The Case for a $15/Hour Minimum Wage – Debunking the Myths

raise-the-wage.council

by Alan Pryor

At last night’s City Council meeting a contingent of low wage workers, students, and union representatives spoke during Public Comments in support of a Living Minimum Wage in Davis. In addition to discussing their own financial plights, they asked the City Council to follow the leads of Seattle, San Francisco, and Los Angeles and implement a gradually rising minimum wage to reach $15/hour. This follows a similar but unsuccessful attempt to raise the minimum wage in Davis last year. The speakers argued that increases in the minimum wage paid in Davis would bring many working poor out of poverty in addition to stimulating the local economy.

Many objections were raised against such a move both in this digital publication and in the Davis Enterprise when this proposal was discussed last year. Most objections, however, were based on political philosophies rather than objective facts as is discussed more fully below

Myth No. 1 – The $15/hour number was picked out of thin air without any objective basis

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In fact, $15/hour is objectively determined to be even less than most workers must earn working full-time (2,080 hr/yr) to support their family as a sole provider in Yolo Co. without government subsidies. This determination was made through an online tool developed by Massachusetts Institute of Technology (MIT)  economist Dr. Amy K. Glasmeier, (see The Living Wage Calculator – http://livingwage.mit.edu/counties/06113) using official US Census and Department of Labor statistics and information.

Living expenses used in the calculations were specific to each County and include food, housing, transportation, medical, child care, and miscellaneous expenses such as for clothing. Not included are any additional educational or recreational expenses or savings for emergencies or retirement. It is truly a no frills, paycheck-to-paycheck budget analysis based on actual living costs in every county in the US.

According to the Living Wage Calculator, are the following minimum wages are necessary to meet this Yolo Co.-specific living standard:

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The estimated hourly minimum Living Wage for purposes of the proposed increase in the Davis minimum wage was determined by averaging the calculated minimum Living Wage for

1) one Adult ($10.42),
2) one Adult and one Child ($20.83), and
3) two Adults ($15.17)

This average equals $15.47 or $15.00 rounded down. Using any other combination of three other different family sizes produces an even higher required minimum Living Wage for the wage earner to meet living expenses without government subsidies.

We also note the the Living Wage Calculator is the most conservative of the the commonly used tools to estimate minimum incomes necessary to raise a family in different locales. The Economic Policy Institute (EPI) has developed a Family Budget Calculator which similarly uses local price data to estimate living costs and minimum wages necessary to meet those living costs  (http://www.epi.org/resources/budget/).

On average the minimum income required to raise a family as estimated by the Family Budget Calculator is approximately 23 – 60% higher than that deternibed by using the Living Wage Calculator depending on the family size, as shown below.

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Myth No.2 – The minimum wage only affects uneducated part-time workers and teenagers living at home. It is not meant for people actually trying to support themselves and a family.

Such claims have never been substantiated by detractors of increased minimum wages.

The demographic impact of the gradual minimum wage increase to $15 overwhelmingly approved by voters last year in San Francisco was analyzed in a study, San Francisco’s Proposed City Minimum Wage Law: A Prospective Impact Study, (Center on Wage and Employment Dynamics, UC Berkeley, August 2014 – http://www.irle.berkeley.edu/cwed/briefs/2014-04.pdf),

According to this analysis, 97% of workers affected were in their 20s or older; 63% were in their 30s or older; and 26% had a Bachelors degree. San Francisco’s minimum wage increase also greatly increases pay to minority workers as 71% of minority workers in the City would see pay increases under the increased minimum wage approved in San Francisco.

Further, according to the US Department of Labor, 88 percent of people earning minimum wage nationally are age 20 or over and over half of people paid at minimum wage work a full-time schedule, In other words, minimum-wage work isn’t just supplemental employment. Many households are relying either fully or substantially on full-time, minimum-wage work to pay the bills. For tens of millions of agricultural workers, fast food workers, and retail workers, the minimum wage is what they depend on to survive.

To further illustrate this point, the following two graphs show the nationwide percentage of workers affected by a possible increase in the federal hourly minimum wage from $7.25 to $15 /hour as well as current average wages in Yolo Co. for different industrial sectors.

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Myth No. 3 – Minimum wage increases will cause prices of everything to skyrocket

There is no doubt that increasing wages will result in price increases if corporate and business profit margins are otherwise maintained at current levels. However, many economic studies have shown the the magnitude of expected price increase can be quantitatively determined and are anticipated to be far less than claimed by detractors of minimum wage increases.

The level of price increases necessary in any industrial sectors necessary to maintain existing profit margins are a function of the total labor component of a product’s or service’s final price times the average wage increases that would result from an increase in the minimum wage to $15 per hour.

For instance, the current cost structure for different industrial sectors that would be most affected by increases in the minimum wage is graphically shown below.

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(Source: Dr. Chris Benner, Professor of Community and Regional Development at the University of California, Davis based on Bureau of Labor Statistics Current Population Survey (CPS) 2011 udated to 2014)

The anticipated effect on total payroll of different industrial sectors caused by a national increase in the minimum wage from $7.25/hour to $15/hour is shown below:

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With this information, the expected average national price increases in different industries caused by an increase in the minimum wage from $7.25 to $15 per hour can thus be calculated.

The higher end product or service costs produced by the increase in the minimum wage =

Percentage higher labor costs produced by the increase in the minimum wage times

Percentage costs of labor component in the final product cost

Using the agricultural industry as an example:

19% total higher labor costs  x  8% labor component in the final product cost = 1.5% total product price increase

When this methodology is applied across the most affected industrial sectors, the following price increases are anticipated nationwide assuming the same profit margins for the companies or businesses are maintained:

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Local increase are expected to be less (particularly in the restaurant and retail sectors because the minimum wages are already substantially higher in California ($9 moving to $10 next year) compared to the rest of the nation.

Even so, I don’t believe an increase in the price of a local pizza from $8 to $8.70 or less is going to seriously impact local business sales especially because there will be a concurrent huge increase in the number of local low wage workers who can now afford to eat out a little more often offsetting any loss of sales due to higher prices. Nor would we expect a flight of pizza eaters from Davis to Woodland because the price of gas would eat up any potential food price savings (if a low wage worker could even afford a car) and Woodland eateries do not deliver to Davis.

Nationally, Dr. Chris Benner of UC Davis has indicated that he calculates the average cost to a family of 4 caused by a nationwide increase in the minimum wage from $7.25/hour to $15/hour affecting 56 million workers across 52 industrial sectors will be less than 40 cents per day. That’s a cheap cup of coffee a week which is a very small price to pay to bring millions out of poverty.

(Source: Dr. Chris Benner, Professor of Community and Regional Development at the University of California, Davis based on Bureau of Labor Statistics Current Population Survey (CPS) 2011 udated to 2014)

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Myth No. 4 – Increases in the minimum wage will put companies out-of business and adversely affect the local economy

It is commonly argued that raising the minimum wage will hurt businesses by making them less profitable and decreasing their value to owners and shareholders. But that’s not necessarily the case, as the classic comparison of Costco and Walmart proves.

Costco and Walmart are two of the largest retailers in the United States, but they have far different philosophies regarding employee compensation. Costco’s starting wage for employees is $11.50 an hour, and their average wage is nearly $21 an hour. Walmart, meanwhile, announced earlier this year that it would raise its starting wage to $9 an hour—and its average wage is $12 an hour, far lower than Costco’s.

Given the large discrepancy in employee compensation, one might expect Costco to have much lower profitability and be worth far less on a comparative per share basis – but this isn’t the case. If you invested the same amount in both Costco and Walmart in 2005, your investment in Costco would be worth 4.5 times more right now than a similar investment in Walmart. (Sources: http://finance.yahoo.com/q/hp?s=COST and http://finance.yahoo.com/q/hp?s=WMT)

How can this be? Well it seems the driving factor behind this is customer satisfaction. Better-paid employees tend to be more satisfied in their jobs, which means they tend to take better care of customers and that makes customers want to come back more often. Happier employees are also less likely to have unexcused absences or quit which reduces employee turnover and training costs.

Smart business people recognize that salaries and benefits are not only expenses on an income statement but that human talent is a valuable resource in the increasingly competitive business world. Skilled employees working under the right incentives can generate enormous benefits for companies via increased productivity and customer satisfaction.

Perhaps the most succesful industrialist of the 20th century, Henry Ford, put it best when he stated in 1934, “No one loses anything by raising wages as soon as he is able. It has always paid us”. This was 20 years after Ford doubled workers salaries in 1914 which helped cut employee absenteeism from 10% to less than 1% and boosted sales 63% in one year (Source: Time Magazine, March 9, 2015)

There is other recent evidence that such increases in minimum wages do not adversely affect local business development and employment. San Francisco first raised its minimum wage in 2004 to $8.50/hour (a 36% increase at the time) and later added paid sick leave and health benefit requirements. They saw only a 2.8% increase in restaurant prices in the first year after implementation. Possibly as a result of the additional $1.2 billion in additional personal income generated by newly higher paid employees in the City from 2004 – 2011, food service jobs grew faster in SF (+18%) during this time period than in other Bay Area counties (+13%) over the same time period.

In 2013, San Jose increased its minimum wage by $2.00 per hour over the state minimum wage. In the following year, registration of new small retailers increased by 19%, unemployment decreased by 1%, and over 4,000 new jobs were created in the Restaurant & Hospitality sector

(Source: Economic & Equity Outcomes of a $15/hr Seattle Minimum Wage (Study commissioned by City of Seattle), Puget Sound Sage, April 2014)

Last year the Seattle City Council approved a gradual rise in its minimum wage to $15 per hour with the fist step occuring on January 1 of this year. According to data released last week by the Washington Employment Security Department, King County’s unemployment rate has since reached a low not seen since April 2008 (3.3%) compared to 4% in March and 4.1 percent in April 2014. It was acknowledged that it will take many years to fully sort out the full impact on employment (if any) of Seattle’s phased-in $15 minimum wage but these results certainly demonstrate there was not an immediately adverse impact on jobs and businesses as some feared.
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Myth No. 5 – The minimum wage is as high as it has ever been so there is no need to increase it further until inflation heats up or workers start producing more

Technically, the first part of this myth is correct. The current minimum wage of $7.25, last raised in 2009, is the highest numerical value the minimum wage has ever achieved. But on an inflation-adjusted basis, the real value of the minimum wage has dropped by 25% since 1968 as shown in the following chart.

Nor has the minimum wage kept up with continual increases in worker productivity over that time period. If it had, the current minimum wage would now be equal to $18.48/hour

(Source: http://www.epi.org/publication/charting-wage-stagnation/)

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There appears to be no good reason not to increase the federal minimum wage. It will help the economy, help workers, and even help businesses. And it is the moral thing to do to reduce income inequality.
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Alan Pryor is Treasurer of Davis Citizens for a Living Wage

About The Author

Disclaimer: the views expressed by guest writers are strictly those of the author and may not reflect the views of the Vanguard, its editor, or its editorial board.

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174 thoughts on “The Case for a $15/Hour Minimum Wage – Debunking the Myths”

  1. Topcat

    Most objections, however, were based on political philosophies rather than objective facts ….

    Actually, the objections I have seen are based on an understanding of basic economics.  I remember a very good article by the owners of Woodstock’s Pizza that explained the negative consequences for low skilled and beginning workers as well as organizations that employ these workers.

