I understand Mike but if the pay is so low that you are homeless is it even worth taking the job? I think this could be exacerbating the problem. Lower wages, higher housing costs, more homeless. Isn’t that a kick in the teeth if you are working long hours and are still homeless?
Andy
Unfortunately I cannot copy from the PDF via my phone. While the study seems to be well designed for the purpose it was commissioned by the City of Saint Paul, and the Covid problems seem well accounted for, the study does have a paragraph indicating that they were not able to account for the immediate and acute effects of civil unrest and for the
lingering effects of that unrest.
While the most job losses and hour reductions were in service industries, and the data is pretty clear on this, it was less clear on how it effected the over all unemployment rate and more importantly it did not compare the lowered hours and employment to the actual dollars transacted in those industries.
As a MACRO economic follower, and as a apolitical follower, I do not care what happened to the employees of the low wage industries that were impacted. In fact I am not terribly interested in the industries themselves.
However, I am interested i the industries in that if the gross receipts did not track the man hours cut, we might see evidence that the low wage industries became more productive per man hour. While this was outside the scope of the commissioning of the study, and is an over site by the city counsil and not the study’s authors, it is a huge missing puzzle piece.
Additionally, the study should have included a comparison to gross tax receipts by the city during the time periods. This would have yielded evidence for causation with the civil unrest. It would have also shown if there were correlations between the minimum wage and over all economic activity.
Remember, having people work harder for less money rarely makes anyone, even the overlords significantly wealthier. Having people produce more with less labor creates significant wealth for the entire economy and everyone in it.
While the study is not flawed as it provided the data and clarity that it was commissioned for, the significant civil unrest that happened during the study time makes conclusions about minimum wages in general difficult.
Even a longer term study will be difficult as often civil unrest physically destroys the ability to do business in an area, or it destroys the desire to do business in an area and we have seen that these areas have remained sub par economic zones for multiple generations after the unrest.
Cheers
Qazulight
Because those jobs are not taken for the purpose of supporting a family. They are KNOWN–in advance, by both sides–to not pay a living wage. Plus, you have omitted a couple of other jobs kids used to do–but have been changed so the requirements pretty much eliminate kids from doing the job. Specifically, newspaper delivery. Paper route used to be a way for kids to earn a little and do a final delivery to the customer every day or when it is supposed to be done. Now, the job is mostly adults doing it because a car is required and kids do not own cars or don’t/can’t drive (too young, etc).
Actually higher wages is the biggest reason unemployment would fall. People with more money spend more. Demand in the economy rose.
Back when the “supply side” nonsense got traction in the 80s, I remember “thought leaders” speaking in glowing terms of sweat shops, as “they provide an entry into the workforce”. Maybe people of that ilk also look admiringly at the huge shanty towns that South American major cities seem to be notorious for. Who needs running water, or sewers, if their cost “burdens” the “JCs”? Let’s blame the lack of housing that can be afforded on $2/hr on “burdensome, big gummit, regulation” Let the working class live in squalor, right?
/sarcasm
Pizza Hut is laying off more than 1,200 delivery drivers in California. The layoffs, which will take place through the end of February, come as California’s minimum wage is about to go up by $4. Fast-food workers in the state are set to get a pay bump of close to 30% in April as the minimum wages rises from $16 to $20 an hour…
Chains such as Chipotle and McDonald’s said they planned to raise menu prices as a way to offset the costs of higher wages in California.
DB2
Higher prices and less convenience leads to reduced fast food consumption thereby improving health. One unintended consequence of raising minimum wage may be reduced social health costs.
As for the economics, people still are going to have to eat. It just won’t be as much fast food. That’s not a bad thing. As for the job losses…again people are still going to eat so that food money is going to be spent somewhere locally, which in turn should stimulate local job growth.
Fewer jobs in fast food companies selling unhealthy stuff and more jobs in grocery stores selling at least some good stuff.
Small thing, perhaps, but isn’t 4 exactly 25% of 16 rather than “close to 30%”? I always get suspicious of the remaining content and/or perspective when something is exaggerated. After all, the article could have just as accurately said “close to 20%” although that wouldn’t have been quite as dramatic.
Pete
You know where there were tons of jobs? The Antebellum South.
You know what the minimum wage was? $0.
This is the vision of the job creators these days. In my entire, long life I can remember one period, and one period only where workers seemed to have the upper hand, and it lasted a couple years, and it’s almost over.
Indeed. I don’t think that journalism majors take many algebra courses (and they may have been sleeping through arithmetic).
DB2
Gonna need bigger whips when paying JCs "$0 minimum wage ". Hey, just paying them what they are worth. Overpaying, actually…
This will be an interesting experiment: reduce customer service, or increase prices. It will be interesting to see which business suffers more.
The Mickey D’s in Albion, MI, seems to have lost my business, due to really horrible customer service. The first time, I made the mistake of ordering a meal…and spent over a half hour waiting, before going back to the counter and making some noise. The second time no-one would even take my order (turned to the people waiting behind me, said “I’ve waited long enough, I’m going to Arby’s”)
Steve
It probably won’t be “or”, it’s going to be “and” for the most part.
