The True Effects of Raising the Minimum Wage Locally on the Most Vulnerable Citizens

minimum_wageBy Sam Houston

An article posted on the Davis Vanguard last week written by the Davis Citizens for a Living Wage (DCLW) commented on five “myths” about the economic effects of raising the minimum wage. Instead of debating the possible economic impacts of raising the minimum wage by 60% in a town of about 66,000 people using national, regional and specific economic data, we need to look at the actual effects of raising the minimum wage on different groups of people in Davis.

When a law is created either by elected official or through the initiative process it is usually done to in order to achieve a determined outcome. In this case a group of local citizens are trying to get an initiative passed that would require that the minimum wage in Davis be raised to $15 an hour in order to “bring many working poor out of poverty in addition to stimulating the local economy.”

I think that it is a very noble effort to try and change laws so that we can help the working poor and lift them out of poverty. I am not in any way disagreeing with or discouraging the motives of the group. However, I think that it is worth looking at the effect of raising the minimum wage in an isolated labor market like the City of Davis.

A single person making the current minimum wage in Davis makes about $18,720 per year. According to DCLW this would be $2,854 less than the annual “Living Wage” required to live in Yolo County without government subsidies.

An increase in their wages from $9/hr. to $15/hr. would have them making $31,200 per year. The increase of $12,480 would increase their buying power by $10,296 after accounting for additional taxes and would be above the “Living Wage” threshold. (I understand that there will also be an effect on employment, labor and prices if the minimum wage is raised, but that is not the focus of the article and can be discussed another time) A raise in the minimum wage for this individual would achieve the goal outlined by DCLW.

Now let’s look at a single mother with a full time minimum wage job with one school aged child. She would make the same $18,720 per year as the single person with no child. According to the “Living Wage Calculator” she would be making $24,606 less than is required for a “Living Wage” in Yolo County.

Luckily she would qualify for a variety of government programs that will help her decrease the amount of income needed to live with a child in Yolo County. The biggest assistance is qualifying for Section 8 housing. This will save the single mother about $7,500 per year in rent. She would also be eligible for an Earned Income Tax Credit in the amount of $3,160 and a child tax credit of $1,000. Another benefit available to her would be Medi-Cal.

This would save her from paying about $1,800 per year in insurance premiums through Covered California. Other programs such as Cal Fresh ($4,300), a daily no cost school breakfast and lunch ($650), free government phone ($600), reduced PG&E rates ($720) are available at her income level. I am sure that I am missing a few, but the value of those mentioned equal almost $20,000 leaving her about $4,600 short of earning a “Living Wage”.

Now let’s see what happens when we increase the single mothers wage from $9/hr. to $15/hr. Her wage would increase from $18,720 per year to $31,200 per year. After accounting for taxes this should leave her with an additional buying power of $10,296. However, since all of the government assistance programs that she and her child were eligible for are based on Federal or State poverty levels and those will not be increased when a local ordinance is passed in Davis she will lose about $17,000 of those benefits.

So the net effect of increasing her wage from $9/hr. to $15/hr. is a loss in buying power equal to about $6,700 and would leave her more than $12,000 under the “Living Wage”. You can do a calculation for a mother with two children or a couple with two children with one or both working a minimum wage job and they will come out similar. In each instance increasing the minimum wage in Davis to $15 would hurt, not help those families.

I am not advocating that poor families in Davis should stay on government assistance to survive. I am also not saying that the current laws should not be changed in order to help struggling families. All I am saying is that the suggested solution by the Davis Citizens for a Living Wage is a bad idea because it is going to hurt the low income families in Davis that need help the most.

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149 thoughts on “The True Effects of Raising the Minimum Wage Locally on the Most Vulnerable Citizens”

  1. Topcat

    All I am saying is that the suggested solution by the Davis Citizens for a Living Wage is a bad idea because it is going to hurt the low income families in Davis that need help the most.