      1. Topcat

        Do you mean where they called the Raise The Wage Davis people communists?

        Actually it was a very well reasoned article that explained why a drastic minimum wage increase would not be a workable idea for employers like Woodstock’s and their employees.

  2. Don Shor

    The estimated hourly minimum Living Wage for purposes of the proposed increase in the Davis minimum wage was determined by averaging the calculated minimum Living Wage for

    1) one Adult ($10.42),
    2) one Adult and one Child ($20.83), and
    3) two Adults ($15.17)

    This average equals $15.47 or $15.00 rounded down

    This makes literally no sense, even as an after-the-fact rationalization. The SEIU is demanding the same $15/hour everywhere, so clearly this campaign has nothing to do with the economic situation in Yolo County. But even so: employers don’t ask, nor is it any of their business, whether the employee has a child, nor whether the adult lives with another adult. Employers hire one adult. And as the calculator shows, that “one Adult” needs $10.42 as a living wage in Yolo County.

    I’ll also ask you again, Alan: Who are the officers of Davis Citizens for a Living Wage?

    1. Topcat

      This makes literally no sense, even as an after-the-fact rationalization.

      Yes, the whole discussion of “living wage” makes no sense.  The author does not understand that the “living wage” rate is irrelevant to someone who is priced out of the market.  How does it help a low skilled individual who is unemployed if the wage rate is $15 per hour?

    2. Justice4All

      The officers of Davis Citizens for a Living Wage are all grass roots activists. We are students, social justice advocates, workers, business owners etc. We are not staff for unions, much less SEIU. Quit your rumor mongering and stick to fact based analysis. This is a matter of justice. Either you think that people who work full time deserve to live in poverty or you do not. Which are you?

      1. Don Shor

        Would you name any of them, please? Not a single member of DCLW has been identified except for Alan Pryor. He apparently refuses to identify the members of your organization, as do you. The SEIU is the driving force behind the living wage ordinances everywhere. The head of the Sacramento labor council is on record on this issue locally:

        Outgoing executive secretary of the Sacramento Central Labor Council Bill Camp revived the prospect last December…SB 935 was co-sponsored by the Women’s Foundation of California and SEIU (Service Employees International Union) California State Council.,.Mr. Camp told the journal that they would attempt to gather signatures to qualify for the ballots of Sacramento and Davis. http://www.davisvanguard.org/2015/04/polling-shows-strong-support-for-minimum-wage-hike-in-sacramento/

        We have three individuals identified over time with this issue locally: Alan Pryor, Bill Camp, and Bernie Goldsmith. Bernie has apparently disappeared from the organization and from Facebook entirely. So that leaves Alan Pryor and a labor official.
        Why do you post anonymously? Why don’t you register under your own name and stand behind the things you’re saying?
        I pay my workers a living wage and they don’t live in poverty.

        1. Justice4All

          I commend you for paying your workers a living wage. Bernie Goldsmith has not been affiliated with the campaign for almost a year due to personal issues. Bill Camp was never on the steering committee, although he has been a tireless advocate on our behalf (as he has for working people everywhere since his work in the civil rights movement), along with much of the labor community. Our officers are regular people. We are workers, students etc etc. Not paid political operatives, not union staff or anything like that. Those folks are our allies, but they do not call the shots. We do. We started this movement, we make the decisions. We are an inclusive organization. Anyone who wants to participate to bring fair wages to Davis is welcome. We do not hide from anyone. We are not against sitting down and talking to anyone, even if they disagree with us. Dialogue is how we move forward in society, and that is one of our principles.

    3. Alan Miller

      I’ll also ask you again, Alan:

      Is someone referring to an Alan without specifying which one, again?  Dammit.

      I and “the other Alan” couldn’t be more far apart on this issue, and apparently on the environmental effects of mega-solar as well.

  3. Tia Will

    I am not a fan of the $15.00 minimum wage. Not because of any of the above myths, but because it acknowledges the basic concept of arbitrary assignment of the value of an individual’s worth to a company based on their title. I see contribution differently. And apparently so does at least one CEO.

    http://money.cnn.com/2015/04/14/news/companies/ceo-pay-cuts-pay-increases/

    Mr. Price is making a bold move. He is acknowledging that without the efforts of all of the employees of his company, whatever their title may be, the customer does not get served. It is interesting that the amount chosen ( brief article does not specify how it was picked) is very close to the number $75,000 beyond which in one study from Princeton there is no more “happiness” derived by the addition of additional income.

    http://content.time.com/time/magazine/article/0,9171,2019628,00.html

    It will be of interest to keep an eye on the ongoing outcomes of Mr. Price’s experiment in compensation equality.

     

    1. Topcat

      I am not a fan of the $15.00 minimum wage….  because it acknowledges the basic concept of arbitrary assignment of the value of an individual’s worth to a company based on their title.

      I’m glad to see that you oppose the minimum wage rate rise to $15 per hour.

      Wage rates are determined by several factors, but the most important is that rates are based on the value of the work that an employee provides to the organization and how much labor is available to do that work.  In general, employers pay higher skilled individuals more than lowers skilled ones.  There are, of course, many exceptions to this general concept and there are many anomalies and distortions in the labor market.  We can see clear examples of this just by looking at the wage rates of some City of Davis employees.

      I tend to favor letting the free market work to set wage rates.  Higher skilled employees can command higher wage rates.  In strong economic times when there is high demand for labor, rates will rise.  In areas of the country with strong economic activity (the North Dakota oil fields in the past few years for example) wage rates will rise and workers will move to those areas.

      If we, as a society, wish to help our most disadvantaged and least skilled individuals; we need to make sure that they can find work even if it is at $9 per hour.  This will provide them with opportunity to learn work skills that will allow them to move up to higher paid work as they become more skilled.  It doesn’t make sense to demand that the least skilled individuals in society should be priced out of the labor market.

      1. Tia Will

        TopCat

        I’m glad to see that you oppose the minimum wage rate rise to $15 per hour.” 

        I am quite sure that you would not be so glad about the reason why. I do not believe it goes nearly far enough.

        I am sorry that you glommed onto the least important element of my post and made it the bases for putting forth a mini lesson on “how we do things now” and “trickle down economics works best” and “it’s fine for people to be making $9.00/per hour”…..presumably as long as I don’t have to live off that. Please correct me if I am wrong, if you earn $ 9.00 or less per hour, I would be interested in your take on how and why that is ok ?

        What you ignored was everything else that I said. I know what we do now. But I do not believe it is set in stone. I believe that there would be better approaches that we certainly could choose. The link I posted was just one example of someone seeing, and choosing an alternate route for his company. That looks like real leadership to me.

  4. Tia Will

    TopCat

    the objections I have seen are based on an understanding of basic economics”

    The objections that I have seen are based on an understanding of one side of basic economics, and a willingness to ignore the other side of the coin. A minimum wage of $15/hr will obviously benefit some and harm others. This is what neither side seems willing to acknowledge. The question is what is the net gain or loss to any particular community ( not any particular teenager looking for entry level work, or any particular small business which may lose or gain depending on whether or not increased sales by those who can now afford to purchase offset increased costs) ? What I see happening is an unwillingness of either side to acknowledge the points made by the other, and try to find solutions. Merely restating oft repeated canards does little to move the conversation forward.

    “This article is nothing more than cherry picking data and supposed facts to come to a pre determined conclusion.”

    And for a perfect, concise and clear demonstration of my point. A condemning statement backed by no specifics, no elucidation of which are “supposed facts” and no statement about why other points of view are superior. The timing could hardly have been better.

    1. Topcat

      A minimum wage of $15/hr will obviously benefit some and harm others.

      Yes Tia,  a drastic rise in the minimum wage does benefit some and harms others.  The question is whether we, as a society, are willing to accept the harm?  As I have pointed out before, those that are harmed the most are the most disadvantaged people in society who are priced out of the market.

      Personally, I think it would be better to have more low skilled people employed in legal work rather than unemployed.  I understand that the unions that support a drastic rise in the minimum wage don’t care about the people that will be unemployed by such a move.

      1. Tia Will

        TopCat

        The question is whether we, as a society, are willing to accept the harm?  As I have pointed out before, those that are harmed the most are the most disadvantaged people in society who are priced out of the market.”

        Well some of you certainly seem not to mind that harm that is currently being done to those on the lowest rungs of the economic ladder. I think it helps to pretend that they will all be able to move up if they just are smart enough, or work hard enough, but I am pretty sure that most of us know that this simply is not true.

        1. Topcat

          Well some of you certainly seem not to mind that harm that is currently being done to those on the lowest rungs of the economic ladder.

          Yes, the “Raise the Wage” supporters do not have any answer to the question of what happens to the most disadvantaged and least skilled people in society who would be priced out of the job market by a drastic increase in the minimum wage.  I guess that they expect the people on the lowest rung of the economic ladder to fend for themselves when they can’t find jobs.

  5. zaqzaq

    The data relied upon does an analysis based on the federal minimum wage and not the California minimum wage which is higher.  It would seem that many of the assumptions made are not accurate for California.

    I am opposed to a city by city approach to  this issue.  It is one that traditionally done at the state level and should not put businesses in Davis at a disadvantage.  It would be interesting to see what percentage of workers who currently receive less than $15 per hour who are not UCD students live in communities outside of Davis.  In other words would that extra income be spent in Davis or some other community.  I see no need for Davis residents to subsidize increased worker spending in Dixon or Woodland allegedly by raising prices in Davis to cover the wage increase.

    One aspect not covered is that most employers have a wage range for employees based on job description and experience.  Increasing the bottom rungs on the ladder all of the wages incurring greater costs for the employer beyond those for employees who make less than $15.  Our family owns a small business in this community and an increase in the minimum wage would impact the expectations of all employees to include those who well exceed the proposed $15.  If one employee is getting a 25% raise based on the increased minimum wage then the one who is making $20 will also expect a 25% raise after all that would only be “fair”.  This will only further increase costs and thus the authors argue the prices.  There are many businesses were revenue is capped by federal and state governments or private companies such insurance companies.  All you need to do is look at the medical field and you have Medical rates, obomacare and insurance companies all capping what they will pay for services.  Someone has to eat the difference and that becomes the small business owner.  Often we look at cutting or reducing employee hours to keep the business profitable.  That is something we have done in the past by making what had been a full time position part time and increasing the expected productivity of the current employees.

    1. Topcat

      I am opposed to a city by city approach to  this issue.  It is one that traditionally done at the state level and should not put businesses in Davis at a disadvantage.

      Yes, I agree that a local rate that is higher than the surrounding communities would have negative consequences for Davis.

    2. Tia Will

      Someone has to eat the difference and that becomes the small business owner.  Often we look at cutting or reducing employee hours to keep the business profitable.”

      And this is one excellent reason for separating the provisions of health care from employment. There are many other good reasons to separate this completely and permanently.

        1. Tia Will

          So we can have health care at the same quality level and wait times as England?”

          If one has to wait for elective care longer, while everyone gets preventive and routine care sooner while paying much less for prescriptions and doing statistically better on most major indices of health, yes, certainly.

        2. TrueBlueDevil

          Tia, I think you asked me about this on another thread. Comparing us to Finland, Switzerland, or Norway doesn’t wash. We aren’t comparable countries for numerous major reasons. I believe we have great medical services and doctors / nurses, but our lifestyle is screwed up. You can’t blame the doctors for our overeating or poor lifestyle choices. (I’m not perfect.)