Like I keep saying, we’re becoming closer to being like Europe. After all, that’s what so many have been clamoring for over the last few decades. They want large government, lots of regulation on business, higher wages for all jobs included low-skill ones, universal healthcare, government provided “stuff”, etc. And that’s what we will get. Along with all that comes fewer fast food places, and more expensive fast food. But not just that, fast food in Europe is something you grab when you are in an area that has it conveniently, and it is a relatively rare thing. It’s not like in the USA where fast food is a destination in itself, and you purposely drive to a fast food place to have, or pick up, “lunch” or “dinner”.
The reason this has to be this way is because the laws of economics are a lot like the laws of gravity, pretty much immutable. If a reasonable profit can’t be had with the needed expenses (rent, labor, materials, food, licensing and regulation, etc) and the possible item pricing (there is a limit, there’s always a limit, such that people will simply not buy it), then the business simply cannot exist, and won’t exist.
It seemed to be exactly like that in Scotland when I was there for two weeks at the beginning of the year!
JimA
For the life of me, I don’t understand why paying a worker barely livable wages takes priority over my unalienable right to spend less money for over-salted, greasy, and processed pizzas, burritos, and hamburgers.
The nerve of forcing me to pay to support a barely living wage for someone cooking and serving me?
Outrageous!
Harumph.
DOUBLE HARUMPH!!!
I”m not too worried about this. I say that because there are 1,423 fast foot outlets within 5 miles of my house. That’s a rough estimate, but it seems right.
(McDonald’s, Burger King, Wendy’s, Dairy Queen, Taco Bell, Chick-Fil-A, BoJangles, Arby’s, Chipotle, Moe’s, Subway, Dominos, Pizza Hut, Papa John’s, Little Caesar’s, Starbucks, Dunkin’, KFC, Sonic, Panera, IHOP, Applebees, Five Guys, Waffle House, LongJohn Silver, Sbarro’s, Captain D’s, and at least a dozen local pretenders, including take out sandwiches, pizza-by-the-slice, yogurt, something called “Chick Salad” which I presume is a salad place run by a woman, and so on.)
I probably missed a couple as I mentally drove down the two main roads near my house, and if I included the mall food court or expanded the radius to 10 miles there would be even more.
Like I said, I won’t starve.
That’s EXACTLY the point. There is no such “right”. Once the prices reach a point at which too few customers are willing to pay, many of those places will disappear, and many of those barely livable wage jobs will also disappear.
And shouldn’t exist. If you can’t pay your people enough money where they do not have to live on the streets, or have my taxes pay for your employees needs. Then maybe you really don’t have a business, you have a charity.
My neighbor was complaining that the fast food joints couldn’t get help. I told her then the solutions was to pay them more. She said it was a starter job and shouldn’t have to pay more. I asked her if that was true then why couldn’t they find anyone?
I don’t understand why people think they deserve anyone’s labor. I think that games over, at least for now.
Andy
Ethically morally and even legally it should not exist.
People can not use other people. Being a user was glorified in the 1990s. No altruism. Greed is good.
BS
Human beings mean much more than stupid with a fat wallet.
A story of a friend of mine in the framing business out in California. He had at one time three shops. He is approaching 80 now. Early on in his business, a young worker showed some promise. He offered to pay for the younger worker’s college if the worker marketed his first shop. That worked out extremely well.
That was around 1971. He kept that young worker and paid for his law school as well. My friend learned a lot about marketing and opened a marketing firm with partners.
Things in the 1970s got more challenging. Then the ideological shift happened and my friend shifted.
He shifted to if all you do is push a broom you should not even get minimum wage and we do not need to educate you.
He lost his stores before 2000.
What happened? The consumers got poorer and poorer and fewer and fewer. Yes, people got richer. Most people did not get richer 80% of consumers got poorer in relative terms. He was in the 80%. He had had servants and a pool boy. He had it all but he was brought down into the 80%.
He does well-selling prints online. At one point around 2005, he had five of the largest print shops on Ebay. He knows marketing. That also got brought down. He says he wants to play more golf. The economics he wanted left him with a fraction of what he could have had. He robbed a lot of other people to get there with his attitudes. He robbed himself.
Specifically, we looked at worker schedule and wage data from 2015 to 2018 for more than 5,000 employees at 45 stores in California — where the minimum wage was $9 in 2015, and has increased every year since then — and at 17 stores in Texas, where the minimum wage was $7.25 for the duration of our study. We then controlled for statewide economic and employment differences between California and Texas in order to isolate just the impact of increasing the minimum wage.
Based on this analysis, we found that increasing the minimum wage had no statistically significant impact on the total number of labor hours employed at a given store…
However, our data suggests that the way in which those hours were allocated among workers did change. For every $1 increase in the minimum wage, we found that the total number of workers scheduled to work each week increased by 27.7%, while the average number of hours each worker worked per week decrease by 20.8%. For an average store in California, these changes translated into four extra workers per week and five fewer hours per worker per week — which meant that the total wage compensation of an average minimum wage worker in a California store actually fell by 13.6%.
DB2