothold in Florida. Its a small step, but communist encroachment is many small steps. It is also an indicator of the power the unskilled labor and service workers have Of course. these folks are communists too. I dont call them socialists because in practice there are no socialists.

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    1. Started with Med Marijuana and giving ex-cons their rights back that the ex-cons gave up by being... well.. cons.

      Those two were the canaries in the mines. That smell you smell now? That's their rotting corpses. This, the minwage increase, is a bullet to the brain.

      Now watch to see what companies are allowed to pay less than minwage and you'll see the real culprits. Back when, the City of Gainesville passed a 'living wage' law regarding it's contractors, such that it made it unviable for companies to try to get a contractor job with said City of Gainesville. But... women and minority owned businesses got a cut-out for a lesser amount. Hmmmm.

      Can't wait to see the exceptions to the new min-wage. That will explain it all.

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  5. At least a step change makes it easier to see the results sooner, for those who have the wherewithal to notice. Welcome to the Gee That's Nice school of economics.

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  6. Kamala Harris doesn't have the gray matter to be behind anything. She's at best a clearing barrel who will read the teleprompter better than Biden can. It's not Harris or Biden (a completely empty vessel). It's those behind them who are calling the shots.

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  7. The people who were at double minimum wage, and now find themselves at minimum wage, won't be getting higher pay.
    Just higher costs.

    The same thing happens when drowning people claw their way into capacity lifeboats.
    Everyone is at the same level at the end, as promised.

    The geniuses who thought it up just forgot to mention that they're all at the bottom of the water.

    And in SiG's restaurant example, i.e. raise costs or not?
    False dichotomy.
    What actually happens is the restaurants inside city limits all move out of the city, and hire workers below the mandated higher minimum, to stay competitive.

    Which means the ones really getting rogered (and quite deservedly) are the cities who tried this, which makes about as much sense as pulling on corn stalks to make it grow taller, and works at the exact same rate.

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  8. I too have run out of fucks to give. We are surrounded by unbelievably stupid people.

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  9. A major problem with campaigns (to improve the lot of the people) like this is that they’re 100% dezinformatsiya. This type of program is sold to the UI as a means of helping everybody, particularly the “working class.” These poorly-educated bednyaks become very grateful to “the Government” and almost everyone becomes highly focused on how they’re actually shooting themselves in the foot.
    But I see no mention of the elderly, retired class who were certain that they had put aside enough money, eked out with the promised Social Security payments, to maintain a reasonable existence without having to depend on their children who were now finding it difficult to feed and clothe theirs. These same elderly who had believed in the “American way” were now finding that the same item that had cost one dollar during their working years now costs ten dollars.
    The government, by increasing the minimum wage, had devalued their savings. The banana republics, at least, do this openly; here it’s been accomplished by stealth and a information campaign designed to mislead the voting public.

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  10. The Gods of Copybook Headings are rousing, it seems.

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  11. "Even Paul Krugman acknowledges rent controls decrease the quantity and quality of rental units."

    But wage price controls will not decrease the quantity and quality of labor.

    Gods of the Copybook Headings - spot on!

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  12. The minimum wage is the same everywhere - $0.

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