          Do you know what the knee replacement center is for Canada? The Cleveland Clinic!

          No, I don’t think we do statistically worse than the EU or Japan if you were to compare them to Palo Alto, Saratoga, and Mill Valley.

      1. Topcat

        And this is one excellent reason for separating the provisions of health care from employment. There are many other good reasons to separate this completely and permanently.

        I am in complete agreement that providing health care should not be linked to employment.  There is a tremendous amount of waste and inefficiency in our current patchwork system.

  6. Alan Miller

    The minimum wage should be abolished.

    These alternate economic theories do not change reality.

    They are based on fantasy and “I really really want it to be so”.

    Ain’t so.

    But there is no arguing with this way of thinking.

    So I’m done.

    Bye.

    1. Tia Will

      Alan

      We make our world, one decision at a time. There is not a God in the sky who laid down the economic law. This is a system designed by humans and therefore changeable by humans.

  7. Barack Palin

    Costco’s starting wage for employees is $11.50 an hour, and their average wage is nearly $21 an hour. Walmart, meanwhile, announced earlier this year that it would raise its starting wage to $9 an hour—and its average wage is $12 an hour, far lower than Costco’s.

    Costco and Walmart are not a good comparison as they have two different business models.  Costco is much less labor intensive than Walmart, they have half as many employees per square foot and therefor can afford to pay their employees more.

    Upper-middle-class people who live in urban areas — which is to say, the sort of people who tend to write about the wage differential between the two stores — tend to think of them as close substitutes, because they’re both giant stores where you occasionally go to buy something more cheaply than you can in a neighborhood grocery or hardware store. However, for most of Wal-Mart’s customer base, that’s where the resemblance ends. Costco really is a store where affluent, high-socioeconomic status households occasionally buy huge quantities of goods on the cheap: That’s Costco’s business strategy (which is why its stores are pretty much found in affluent near-in suburbs). Wal-Mart, however, is mostly a store where low-income people do their everyday shopping.

    http://www.bloombergview.com/articles/2013-08-27/why-walmart-will-never-pay-like-costco

    1. Topcat

      Costco really is a store where affluent, high-socioeconomic status households occasionally buy huge quantities of goods on the cheap: ….Wal-Mart, however, is mostly a store where low-income people do their everyday shopping.

      I shop at both Costco and Walmart, so what does that make me…”high-socioeconomic status” or “low-income”?  In either case, Davis is not getting the sales tax revenue because we don’t have those stores here.  Oh yes, and I have to use carbon based fuels to get to those stores so I’m probably upsetting the “Cool Davis” folks 🙂

  8. Barack Palin

    Well it seems the driving factor behind this is customer satisfaction. Better-paid employees tend to be more satisfied in their jobs, which means they tend to take better care of customers and that makes customers want to come back more often.

    When I go to Costco I rarely see an employee where I do the actual shopping.  Costco likes to move their products around so I have to do a lot of searching because there’s no employees on the floor to ask for help.  I don’t shop at Costco or Walmart because of the employees, I shop at Costco due to the bulk pricing and I shop at Walmart do to they have everything and it’s less expensive.  It has nothing to do with being better taken care of or satisfied employees.

    1. Topcat

      I don’t shop at Costco or Walmart because of the employees

      Me too.  The availability of what I want and the prices as well as the ease and speed of checkout are the main factors in where I shop.  I appreciate that both Costco and Walmart run very efficient operations and they keep labor costs low which keeps the prices low.  Both Costco and Walmart are heavy users of automation and computer technology to keep labor cost down.

  9. Frankly

    Myth number 1 should be that Alan Pryor knows enough about business and economics to be making claims in this topic.

    First, let’s not compare anything to San Francisco.  The land of $4500 per month average rent.  Using San Francisco as his data points clearly indicates creativity in desperation to make his point.

    Maybe Alan should actually get out and talk to the restaurant owners in Davis.  Maybe he should start with Tucos owners for why they went out of business.

    If I am not mistaken, Alan Pryor is a bit of an environmental extremist guy.  So he demand lots of regulations to make it more costly for business to start, operate and grow.  And so to stay profitable, the businesses have to learn how to operate lean.  They use automation where they can, and they obviously have to reduce their largest single expense item which is for labor.  So Alan’s real interest in life must be to advocate for all policy that punishes business and puts them under.  I guess he is happy when we see more restaurants fold like Tucos.

    Wage rates are a function of supply and demand.  In Davis, and in other places, we have too high a supply of low-skill workers and too low a demand from the lack of local business.  If Alan Pryor really cares about wages, he would advocate for growing the local economy.  That way, restaurants would have more customers and they could afford to increase wages… and they would have to because there would be more restaurants competing for quality employees.

    The $15 minimum wage is a construct of those that don’t have a clues about the financial realities of business, and the economy.  So, might I suggest they stick to saving dung beetles and little fish.

    1. Miwok

      Since I am ignorant, according to Tia, these ideas or questions may not make sense, but here goes:

      WHY would an employer strive to put the lowest grade worker in a position of responsibility? Then also tell the employee their job is only temporary?

      Since I work a majority of tech jobs, I fail to see why companies who hire consultants want workers to do a brief job, then fly away, leaving everyone to sort the mess out later? I work with Graduates of Universities and schools like Heald with their shiny new Bachelor degrees who cannot program, or much else in the tech world.

      I write documentation and policies for companies who have never had them in place before, which makes me wonder why they write them at all?

      Paying a competitive wage for a job, to me is paramount to getting a good product, but I am not seeing that. In fact, I keep getting called back to maintain databases and such because the full time people there can’t do it? hmm. wish I had a few more of those to do..

      You could also address the concept of loyalty, but that seems to be an outmoded concept as well.

    2. Justice4All

      Actually, typically the highest cost for restaurants is rent, not labor. Alan is a small business owner himself, who pays living wages to his workers, and makes profits. Furthermore, you sir do not adequately understand the principles of consumer economics. Its 70% of the economy. Allowing low wage workers to have disposable income means that they can go out and BECOME CONSUMERS! That means they can go downtown and get a bite to eat occasionally. What business owner does not want more consumers with more disposable income in their market?

      Calling people names, insinuating they are extremists etc is not a good way to have a rational discussion about the issues at hand. Especially when the name calling or “Ad hominem” is clearly untrue as it is with you and Alan, considering that A, he is a business owner, B. He pays his workers 15$ an hour, C. hes profitable, D. He has spent more time educating himself and others on this issue than some armchair economist (that would be you).

      I doubt you would have the courage to say anything like this to him in person, so please, keep your criticism to factual analysis and leave the BS on fox news.

      1. Sam

        In what restaurant would your highest expense ever be rent? Even using the chart in the article, if that was true then rent is 36% of your budget, labor 35%, profit is 20% and the cost of the food, utilities, insurance, credit card fees, linens… would only be 9%?

        As a real life example if you rented 3,000 sq. feet on G Street right now and put a restaurant in it, in order for your rent to be your highest expense you would have to run it for 12 hours a day and employ only two minimum wage people at all times.

        1. Sam

          Or you could rent 1,100 sq feet on 3rd Street for $1,430 per month and pay one person minimum wage for 40 hours to run the whole restaurant themselves and NOT pay any payroll taxes or workman’s comp insurance.

        2. Tia Will

          Sam

          In what restaurant would your highest expense ever be rent?”

          Perhaps in one  which is run by a family enterprise with all family members playing a role ?  Non snide response intended. I have seen many such operations in which the largest expense was the rent because the work was done by all and the  profits shared. Many communities that I have lived in have had multiple such mom, pop, grandparents, and kids arrangements and, for the most part, they have been what we would consider “ethnic restaurants”.

          Usually these operations have been their way of life, not just a job or a business they run. So it does exist, even though it is not included in what you are discussing.

      2. Frankly

        This is absolutely not true.  I run a business that makes small business loans and many of my clients are restaurants.  Their cost by order are:

        – Labor

        – Cost of goods sold (food and beverage costs)

        – Marketing (depends on the restaurant and how well established it is, but most have to advertise a lot to draw in enough customers)

        – Rent or mortgate

        – Other

        Labor is by far the biggest expense item for restaurants.  We call this industry food and beverage “service”.  Restaurants are service businesses.  And service business requires human employees to deliver the service.

        Now, retail is both product and service.  But the trend is going away from human employees to more self-service.  Raise the minimum wage and you will make all the service-automation and technology people very happy.  They will be calling on these stores to close the deal on the self-check out equipment.   Lay-off several of those highly paid checkers to fund the purchase… which by the way, is a tax write-off.

        1. Justice4All

          Ok, so just to clear a few things up. Yes automation is a thing that is going to happen. It is going to happen regardless of wage increases. As someone who works in a grocery store, I can tell you that there is a very real productivity cap for self checkout machines. You still need an operator, they cannot check out many items (have you tried to buy produce at a self checkout machine?)

          It is my understanding that labor is a significant chunk of restaurant’s business expenses. While initially canvassing for this campaign I did speak to many small business owners about this, and admittedly faced a lot of opposition. But they did say that rent in many cases is their highest cost, particularly in Davis. (I would say the name of these businesses but I dont have their expressed permission to do so publicly). It may not be so in every case, but it was a significant portion of the businesses I talked to, one of which at least has since been evicted from their former location.

           

        2. Topcat

          You still need an operator, they cannot check out many items (have you tried to buy produce at a self checkout machine?)

          Yes, I’ve become quite good at using the self check out machines.  It took me a few times, but now I know the code numbers for many of the produce items I purchase (4011 = bananas!).

          I’ve been reading about more automation coming to the restaurant industry so that customers will be able to order their food on a video screen.  They will also be able to pay the check without human intervention.  It will still take a human to prepare the food and bring it to the customer; at least until robots are developed to do this.

        3. TrueBlueDevil

          Topcat, I guess this move will give us other benefits. We don’t have to TIP a computer! … But this may cost the bus boy and chef, who often take a cut of the tips.

        4. Topcat

          Topcat, I guess this move will give us other benefits. We don’t have to TIP a computer! … But this may cost the bus boy and chef, who often take a cut of the tips.

          You have a good point.  When the customer goes to pay, the computer systems are set up so that they will “suggest” a tip amount starting at 15% and going up from there.  The customer can enter a different amount and even no tip.  I don’t know what the trend is in tipping with these automated systems but I am interested in finding this out.

        5. Topcat

          I’ve been looking at a company called “Ziosk” that is bringing automation to the restaurant industry.  Their website indicates that they have deals with Olive Garden and Red Robin restaurant chains.  We are still in the infancy of restaurant automation, but I expect that we will see a rapid adoption of automation in this industry.

          I look forward to trying out the Ziosk system.

        6. Barack Palin

          Topcat, I guess this move will give us other benefits. We don’t have to TIP a computer! … But this may cost the bus boy and chef, who often take a cut of the tips.

          Do we really have to tip as much as before if the servers, waiters, busboys, seaters and cooks are all making $15/hr.  I always tip 15 to 20% but if these workers are getting $15/hr which will in turn cause food prices to inflate my tips are going to be less.

        7. TrueBlueDevil

          Topcat, I think we’re onto a huge deal these do-gooders missed. We will in effect become like Europe in a way. First time I traveled there I had to constantly remind myself to tip much lower as they have higher wages. A lot of wait staff make minimum wage or a bit more, but can make $20-30+ per hour on tips.