    Yes!  What I have pointed out a number of times is that a drastic increase in the minimum wage will hurt the most disadvantaged and least skilled people in society the most.  These are people that already find it difficult to find employment at $9 per hour.  It will be impossible for them to find work after a drastic increase to $15 per hour.

    1. Alan Pryor

      The whole premise of this article is that all low income workers receive all of  these public assistance benefits. This is patently false. For instance, I know dozens of low income students and workers who do not receive a dime in public housing benefits because there is virtually no such subsidized low income housing stock available in Davis (or in most cities for that matter).

      The number of low income folks who qualify for such assistance dwarfs the supply of housing units available. In fact, our stock of such low income housig is so pathetically short that there is a 4 year wait list for some more desireable units. I know one senior couple who rause their grandchild who receive subsudized housing in Davis and they claim that their rent is reduced by only about $200 per month compared to market housing. So to say that all peopole who now make $9/hour will lose $7,500 per year in subsized housing if their pay is raised is ludicrous on the face of it because virtually no low  income wage earner gets this assistance anyhow.

      Most other public assistance programs gradually reduce payments as income raises. It is not simply an either-or situation. The author of this article would do readers a service by noting what various cutoff levels exist for given benefits for the myriad of different public assistance programs he claims are available to them and provide links to all of these references (just as I have provided verifiable links in my recent article on Minimum Wage last week). Making bold, challenging statements without providing any refereces for the reader to verify the veracity of those statements leads one to believe they are just plain false.

      1. Frankly

        The whole premise of this article is that all low income workers receive all of  these public assistance benefits. This is patently false.

        This statement is patently false.  And you loose complete credibility failing to acknowledge the valid points being made.  Are you after an agenda, or do you really want to help low income people?

        1. Justice4All

          What if those points being made are based on a false premise? All of the math in this article (calculating public assistance benefits) is based on a terrible assumption. That being that low wage workers get full time employment, year round, especially single mothers. AS someone who works in an industry dominated by low wage workers, I can honestly tell you that the examples used are white rhinos. They might exist somewhere, but their numbers certainly are not reflective of the wider low wage worker experience.

        2. Alan Pryor

          Points made that are based on false assumptions are not neceassrily valid. In the case of availability of low income housing assistance, the author’s assumptions that every low income wage earner gets it is false so his point that if you raise low income wages they will lose out on public housing assistaance is also false. C’mon Frankly, I think you can figure that out youself.

          And yes I do have an agenda and that agenda is to help low income people get better wages and raise their standard of living. I think you have figured that out yourself also.

      2. Sam

        “The author of this article would do readers a service by noting what various cutoff levels exist for given benefits for the myriad of different public assistance programs he claims are available to them and provide links to all of these references (just as I have provided verifiable links in my recent article on Minimum Wage last week).”

        “This would save her from paying about $1,800 per year in insurance premiums through Covered California.”

        http://hbex.coveredca.com/toolkit/PDFs-Collateral/FactSheet_Individual_editable.pdf

        2 person household qualifies up to $21,708.

        Most programs also “Direct Certification” so if you qualify for CalFresh, you automatically qualify for reduced cost lunch in DJUSD as well as most of the other programs I have mentioned.

        http://www.cdss.ca.gov/foodstamps/PG3628.htm

        http://davincicharteracademy.net/wp-content/uploads/2014/06/engl.-letter-to-household.pdf

         

         

  2. Tia Will

    I am not advocating that poor families in Davis should stay on government assistance to survive. I am also not saying that the current laws should not be changed in order to help struggling families. All I am saying is that the suggested solution by the Davis Citizens for a Living Wage is a bad idea because it is going to hurt the low income families in Davis that need help the most.”

    I understand that you are not advocating that the working poor stay on assistance to survive…..but that is the inevitable outcome of not making dramatic changes to our current system of compensation.