          I bet there are also some smart cookies out there working on the automated bartender, another place for cost savings on multiple levels. No more “over pours”, free drinks on the house, or free nips on the house. Such automation probably could also pour a perfect drink every time!

  10. Alan Pryor

    Myth number 1 should be that Alan Pryor knows enough about business and economics to be making claims in this topic….Using San Francisco as his data points clearly indicates creativity in desperation to make his point…. Alan Pryor is a bit of an environmental extremist guy.  So he demand lots of regulations to make it more costly for business to start, operate and grow…So Alan’s real interest in life must be to advocate for all policy that punishes business and puts them under…  I guess he is happy when we see more restaurants fold…If Alan Pryor really cares about wages…The $15 minimum wage is a construct of those that don’t have a clues about the financial realities of business, and the economy.  So, might I suggest they stick to saving dung beetles and little fish.

    I have been patiently waiting today for any comments on this blog opposing increases in minimum wages that are based on and provide objective data trying to refute my claims and assertions. All I have seen, though, is a recitation of trickle-down economic theories by the anti-minimum wage folks without any verifiable statistical data  to verify their claims.

    Many of the blogs today read like news clips from Fox newscasts (see John Stewart pictorial meme introducing the article). And now Frankly weighs in with his little  childish, name-calling diatribe.

    I am accussed of cherry-picking my data to make my case. Well, why not go out and cherry pick your own data to bolster your claims. C’mon, folks! How about referencing some good hard statistical data and reports showing jobs or buinesses lost in areas that have increased their minimum wage? Use the objective data to write your own article to publish here. Then we can have a real debate.

     

    1. Don Shor

      Using your link, a living wage in Yolo County for an adult is not $15/hour. Please explain to me why small local businesses should pay an adult $15/hour, and where you think that money is going to come from.

      1. Justice4All

        Its pretty simple. 26% of Davis residents live below the federal poverty line. Give those workers more money, they go out and spend it. Supply and demand right? Moreover in places like Seattle, LA, SF, etc all have longer ramps on their minimum wage hikes for those small businesses you are talking about. (as opposed to large employers like Mcdonalds, Target etc.) That is something that would likely happen in any local ordinance. Moreover, when the minimum wage is raised locally, small business in affected industries like retail, food service and leisure actually DO BETTER. Just look at San Jose, who raised their minimum wage by 25% in one day, and in that following year, job creation in affected sectors went UP, new business creation in affected sectors went UP as well.

      2. Alan Pryor

        Using your link, a living wage in Yolo County for an adult is not $15/hour. Please explain to me why small local businesses should pay an adult $15/hour, and where you think that money is going to come from.

        Don – I very carefully explained in the article exactly what were the assumptions used on which we calculated why we thought a $15/hour wage was appropriate. It is more than a single adult needs to pay their own way but way less than what is needed by a single parent or a sole wage earner with one or more children. I do not need to repeat myself.

        1. Don Shor

          So why should a local small business pay a teenager $15 an hour, or a single adult? And where do you think the money is going to come from?

          1. Don Shor

            Not a false premise in my case. I always have one or two teenagers working for me, watering and stocking and learning nursery skills. Why would or should I pay them $15/hour? Are you willing to make a separate wage level for teenagers in a local ordinance?
            Thank you for identifying yourself.

        2. Sam

          The average age of a minimum wage worker in Davis is 35? Where did you get that stat from? Or are you trying to use a National statistic to say that Don is wrong in your argument to change something local? Apples and oranges.

          Just like in Myth #4. It is stated that unemployment in San Jose went down with the minimum wage went up. Yes the unemployment for ALL workers went down, but the unemployment for those without a high school degree (a typical worker making minimum wage) increased. So the increase in minimum wage hurt that group of people, it did not help them.

        3. Justice4All

          Statistics do not exist locally for these employment numbers. The best we can do is use the census data, which goes county by county. Unfortunately Davis is something of a bubble in Yolo county, and makes the picture muddled to say the least.

        4. Barack Palin

          So you admit you don’t have the statistics for Davis but yet you push for a local $15/hr minimum wage.

          What’s wrong with just going along with the new state minimum wage parameters instead of sticking Davis out on an island?

        5. Justice4All

          We did some math based on cost of living, using surveys of cost of apartments here in town to come up with 15. Its actually shown here in Alan’s work. Ill say this again, we are interested in a dialogue with the business community and the council. We would like to come up with a solution that everyone can live with reasonably. We want to make Davis prosperous for all of its citizens, and protect small businesses. We arent irrational people. We just dont like seeing poverty in our city. I see it every single day, and I simply cannot live with myself knowing that it exists here in my city without doing something about it. Understand?

        6. Sam

          Justice- Have you considered the effect of the loss of government benefits to those working in Davis at $15 an hour? A single mother going from $9 to $15 per hour would gain:

          $12,480 Increase in wages

          -$2,000 Earned income credit

          -$1,000 Additional payroll taxes

          -$5,000 Increase in Section 8 housing costs

          -$720 Loss of PG&E CARE program

          =$3,760 Net gain in income or $313 per month.

          This was just having them lose some of the benefits that I can think of off the top of my head. There is also CAL fresh, loss of Medicaid, WIC…. The net gain for a single mother might actually be negative. That also assumes that she does not get laid off or her employer has to close their business due to the higher labor costs.

        7. Topcat

          We arent irrational people. We just dont like seeing poverty in our city. I see it every single day, and I simply cannot live with myself knowing that it exists here in my city without doing something about it. Understand?

          I understand the concern about poverty and the plight of the most disadvantaged people in society.  I understand the natural desire to “do something about it”.  The question is what is the appropriate social policy to address the problem?

          Unfortunately, as I and others have pointed out, a drastic rise in the local minimum wage would do more to hurt the disadvantaged than to help them.  Such a drastic increase will result in employers needing to raise prices for the goods and services they provide.  This will result in customers cutting back consumption of those goods and services.  The employers will then need to cut back employee hours, or reduce the number of people they employ.  Some employers may decide that it’s just not feasible to continue operating and just close up shop.  Other potential employers who are looking at starting businesses or non-profit organizations may decide to not open up.

          These are complex societal problems and there are no easy solutions.  Intelligent and rational people can disagree about what to do.  Perhaps it would be better to follow a different policy objective such as increasing the EITC (Earned income tax credit) than pushing for higher minimum wages?

        8. Don Shor

          The premise of this rationalization is that workers are evenly distributed across the three demographic categories that you averaged. And you left out one of the most common demographic groups in the Davis workforce: 2 adults, no children, living together in one household — for whom the MIT site you linked has a living wage at $8.89/hour.
          That’s why it is reasonable to make the assertion that your numbers are cherry-picked.
          As you say, $15/hour “is more than a single adult needs to pay their own way.”
          It seems the main goal of this is to get big box retailers (Target being the only one), fast-food places, and restaurant chains to pay their workers more. Unless you craft the proposal carefully, the collateral damage will land disproportionately on local small businesses that provide entry-level jobs and training. It will adversely affect their (our) employees, potential employees, and our own income — which will affect the business-to-business monies that we spend, among other things.
          Most very small businesses will have difficulty absorbing a 25 – 30% increase in payroll costs. It is, in fact, usually our biggest expense. We can’t raise our prices to accommodate it. We don’t have other expenses to cut at that level. We will have to reduce our staff, pay ourselves less, and tighten our expenses wherever else we can. Less advertising in local media, delayed upgrades of office supplies, delayed purchases and building improvements.
          So you need to target your legislation more carefully, and that has not been the pattern of these debates elsewhere. When you begin with a faulty living wage premise, it’s difficult to see how you’ll make this work without doing a lot of harm.

        9. Topcat

          Most very small businesses will have difficulty absorbing a 25 – 30% increase in payroll costs. It is, in fact, usually our biggest expense. We can’t raise our prices to accommodate it. We don’t have other expenses to cut at that level. We will have to reduce our staff, pay ourselves less, and tighten our expenses wherever else we can. Less advertising in local media, delayed upgrades of office supplies, delayed purchases and building improvements.

          The members of “Davis Citizens for a Living Wage” don’t seem to understand this.  They seem to think that all employers are greedy and rich and just want to take advantage of their workers.  In their view, wages could be increased by any arbitrary amount and it would have no effect on employment.

      1. Justice4All

        If you want to see who is part of the organization, simply come to one of our city council blitzes and see for yourself. You can see on the picture posted on the article. That is a good chunk of our organization. Ill talk to anyone. We are a transparent, grass roots organization. Its not some conspiracy or communist plot.

        1. Don Shor

          No, maybe you or Alan could just answer the question. You are not transparent. You and Alan repeatedly refuse to identify your leadership, and you refuse to post on the Vanguard under your own name. Who is the leadership of your group?

      2. Justice4All

        I didnt realize that was a thing that people did here. If I can, ill change my settings.  My name is Sean Raycraft. Im not afraid to stand by what I say here or anywhere else.  Im an organizer, and co founder of the campaign. Alan is our Treasurer. Im not going to publicly out the other senior leadership without their expressed permission. But like I said, we are a grass roots organization. Just look at the funding filings. Dave Ryan of The Enterprise did a good article on it a while back. Ive put the most money into this campaign by far because it is something I believe in. We have had some labor support, but its still dwarfed by my own contributions to this cause. If you would care to meet up and talk about this in person, I am willing. I am willing to meet with anyone who wants to talk about this issue.  Im not some jerk who hides behind anonymity and throws verbal bombs at people.

        1. Alan Miller

          My name is Sean Raycraft.

          I could not disagree with you more on this issue, but you have my respect, sir, by identifying yourself.

          Im not some jerk who hides behind anonymity and throws verbal bombs at people.

          No you are not!  Unlike the jerks who hide behind anonymity and throw verbal bombs at people.

          You know who you are!  . . . . . and the rest of us don’t.

      3. Alan Pryor

        I have been patiently waiting for months for you to list the members of your organization.

        Don – Asked and answered. To repeat myself yet again (this time please note), I am the sole officer of the FPPC registered political campaign, Davis Citizens for a Living Wage. You could have easily checked this out yourself at the FPPC website just as I can determine your corporate officers through the Secretary of State website.

        That said, we have many other dedicated local wage-earning people and student volunteers working on this campaign. While we are not hiding anything (as evidenced by the fact that many chose to publicly identify themselves during our presentations to Council), I feel no particular compulsion to publicly reveal all of their names here just as you would presumably be uncomfortable revealing the names of all of your employees on this blog.

        I guess I do question your continued fixation on finding out the identities of people working on this campaign, though. For what purposes do you seek this information? I assume it is for some purpose other than satisfying an insatiable curiosity…?

        1. Don Shor

          Because the campaign in Seattle reached the point where supporters of the wage called for boycott of local businesses that opposed it. If it’s an SEIU or other labor-driven campaign, it is very unwise for business owners to take any public position on the issue. If it is truly a local, grass-roots campaign, then it might be possible for there to be fruitful conversations. But the specter of boycotts, picketing, and social media campaigns against businesses is likely to be an impediment.
          http://www.bizjournals.com/seattle/news/2014/06/26/business-meet-politics-activists-boycott-seattle.html

        2. Alan Pryor

          But the specter of boycotts, picketing, and social media campaigns against businesses is likely to be an impediment.

          Don – So is the specter of employer retaliatory firings of protesting employees or imposition of reduced hours or blacklisting by employers

    2. Frankly

      Alan – I have piles of statistics to refute the claims made in your impressive, but one-sided, work here.  But we can both go find stats to make our case.

      We can simply cut out the middleman here and actually talk to the business owners about how a big increase in minimum wage will impact them.  Most of the restaurants in town run on thin margins.  In fact, if they are lucky they barely break even on food service, and many of them make their profit changing to a night club after 10:30 – 11:00 PM.

      And it is not only these existing businesses that can set the record straight, it is also those that would be starting or expanding business.  And today it isn’t happening.  It isn’t happening because of the cost relative to the return.  And raising the minimum wage drastically like you and others are advocating in your misguided and uninformed crusade for social justice increases the costs and thereby reduces the anticipated return.

      Every day there is a stack of business ideas being vetted for feasibility.  Do we invest, or do we do something else to earn a return on our capital?  That is question.  The feasibility is done and some ideas pencil out, and others do not.  Raise the minimum wage to $15 and a lot more that would have otherwise penciled out will no longer pencil out.  Therefore that capital will seek other investments… one that do not create jobs.

      I am one.  I am working on two business start-ups that would provide jobs.  Some entry-level, but with step career opportunity.  Raise the minimum wage to $15 per hour and it kills both of those business ideas.  At least one of them I will locate in another lower wage state where the business will be feasible.  Or I will invest in automation so I need fewer employees.  Or I will just kick back and retire earlier like a public sector worker on a fat pension.

      A recent Pew report concluded that nearly half (48.2%) of the 3 million hourly workers who were at or below the federal minimum in 2014 were ages 16 to 24.  Why yes, surprise, surprise… it is high school age and college age people working for minimum wage.   The problem with someone working for minimum wage as a sustainable wage is the lack of education and lack of skills and lack of motivation to do something else that pays a better wage.

      We are flooded with uneducated immigrants that can only work in low paying service industry jobs with wage increases depressed because of the flood of uneducated immigrants. When I was a young man I worked in the construction industry and made a decent wage.  Now all those trades are dominated by immigrants that work for a lot less.  So kids that might have taken the route (more difficult work) instead flip hamburgers.  But at least they have that job.

      How about this point too.  Let’s see the total compensation number for these people on minimum wage.  What is the value of their public assistance benefits combined with their hourly wage.  Because of Obamacare those kids up to 26 get to stay on their parents policies… this at great cost to the companies paying the premiums.  Then there are the myriad of other benefits being provided.  The fact is that most people making minimum wage have already been given many raises thanks to the liberal social policies we have expanded over the years.

      Here is what I think is happening.

      Folks like you that work for the government, or have worked for the government, and have a vested interest in political moves to pilfer more money from the private sector, or to retain more of what government already takes in, so that government will continue to fund your fat wages and fat pensions.  That is what this is really about… the expansion of all the social programs has led to liberals running out of money and putting the public sector payola scheme at risk.  So, if you can force business to pay these private sector workers more, there would be fewer needing social services and that savings can be put in the bank accounts of all those public sector union members who then pay for the Democrat political campaigns for payback.

      I use partisan language to make a point, but the real battle is between the classes… the ruling class and everyone else.

      1. Justice4All

        So I am going to acknowledge the well thought out post above, because it is. Ill just say this, we at Davis Citizens for a Living Wage are committed to making an ordinance that works well for everyone in the community, and that includes small businesses and start ups. We live here too. We want to see our community thrive, we eat at those restaurants you talk about. We just dont want those workers to live in poverty. We are open to the idea of exemptions on small businesses and start ups, or longer ramps to 15 like they have in Seattle. In order to do that, we have to sit down and have reasoned discussions, which admittedly did not happen enough previously.

        1. Topcat

          we at Davis Citizens for a Living Wage are committed to making an ordinance that works well for everyone in the community

          Except that you do not seem to be at all concerned about the lowest skilled and disadvantaged people in society.  Those with mild disabilities, those with poor customer service, interpersonal and language skills, those with criminal records, and those who lack basic work skills like getting to the job on time and dressing and grooming appropriately.  Many of these folks already have trouble getting work at $9 an hour.  It will be impossible for them to find work at $15 per hour.

          I would like to see you talk about what the lowest skilled and most disadvantaged people should do if they are priced out of the market.  Perhaps you feel it is appropriate for them to become panhandlers, burglars, thieves, prostitutes, or drug dealers in the underground economy?  Is that what you want?

          You may feel like you can simply ignore this large segment of society, but I have a lot more compassion than that.

      2. Frankly

        By the way, I apologize for my heat and for going personal on this.  I will clean it up.  But I am steamed about this topic when those that push it fail to acknowledge the negative impacts.  I don’t naturally play nice when the game is political propaganda.  And there is even more heat for any policy push that negatively impacts young people from being able to effectively launch into the type of good life that most of us loud mouths (Frankly included) are fortunate enough to have.

        Let’s talk about the real problem.  The real problem is that there are too many people trying to survive on minimum wage.  Now, let’s talk about ALL possible solutions and their consequences.  Do that and you elicit the type of intellectual debate we would prefer to see on the VG.

        1. Justice4All

          Cool. So I am interested in finding solutions for this problem as well. It is a national issue, and a state issue but as we all know the national government is basically defunct, incapable of doing anything but further empowering those already empowered. You are right about too many young people trying to make it on minimum or near minimum wage. Its a simple problem of scarcity. 2/3 of all jobs created now (nationally) are sub 15$ an hour jobs. Thats a huge problem. We at Davis Citizens for a Living Wage think its really important that Davis do SOMETHING to help address this issue, and dialogue is super important. a 15$ minimum wage would be great for workers, and I personally think its a good solution. But it needs to be implemented in such a way as to protect our local businesses from being at a competitive disadvantage to the huge businesses like Target that can just cut the checks and not adapt their business practices. Thats why we want the council to pick up this issue, create a sub committee or task force to study the issue, and come back with recommendations.

           

          PS I am all for intellectual and reasoned debate, its one of my passions, if that isnt an inherent contradiction.

        2. Frankly

          If you want higher paying jobs for these young people, then support the innovation parks and push for tax and regulatory reform that causes capital to flow to job-creating investment.

          One more argument against raising the minimum wage to $15.  Most of these low-paying jobs are brain dead unsatisfying work.  And when you raise the wage you will cause more young people afflicted with the standard human behavior of seeking comfort over the stress of ambition to fill up their resume with this brain dead experience thereby locking them into a long-term career doing work in the brain dead industry.

          I’m not saying that there isn’t satisfying work in these types of businesses that pay minimum wage, but it is low-skill work.  The bigger tragedy for me is how many smart young people are locked into these jobs while all the stingy and old farts in Davis block economic development that would provide them other more satisfying and higher-paying alternative career moves.

      3. Alan Pryor

        I use partisan language to make a point, but the real battle is between the classes… the ruling class and everyone else.

        Frankly – I think your last comment is the most telling. It seems from your post that you consider yourself a member of that elite “ruling class”. I would congratulate you on your achievements except it appears you have attained your lofty success on the backs of lowly paid workers. And if those low paid workers are no longer available then, by your own admission,  you’ll use machines or move elsewhere in the future…not exactly an enlightened and humanistic approach to business development. Do you at least tell your workers how to apply for government assistance like Wal-Mart?

        I do find your posts railing against government subsidies for the poor somewhat confusing though. These subsidies are what keep low wage workers modestly fed and healthy and able to continue to work for folks like you for such low wages. Why would you want to kill these subsidies to low income workers (which many people actually characterize as “Wal-Mart” subsidies). That would seem akin to killing the golden goose.

        1. Frankly

          I am not of the ruling class, I am of the working class.  I don’t have a lofty status, I am employed as a professional manager.  I started working on farms, then restaurants, then construction, worked at old Court Galvanizing (in Davis) doing hard physical labor got real buff and met my future wife, then entry level in corporations (beginning at Pacific Standard Life in Davis) where I developed an interest in computers, and from there I pretty quickly rose to IT management.  Earned my Bachelors in business and marketing during this time.  I took a detour at one point going to the business side working for a large bank, and then back to IT.  Then I discovered project management and taught myself how to program.  Worked for a large regional healthcare company running a corporate project management unit connected to marketing and sales, and then corporate planning and development, and then IT management again.  Left and started my own consulting practice working with state agencies and local business. Made a difficult decision to abandon my consulting business to take this job… because this job is all about creating jobs and enhancing the economic circumstances for the communities I serve in CA, NV and AZ.

          Now you know the rest of the story.

          I am not so much railing against the social services that subsidize low wage workers as I am railing against how they are funded and the human condition impacts caused by that funding.

          I see low-wage as a temporary state just like social services should be.  I see a good life as a progression like mine… where a young person starts out working and figuring out what he/she likes to do.  It is the marriage of passion and skills within that passion that leads to great professional satisfaction.  You cannot move forward without the opportunity to strive for upward mobility in the economy where you trade your labor for compensation.

          I always tell young people, don’t load up your resume with food service experience unless you want a career in food services, because you will end up with a career in food service.

          I want to be able to tell someone complaining about the difficulty living on minimum wage to go do the things required to make more money.  That is still the valid advise, but there is a problem that there are fewer opportunities for people to pursue and more people competing for those fewer opportunities.

          Raising the minimum wage is basically an acknowledgment that we adults are failures.  We have failed to protect an system that provides young people the type of wage mobility and upward prosperity that we enjoyed.  The increase of people on minimum wage is a symptom of our failures.  Raising minimum wages will only exacerbate those failures.  We will eventually crash and burn doing this wrong thing.  Just as much of Europe has crashed and burned over the same.

          Reading about Spain where after being unemployed for many months, people are finally accepting jobs that pay half of what they used to make… and what they used to make was artificially high because of the rules pushed by the social engineer do-gooder ruling class.

        2. tribeUSA

          Frankly: Re: “I see low-wage as a temporary state just like social services should be.”

          yes, this is a nice thought, but does not reflect the reality of the existing wage structure in the USA.

          If I recall correctly, about 1/3 of all jobs in the USA are at minimum wage or within 20-30% of minimum wage (later I will see if I can find the actual statistic on-line). This means that although many will move up in pay substantially within a decade, many also will not; even if they perform well; there are just not enough decent paying jobs to go around (and continuing to import immigrants by the millions helps ensure things stay this way). In many food prep and retail industries, you can look forward to an increase in pay from minimum wage to maybe 15-20% above minimum wage after ~5 years or so of full-time work with good performance. Hoo-rah.

          For the record; I agree that $15/hr minimum is too high; and the sweet spot is around the $11-$12/hr range–will post my reasons for this later, below.

        3. tribeUSA

          Frankly–good to see your story, and all your hard work has paid off; i respect your hard work and entrepreneurship. Assuming that you are somewhere close to 60 years of age, though, you lived most of your work life in the time of greatest opportunity and social mobility ever in the history of the USA (post WW-2 thru 1990s); but in recent times there has been much less social/economic mobility than the former golden age–it is not that americans are dumber or lazier; things are genuinely tougher now for a young person starting out than they were when you were in your 20s (?presumably in the 1960s and 1970s?).

        4. TrueBlueDevil

          tribeUSA, yes, he would have hot his stride just as the Ronald Reagan economic boom hit … from Jimmy Carter to 7% GDP growth. A 30-odd year boom. Now we have had a re-adjusted Q1 GDP “growth” rate in negative territory. No bueno.

      4. Tia Will

        Frankly

        A recent Pew report concluded that nearly half (48.2%) of the 3 million hourly workers who were at or below the federal minimum in 2014 were ages 16 to 24.”

        Other readers may not be aware of the back pedaling that has been occurring over time in your posts on this issue. Not so long ago, you were portraying the teen and entry level workers as the majority. In summarizing you have said on several occasions 1/2 of the workers, and now you have posted an actual percentage from the Pew report ( 48.2%). Now to me what is significant here is not a quibble over the exact percentage, it is that your comment is dismissive of the 52.8, or 50, or “most” of the workers who do not fit the description of teen, or single adult, or entry level, but actually describe an individual with real world responsibilities.

        Your comments leave out the “teen” who is working not for college savings or recreational spending money, but to augment the income of parents who may be disabled or themselves underemployed, it ignores those who are attempting to support their own children alone, it ignores those whose income is needed to fill in for the primary wage earner who has died or is disabled, it ignores the senior whose savings did not meet their retirement needs. Your blithe discounting of the other “50%” of the picture is not at all reassuring to me.

        1. TrueBlueDevil

          Did you ever consider the “underemployed” might be underemployed because of the Affordable Care Act and the failed economic polices of our President?

  11. Barack Palin

    Nationally, Dr. Chris Benner of UC Davis has indicated that he calculates the average cost to a family of 4 caused by a nationwide increase in the minimum wage from $7.25/hour to $15/hour affecting 56 million workers across 52 industrial sectors will be less than 40 cents per day.

    Sorry, but I’m not buying that a minimum wage in Davis of $15/hr is only going to cost a family of four only 40 cents a day.

    I don’t think this has really been thought out.  I know the preschool my wife works at will have to raise all tuitions in order to cover their labor costs.  There are so many other facets to this that will raise prices I think the 40 cent prediction is a pipe dream.

  12. Justice4All

    I just do not see these things as mutually exclusive Frankly. In many ways, I am a good example of what you are talking about with younger workers stuck in a brain dead job. I think we both recognize this problem that you are describing, and we both want to do something about it. We merely want a broader solution. We think Target can and should pay 15$ an hour, along with the other huge retailers in town. I think McDonalds and Burger king etc can as well. I think the hospital can pay their workers living wages in a town where a 1 bedroom apartment costs 1100 a month. We also think this can be done in a way that does not stifle innovation, or significantly harm small, local businesses. We are flexible to find solutions that work for everyone, but for too long, the working poor in this city have not had people to advocate for them at the city level. That is our purpose.

    1. TrueBlueDevil

      And who makes that decision? The businesses and the market do!

      In & Out Burger is well-known to youngsters for paying several dollars above the minimum wage, and they expect good performance. They run a tight ship. I’ve never seen one of their employees on an iPhone. (See below post, #5.) Grocery stores pay more than McDonalds.

      The “justice crowd” is chasing fool’s gold when they support tens of millions of illegal workers sneaking across our border and not expecting hugely negative affects. When you blow out the Supply curve, wages will drop dramatically. It is basic economics. Illegal immigration has eviscerated construction wages and jobs in many areas. Those were middle class jobs. Construction trainee positions used to also pay decent wages.

      The same thing is happening on the upper middle income jobs, where we have brought in hundreds of thousands of H1B visa holders in what a Davis Computer Science professor has clearly explained is a clear case of age discrimination, i.e., you can pay an Indian or Chinese 27-year-old H1B Visa holder (ergo indentured servant) $50,000 a year, instead of the American programmer $90,000 or $120,000.

      1. Justice4All

        Those are all good points, but have little to do directly with Davis, as that is a national issue. Moreover, there are elements of the business community that love the illegal immigration, and do not wish to see it fixed. We have millions of people with few legal labor protections. Undocumented workers are not going to report when they get injured on the job, or are sexually assaulted etc. But like I said, that is a national issue, not an issue that can be handled locally well.

    2. Topcat

      We are flexible to find solutions that work for everyone, but for too long, the working poor in this city have not had people to advocate for them at the city level. That is our purpose.

      You talk about the “working poor”, but you never talk about the people that are unemployed and can’t find work because of their disabilities or low job skills.  Unfortunately there are a large number of people who fall into this category.  I know because I’ve been around a few of them. Some have mild disabilities, some have criminal records, some have poor work habits or lack basic skills, and some have problems with substance abuse and addiction.

      If you were truly concerned about finding solutions that work for everyone, perhaps you should start with the most disadvantaged people who already can’t find work at $9 per hour?

      1. Justice4All

        I actually personally do advocate for those people. I am a shop steward at a local grocery store, and we have programs to help members in need, and or are dealing with personal crises. I also advocate for job placement for those working poor in other ways, but this is the primary campaign I focus my free time on. The two issues are by no means mutually exclusive, and are broader parts of a larger problem (income inequality in general).

      2. Topcat

        I am a shop steward at a local grocery store, and we have programs to help members in need, and or are dealing with personal crises. I also advocate for job placement for those working poor in other ways, but this is the primary campaign I focus my free time on.

        I’m sure that you have a lot of concern and compassion for those who already have jobs.  You would like to see them making more money so that they could enjoy a better life.  I don’t know what grocery store you work for, but if it is one of the unionized stores, the employees already make substantially more than the minimum wage.

        I am also concerned about the large number of people who don’t have jobs.  How does it help someone with a disability or poor job skills who is unable to find a legal job at $9 per hour if the minimum wage is raised to $15?  There are a lot of people in this position.  What would you have them do?

        1. Justice4All

          Likewise I am concerned about the people without jobs. I do work at a unionized store, and many do make significantly more than the minimum. I am one of those. Still, there are many who make poverty wages, (or even the minimum wage) even in my store and the other grocery stores.

          The problem with your argument is that it is based on a false premise. That being that raising the minimum wage has an adverse affect on employment. It does not. All reputable studies show that minimum wage increases have a net zero effect on employment in affected sectors. Why is that? Well, it is because the increase in spending by the workers goes right back in to the local economies, boosting consumer consumption and demand.

        2. Topcat

          Likewise I am concerned about the people without jobs.

          So, what are your ideas to help those unemployed people?  A raise in the minimum wage certainly won’t help them since they are already not working.

        3. Topcat

          There is no reliable data that shows that the minimum wage increases will cause job loss.

          If that were true, then what would be the objection to raising the minimum wage to $20 per hour or $25 per hour?  Or how about $30 per hour?  As you say there would be no job loss, there should be no problem with this, right?

  13. TrueBlueDevil

    I’ll chime in with a few points, maybe Frankly or some of the other business professionals can chime in.

    1. I’ve always read that new business failure rate is quite high. It is very risky. 80%, 90% fail within a few years. Starting a new business is not printing money.

    2. My friends who are small or large business owners typically work 6 1/2 days per week.

    3. I heard some numbers recently, these aren’t exact but are instead illustrative. Frankly may know the real numbers. It was something like this: the US typically has 500,000 new businesses started each year, 400,000 go out of business, so we get a net gain of 100,000 businesses per year. That is typical in decent times. The numbers are now currently reversed: we are losing something like 100,000 businesses per year. The analysis is that rising business costs, taxes, and regulations have reduced the chances for success.

    4. I mentioned in another thread the medical tax effect of the Affordable Care Act. I know a doctor who has a new medical procedure which was stopped by the new tax. It lowers the costs of the typical procedure undertaken today, is less invasive, and seems like a real breakthrough. The new tax applies before the procedure makes it all the way through clinical trials, and the investors have all backed out. The investors look at the added costs, the added risks, ROI, etc., and this one item pushed everything into the negative. As the saying goes, “The road to hell …”

    5. One teenager I know who works at minimum wage was fired from their first job for twice being a no show. At the second minimum wage job they wanted to carry around their water bottle, use their iPhone, and socialize with co-workers. This teenager was not promoted to better paying jobs within the organization. These are the basic types of job skills that some employers have to teach today.

     

    1. Frankly

      Here is the failure rate for business startups in the US.  That is right, 71% of all business startups are kaput by the 10th year.   What is real interesting… restaurants and grocery stores are #3 and #4 on the list for most frequent failures. And restaurants and grocery stores are two of the biggest minimum wage employers.

      Year 1
      25 %

      Year 2
      36 %

      Year 3
      44 %

      Year 4
      50 %

      Year 5
      55 %

      Year 6
      60 %

      Year 7
      63 %

      Year 8
      66 %

      Year 9
      69 %

      Year 10
      71 %

  14. Barack Palin

    We think Target can and should pay 15$ an hour, along with the other huge retailers in town. I think McDonalds and Burger king etc can as well.

    There’s a lot of we and I “think”.  For something so important as this it shouldn’t come down to what someone thinks. You name big box stores, and yes, they could probably pay a higher wage in Davis and get away with it.  But that’s not what you’re advocating for, you want all businesses to have to pay $15 without considering how many will be hurt and put out of business. I think you should do a little more thinking of the consequences of such a law

     

    1. Justice4All

      If you care to read my comments, it is very clear that we are open to implementing a 15$ minimum wage in a way that protects local small businesses. That means extended ramps and perhaps even exemptions for certain businesses. All of this would have to be hashed out by the working group. I spend a lot of time thinking and working on this, much more than an armchair economist.

      1. TrueBlueDevil

        So you are smart enough to know who to protect, and who not to protect?

        How about workers gain skills, and either their bosses give them a raise, or they find a new job, or they even might create their own business? I know of a college student who started a pretty ambitious car business as a 20-year-old! His boss was unreasonable, he took himself, and a fellow employee, and “hung a shingle”. He is now a small businessman!

      2. Barack Palin

        I spend a lot of time thinking and working on this, much more than an armchair economist.

        Can you tell us your credentials that you think qualifies you to spearhead this endeavor that will have far reaching effects on every citizen and business in Davis?  You have told us that you work in a grocery store, do you have any other qualifications?

  15. Edgar Wai

    I think the question of whether to have minimum wage is different but determines what the minimum wage should be. For an argument against minimum wage increase (that is, instead of arguing to abolish minimum wage), if we ignore the weight of the status quo, there is a symmetrical question of “is the current minimum wage already too high?”

    Unless a commenter can show that the current minimum wage is too high, or is already optimal, there is no argument against why it should not be raised. The argument can only be settled by knowing what the optimal value is for a minimum wage.

    Regardless of the skill or expertise involved in a job task, a common cost is the time the worker spends for the employer, which, directly or indirectly provides something society wants or needs. Part of the minimum wage accounts for that time, in an attempt to compensate the time spent so that we don’t end up with a society where people sacrifice their lives too much for others.

     

    1. Frankly

      Those that support big minimum wage hikes and tax hikes expect the economic system to settle into a new normal.  We have to look at the long-term trends to see hat the consequences are, because the economy will always settle into a new normal, but now without adjustment.  From my perspective and knowledge, the primary adjustment for higher cost labor has been capital moving toward other investments that promise a greater return rather than creating new jobs.

      I think this is what is missing from the understanding of the folks pushing minimum wage hikes.  They cannot force people to invest in new business starts and business growth, and they are advocating for things that cause the exact opposite.

      So the new normal… one that has been trending for some time… is fewer good jobs and more people bottom feeding for work.

      1. Justice4All

        Capital has not much been involved in job creation of late. Mostly it gets put into financials, speculation etc etc. I fully support the banks creating jobs through financing new business, unfortunately that is not what is happening now. I think you can agree with that.

        There is something to be said for creating a consumer market. The argument for higher minimum wages is that for a long time, people have been working longer for less. It takes the energy out of the economy, as people cannot afford goods and services. By turning the lowest wage workers into actual consumers, we can create demand for those aforementioned goods and services. Im not alone in this thinking. Economists like Robert Reich, Paul Krugman etc all see the wisdom of this line of thinking.

        1. Don Shor

          Economists like Robert Reich, Paul Krugman etc all see the wisdom of this line of thinking.

          Knowing Frankly, I’m guessing those are two economists he won’t find very compelling. So I’m hoping that he will reply to the content, perhaps with some other economists that are more to his liking.

        2. Frankly

          Reich and Krugman are hopeless left ideologues.  To call them economists does a great disservice to the proession.

          I like what David Neumark writes even though he irritates me on some conclusions.

          http://www.wsj.com/articles/who-really-gets-the-minimum-wage-1404683348

          The point not dicussed much is how the increase in minimum wage generates more money for government while reducing social service payments.

          The way I see it politicians are exploiting class warfare, populism and uninformed bleeding hearts to extract more money from the private sector for the public sector.

          It is government as a leech… sucking more and more mostly for itself under the guise of helping the needy.

          There are much better and actually effective ways to help people, and it requires a focus on policy that rewards economic growth and job production.

      2. Topcat

        By turning the lowest wage workers into actual consumers, we can create demand for those aforementioned goods and services.

        That sounds like a good argument.  The problem with this line of reasoning is that a drastic increase in the minimum wage will result in employers and consumers making adjustments that will actually hurt the most disadvantaged people in society the most.  Employers will need to raise prices for the goods and services that they provide.  Consumers will react to the price increases by cutting back consumption.  This will result in the employer needing less labor so the employer will cut employee hours or lay off workers.  Some employers may find that it is no longer worth operating and they will close up shop.  Other potential employers who are thinking about starting businesses or non-profit organizations will decide that it’s just not worth it, thus hiring nobody.

        Perhaps you should be looking at a different approach to social policy?  Many prominent thinkers who have looked at this area are advocating an increase in the EITC.  Maybe that should be the focus of your organization?

        1. Justice4All

          Many prominent thinkers have looked into the expansion of an EITC. In fact there are bills in the California legislature looking into this matter. If you read Alan’s article, he will go over the costs (assuming employers pass on 100% of the cost to consumers) of a local 15$ minimum wage. If you look at cities like San Jose, San Francisco, and Seattle, their minimum wage hikes have had good effects on the low wage industries in terms of growth.

           

          Again, the data shows that for everyone who may lose their job in a low wage industry, another one is created by the increased spending. The data is really, super clear on it.

        2. TrueBlueDevil

          What increased spending? If my $8 fast-food meal becomes $12, I will substantially reduce such excursions.

          If the $10 movie ticket for the new release becomes $12, I’ll go to the theatre even less. We already have Netflix, youtube, and free DVDs at the library. It’s not just the added $6 ($2 x 3).

          For example:

          $27 = 2 adults, 1 child

          $15 = 2 sodas, 1 popcorn

          $  5 = gas to get there

          ___________________

          $47 + $ 6 = $53.

          Granted, I save a few bucks buying tickets at Costco, but if you take a night at the movies from $40 to $50, that is a 25% increase, so I’ll go less often. I just won’t stomach $12 or $13 for a movie ticket when I also have to deal with numskulls on their iPhones.

          1. David Greenwald

            You just laid out why I never go to the theater. But I don’t feel a lot of sympathy for movie theaters, they have priced people out of going to the show and most of it is pure profit. They could easily pay more in wages and still be making a killing without having to pass the increased cost of employees on to the customer.

  16. Tia Will

    BP

    you want all businesses to have to pay $15 without considering how many will be hurt and put out of business. I think you should do a little more thinking of the consequences of such a law”

    You may have missed these comments from Justice4All prior to writing yours”

    We are open to the idea of exemptions on small businesses and start ups, or longer ramps to 15 “

    We also think this can be done in a way that does not stifle innovation, or significantly harm small, local businesses.”

    But it needs to be implemented in such a way as to protect our local businesses from being at a competitive disadvantage to the huge businesses like Target that can just cut the checks and not adapt their business practices.”

    This sounds like the antithesis of not “considering how many will be hurt and put of our business to me.

    1. Barack Palin

      So what’s your cutoff spot Miss Will?  What businesses get hit and which don’t?  What if an owner owns two struggling restaurants, should he have to pay the higher wage because he owns more than one restaurant?  What big boxes get hit.  Those with gross margins over a million?  Over $5 million?  So now we’re going to pick the winners and losers store by store by some group who think they know what’s good for everyone?

      1. Justice4All

        I think that is what a working group would decide those questions. Its certainly not going to be decided by an internet troll with no constructive or respectful criticism. The campaign is taking the position that while we would like a 15$ minimum wage, we want it implemented in the best possible way, with special consideration for local business.

        1. Barack Palin

          Its certainly not going to be decided by an internet troll with no constructive or respectful criticism.

          Just because I don’t believe in the social engineering that you’re pushing doesn’t make me a troll.

          [moderator] edited.

        2. Barack Palin

          The campaign is taking the position that while we would like a 15$ minimum wage, we want it implemented in the best possible way, with special consideration for local business.

          I don’t know that would even be legal.  Are you going to tell outside businesses that if they want to set up in Davis that they will have to pay more for labor than local businesses?  How about franchise stores which are big box names but independently owned by a local?  Have you really thought this out?

          [moderator] edited.

          1. Don Shor

            [moderator] Please don’t tell me how to moderate the Vanguard. Discussion of moderation practices will not take place on the Vanguard. If you have a comment or complaint, you can contact me directly at donshor@gmail.com, or take it up directly with David Greenwald.

        3. Barack Palin

          The campaign is taking the position that while we would like a 15$ minimum wage, we want it implemented in the best possible way, with special consideration for local business.

          If your plans are going to dictate that the special considerations for local business would create a situation where one business has to pay higher minimum wages than another business you guys had better get ready for the coming lawsuits.

        4. Topcat

          The campaign is taking the position that while we would like a 15$ minimum wage, we want it implemented in the best possible way, with special consideration for local business.

          Perhaps you can explain how this will help those who are currently unemployed?  If you are truly concerned about poverty and the most disadvantaged people in society, then perhaps you should be looking at solutions to help those who don’t have jobs.

  17. Justice4All

    The National Labor Relations Board has decided that franchises like mcdonalds are joint employers. This was decided with the Seattle 15$ campaign.

    1. Sam

      Justice-Can you please answer my question below?

      Have you considered the effect of the loss of government benefits to those working in Davis at $15 an hour? A single mother going from $9 to $15 per hour would gain:

      $12,480 Increase in wages

      -$2,000 Earned income credit

      -$1,000 Additional payroll taxes

      -$5,000 Increase in Section 8 housing costs

      -$720 Loss of PG&E CARE program

      =$3,760 Net gain in income or $313 per month.

      This was just having them lose some of the benefits that I can think of off the top of my head. There is also CAL fresh, loss of Medicaid, WIC…. The net gain for a single mother might actually be negative. That also assumes that she does not get laid off or her employer has to close their business due to the higher labor costs.

        1. Tia Will

          TBD

          Very little logic it seems to me. So what Sam is actually saying is that the optimal system is to have this woman working for a wage that forces her to be dependent upon all these various benefits in order to survive. This does not seem like a very desirable solution to me.

        2. Sam

          No Tia, what I am saying is that raising the minimum wage to $15 an hour in Davis is going to hurt the very people you are trying to help. I am asking the group that is trying to pass the measure if they have considered this before they suggested changes to the current laws. I have done a little more research and post an updated effect of raising the wage.

      1. Frankly

        Sam oh Sam, you hit on the scam

        The money will flow

        But not to those with income low

        No oh no

        It will go to Barry, Jerry and Dan’s folks

        Those with large pensions that want larger still

        The money will flow through the hand of their pals

        Their pals with their hands in the till

        But business won’t mind

        They are used to decline

        But they weep for the young and those with income low

        Because they know it is those who will carry the load

         

  18. Sam

     
    Mr. Pryor or Justice,

     
    Have you considered the effect of the loss of government benefits to those working in Davis at $15 an hour? A single mother going from $9 to $15 per hour would gain:
     

    Increase in wages $        12,480

    Decrease in Earned Income Tax Credit           (2,000)

    Increase in Federal Income Taxes           (1,135)

    Increase in Section 8 Housing Cost           (5,000)

    Increase in Medical Premiums           (1,800)

    Loss of CAL Fresh           (4,300)

    Additional Payroll Taxes           (1,000)

    Loss of PG&E Care Program               (720)

    Loss of free government phone               (600)

    Loss of free school lunch for the child               (650)

    Total gain/(loss) from $15 min wage $        (4,725)

     

    1. Barack Palin

      How many times have we heard stories where a boss offered a worker a raise and they refused it for just the reasons that Sam has posted.

      1. Tia Will

        BP

        How many times have we heard stories where a boss offered a worker a raise and they refused it for just the reasons that Sam has posted.”

        None. So unless you have documentation, I think that this can be tossed into the “stories I have heard” bin.

  19. tribeUSA

    Seems to me a more modest increase in the minimum wage to $11-$12 (pegged to inflation for future years) might be a good compromise and better for everyone in the long run, particularly small businesses.

     

    Here’s my logic: the megachain big businesses can better weather a $15/hr minimum wage than can small mom & pop businesses, particularly retail businesses. As smaller businesses begin to go broke or otherwise close down, there will likely then, a few years down the road, be a proposal to drastically reduce or  repeal the minimum wage altogether (with the reason being the loss of small non-chain businesses; and perhaps by TPP mandate; the secret legislation they are pushing thru on fast-track to trump national sovereignity on business and trade policy, and ensure the techno-serfdom of your children and grandchildren). By the time such legislation gets passed, it will be too late; most of the mom & pop’s will be gone. And the mega-chains will step in to further consolidate market share, with the added  benefit of minimum wages likely being even lower (in real dollar terms) than today, if not repealed altogether.

    Why do we lurch from one extreme to the other? A minimum wage increase to $11-$12 dollars per hour is a substantial increase (20-40%) from todays minimum wage in most communities, and is a modest enough increase to not have a large deleterious effect on small businesses.

    1. Topcat

      Seems to me a more modest increase in the minimum wage to $11-$12 (pegged to inflation for future years) might be a good compromise and better for everyone in the long run, particularly small businesses.

      If we are to believe the “Raise the Wage” folks, “there is no reliable data that shows that the minimum wage increases will cause job loss.”  So why not raise the minimum wage to $20 per hour, or $25, or even $30?

      1. Justice4All

        Did you see the meme at the top? John Stewart pretty accurately (and hilariously) debunks that particular question put forward by the right wing. 15 was a well reasoned number we came to, after long and thoughtful consideration. Before advocating for 15$ an hour was cool.

        1. Don Shor

          Actually, $15 is arbitrary because averaging those three demographic groups bears no relationship to their relative proportion in the labor pool. And your analysis excluded a demographic that is very common in the Davis labor market: working single adult sharing residence with another working single adult. That happens to be my most common employee’s situation.

        2. Barack Palin

          Yes, this group would have you believe that most people working on minimum wage are coming home to three kids and a mate that doesn’t work.  Sure, there might be a few cases of that, but the norm in Davis is more a college student who’s working to make some extra cash , a part time teenager working the summer or after school, like Don says working single adults sharing a residence, or a spouse having a second income to the main breadwinner’s much higher wages.

        3. Topcat

          15 was a well reasoned number we came to, after long and thoughtful consideration.

          What would you say to the employer who will need to raise prices, decrease employee hours, or lay off workers in order to meet the $15 minimum?  How about the employer who decides that they can’t afford to continue operating?  What about the potential employer who decides not to start operating in Davis because of the increased cost burden?

        4. Topcat

          Did you see the meme at the top? John Stewart pretty accurately (and hilariously) debunks that particular question put forward by the right wing.

          It’s hard to take someone seriously who gets their political philosophy from Comedy Central.

        5. Barack Palin

          Plus the lady in the meme looks foolish asking why not $100,000/hr.

          But if $15/hour is so good for everyone why not $20/hr or $25/hr?

          I know, I know, this group claims they have done much research, thinking and consideration and $15/hr is the sweet spot (cough, cough)

          They know what’s best for everyone.

    2. Justice4All

      We at Davis Citizens for a Living Wage would consider an ordinance that would address the concerns of small business owners in town, like a longer path to 15 or exemptions for really small businesses and start ups. Like I have said many times, we live here, we work here, we eat at down town restaurants. We do not want to harm our community. At the same time, the working poor of this city have been marginalized for far too long by the people in power. We intend to advocate for ALL citizens of Davis, not just the elite.

      1. TrueBlueDevil

        So you want to experiment with the livelihoods of your fellow citizens – since you and your group know better? As others have posted, why not a $30-an-hour minimum wage?

      2. Topcat

        We intend to advocate for ALL citizens of Davis, not just the elite.

        Except that you don’t advocate for the low skilled individuals who are unemployed and will find it impossible to find work if they are priced out of the market. It appears that your attitude towards the truly disadvantaged is that they just have to try to live off of government support or find some illegal activity to make money to live on.

        1. Topcat

          Wow… “sorta’ a minimum wage”… what a concept!  An absolute MINIMUM, EXCEPT ….

          Yes, the “Davis Citizens for a Living Wage” group don’t seem to have much grasp of how things work in the real world.  Their whole argument focuses on what they think someone needs to live on.  They have no concept of the value of the work that someone is able to do or the amount that an employer is able to pay and still have a viable enterprise.

        2. hpierce

          Topcat… to be clear… I have no problem with the minimum wage hike approved by the CA Senate.  I do have a lot of problems with blanket minimum wage proposals floating around, particularly worried about minimum wages that would prevent those with autism, Down syndrome, other impediments from finding real work that they can succeed at, making them as independent as they can be.

          And giving them the satisfaction that they are contributing members of society.

        3. Topcat

          … particularly worried about minimum wages that would prevent those with autism, Down syndrome, other impediments from finding real work that they can succeed at, making them as independent as they can be.

          That is my concern too.  I also include people with mild mental illnesses, people with criminal records who want to get back on the right track, and people with addiction and substance abuse problems.

  20. TrueBlueDevil

    Lost in this squabble was the recent downgrade of the first quarter economic growth into a negative GDP rate. This negative Q1 growth rate is quite uncommon. Seven years in, and the Obama economy still sputters.

  21. Tia Will

    Frankly

    Please take this for the very sincere question it is given that I have no knowledge of economics.

    If as you say 70% of private upstart companies fail within 10 years, then it would seem to me that our “free market” our “private enterprise” system is hardly the most efficient that could be devised.

    Look at this from a surgeon / patient point of view. If I were to tell you that 70% of the time the surgery I was proposing failed, and that there were other options available, would you still want me to proceed with that surgery ( or adopt it as the standard of care which is the more apt analogy)?  Or would you maybe consider taking another look at those other options ?

    1. TrueBlueDevil

      It is by far the most efficient system we have. I’m actually surprised the failure rate isn’t higher than 70%. There are a litany of reasons why businesses fail. I’ve seen poorly thought ideas, poor execution, changing markets, and burdensome government regulations. AJ Bumps and Giant Hamburger thrived in Davis for years but likely closed due to changing demographics and competition. Now we have sushi, Thai and noddle shops along with Redrum and In & Out. Many businesses fail due to being “under capitalized”. TV programs like Shark Tank and The Profit provide interesting case studies.

      Your query required me to look up the actual author of a very famous quote which describes this process of “creative destruction”.

      “In Capitalism, Socialism, and Democracy (1942), the Austrian economist [Joseph Schumpeter] wrote: ‘The opening up of new markets, foreign or domestic, and the organizational development from the craft shop to such concerns as U.S. Steel illustrate the same process of industrial mutation—if I may use that biological term—that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. (p. 83)’
      “Schumpeter and the economists who adopt his succinct summary of the free market’s ceaseless churning echo capitalism’s critics in acknowledging that lost jobs, ruined companies, and vanishing industries are inherent parts of the growth system. The saving grace comes from recognizing the good that comes from the turmoil. Over time, societies that allow creative destruction to operate grow more productive and richer; their citizens see the benefits of new and better products, shorter work weeks, better jobs, and higher living standards.
      “Herein lies the paradox of progress. A society cannot reap the rewards of creative destruction without accepting that some individuals might be worse off, not just in the short term, but perhaps forever. At the same time, attempts to soften the harsher aspects of creative destruction by trying to preserve jobs or protect industries will lead to stagnation and decline, short-circuiting the march of progress. Schumpeter’s enduring term reminds us that capitalism’s pain and gain are inextricably linked. The process of creating new industries does not go forward without sweeping away the preexisting order….”

      http://www.econlib.org/library/Enc/CreativeDestruction.html

      Conversely, few businesses have likely closed in North Korea of late, but are they better off?

    2. Frankly

      Tia – You need to learn about the creative destruction aspect of capitalism.  It is what is lacking in government.  Do you let all plants in your garden continue to grow, or do you remove unwanted ones and trim and prune so that the best plants can thrive?

      The point here is that it is already quite difficult to start and grown a business to long-term success.  Government makes it more difficult.  This is one of the reasons that we have too few good jobs and so many more people unable to provide enough for themselves.

      1. Tia Will

        Frankly

        A note on creative destruction. The creative part only applies to those who end up the winners in the competitive game. There is only destruction for those who don’t make it into the “winners circle”. Plants are not people. If you are willing to “cull people” from your society, then I guess you might succeed in obtaining a “super race”. I think that someone once put that forward as a viable option. It doesn’t seem to have worked out that well.

        I am often asked about how I do not understand about how what ” I advocate” would harm those at the bottom of the economic scale who I am trying to help. I am not arguing for a minimum wage. What does not seem to be being appreciated is that I would completely redo our economic system. I would provide everyone with a calculated amount that is enough to live on. Therefore, no one would be “injured” my my plan. If anyone wanted to earn more, they most certainly could do so. All they would have to do is to put in additional hours.

         

        1. TrueBlueDevil

          We have plenty of people who are creative who never get the golden apple. They work a normal job during the week and are ‘creative’ at night or on weekends. Or they work part time, and create part time, if their partner or family subsidizes them. Some also might see “destruction” as merely the artist who sells his / her art at a street faires, but doesn’t become the next Ansel Adams. Adams “won”, I guess, but the others can still create… it merely won’t reach the masses.

          Some would argue that we already do provide this minimal living level with food stamps, public housing, Section 8 housing, sometimes free utilities (in San Francisco), free medical care, education, and such. My understanding is that most homeless people have drug, mental health, or substance abuse issues, and the legal world says we can’t force them into housing.

          We also have free choice. Sacramento offers cheaper hosing than SF, but it isn’t as exciting or cultured.

           

           

        2. Topcat

          My understanding is that most homeless people have drug, mental health, or substance abuse issues, and the legal world says we can’t force them into housing.

          Yes, and these are the people that are hurt the most by an arbitrarily high minimum wage.  Wouldn’t it be better to have someone with mild disabilities working and being a productive member of society rather than having to live on government assistance or living on the streets?  This is the point that the  “Davis Citizens for a Living Wage” group does not understand and will not address.

        3. hpierce

          Yeah… in your system ideal, a HS drop-out with six kids, sweeping floors @ a Mickey D’s would have more income (because their ‘needs’ were greater) for a forty hour week than a single professional engineer with a college degree and professional license, and if the engineer wanted better than that they could always work 24 hours or more each day including Saturdays, Sundays, and Holidays…  not buying it.

    3. Topcat

      …it would seem to me that our “free market” our “private enterprise” system is hardly the most efficient that could be devised.

      Nobody has been able to devise a better system for coordinating economic activity on a large scale.  The experiments with communism during the twentieth century were largely failures.  Most countries, including the US have mixed economies with some socialist sectors and some free market sectors.

        1. Tia Will

          BP

          The greatest economy and country on Earth.”

          Only if you value money above all else. There are many countries in the world whose citizens are just as convinced as you are that their country is the best on earth. On what basis do you judge greatest ?  Some would probably say that the most egalitarian is the greatest. Others might hold that the most compassionate is the greatest. Or maybe the happiest. There are many ways to measure “greatness”. Conspicuous consumption is only one and even there I think that some of the Arab countries may have us beat.

        2. TrueBlueDevil

          I think you’re both correct. I do think there have to be 10-15-20 countries out there with many wonderful attributes, many in western Europe. I do admire their vacation time and quality of life in some countries. But they have their issues too, high taxes, if you want to quit a job you have to give 6 weeks notice, if you tried to rent your condo in France the policies / cultural norms are even worse than San Francisco, etc. Japan looks highly civilized, but there appears to be almost no diversity and a great deal of conformity and stress.

           

      1. TrueBlueDevil

        Castro’s system has failed in Cuba, he has had to accept a black market with American dollars, and his policies has caused prostitution to flourish for European tourists. Citizens need the few dollars just to buy basics.

    4. Edgar Wai

      Business failure and injury/death of patients are not comparable risks.

      If I start 5 businesses and I only need 1 to succeed to cover the losses,  a failure rate of 80% is affordable.

      1. Barack Palin

        Agreed, it’s like investing in start up biotech stocks.  Buy five of them on the cheap and it just takes one to hit and you’re a big winner.

      2. Tia Will

        Edgar

        If I start 5 businesses and I only need 1 to succeed to cover the losses,  a failure rate of 80% is affordable.”

        I think that is a little bit of a rosy picture. Where are you going to get the funding for that fifth business after you have run the previous 4 into the ground ?  Unless you start out independently wealthy or have some really good or gullible friends, I doubt you are going to be able to keep going.

         

         

        1. Edgar Wai

          People generally don’t become homeless when they first business idea fails. They are not betting everything on their endeavors. They know the statistics like we do and they take measured risks.

  22. Sam

    “I have been patiently waiting today for any comments on this blog opposing increases in minimum wages that are based on and provide objective data trying to refute my claims and assertions.”-Alan Pryor

    Mr. Pryor,

    I have posted a comment using actual data showing that raising the minimum wage has a negative economic effect on single mothers and am still patiently waiting for a response from someone in your group.

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