    So what you have laid out is an excellent argument for completely doing away with the hodgepodge of various partially effective and inefficient programs that we currently offer as assistance. I would replace them all with a very simple formulation. Everyone who is contributing to our society receives enough to live on as calculated by the location in which they are living. It comes as a single payment from the federal government. It does away with all of the overlap of various agencies and people dropping in and out of various programs based on minor changes in their income and status. Each individual is treated separately, no comings and goings off various programs depending on whether or not there is one adult or two in the family.

    Oh…..but horrors ! That’s socialism isn’t it ? And what in your minds would be different about having a well organized, well run system than the amount that is being payed out now through a multitude of confusing, contradictory, over lapping , and ever changing programs ?  If looking at Scandinavian countries or other European countries is too frightening ideologically, how about a look at the educational and health care systems of Israel ?  Many of you seem to believe that Israel is our great friend and democratic nation. And yet their education through college is paid for as is their heath care. So we say “can’t be done “….. which I paraphrase to “won’t be done” because those of us here would rather continue the chant of “greatest nation on earth” than we would consider that others may actually have some aspects of a society down better than we do.

    1. Topcat

      I understand that you are not advocating that the working poor stay on assistance to survive…..

      But this is essentially what the “Davis Citizens for a Living Wage” are advocating.  By making it difficult or impossible for the least skilled and most disadvantaged people in society to find work because they are priced out of the market, they are saying that those people should stay on assistance to survive.  Alternatively, they can take up panhandling, robbery, burglary, prostitution, drug dealing, or another illegal activity to get by.

      1. Justice4All

        I take exception to this straw man argument, based on a false premise. All reputable studies show that minimum wage increases (even local ones) have a net zero impact on overall employment. Furthermore, its one of our goals to make every worker economically independent (not on government assistance). Implying that we at Davis Citizens for a Living wage want rampant criminality in our community is preposterous. (we live here remember). Such commentary is unproductive to say the least, slanderous at worst.

    2. Frankly

      You can cherry-pick your favored example from a list of countries, but not identify one that does it all.  Nor can you identify one that comes close to matching the US.

      Hypothetically, if we could immediately remove all of the first generation immigrants that are near or below the poverty line… many of the social problems decried by liberals would vanish.

      Finland is 5.439 million people of mostly homogenous ethnicity and you want to make them a model for a country of 319 million hyper-diverse people?

      Everyone who is contributing to our society receives enough to live on as calculated by the location in which they are living.

      You seem to have a big blind spot understanding human behavior and the corresponding failure of bossy people to control human behavior to achieve optimum social outcomes.  Do you read history?  Do you know how many times during our 2000+ years of modernity there have been attempts to do this?  Do you understand how those attempts led to much misery and suffering at the hands of those that would control… the ones that would decide what “contribution to society” is?

      The US system of democratic capitalism is far from perfect, but is also by far the best system every designed in those 2000+ years.  Your advocacy is to throw the baby out with the bathwater after focusing on the imperfections… but completely ignoring that which is positive… primarily freedom.  You take the positive for granted when you should be more reflective and more thankful.    It has been earned with blood, sweat and tears of many that have come before us.  You would reduce or eliminate it only because there are some that cannot seem to get it and fit in.  How about this…. instead of destroying it, why not work on helping those people to figure out how to fit in?  You and I have a good life, why not help them figure out how to go get the same?

      It is fallacious to think that you can just give people a good life.  They have to earn it themselves.  And they earn it by trading things of value (their labor is the first thing they can trade, because everyone has it).  The value is set by the market.  There are some problems with value set by market in consideration of social needs, and we do require policy to help smooth the impacts of the ebb and flow of the economy.  However, setting value by committee is a recipe for disaster.

      1. TrueBlueDevil

        Good points. Take away those with drug and alcohol problems, and those in need drop even more.

        (One quibble point. My understanding was that in the past, we first had millions of immigrants when there was no social safety net. We didn’t have these big government programs. Even after they were implemented, immigrants (I thought) were under-represented in welfare programs. Today my understanding is the opposite, that immigrants are over-represented on the welfare rolls. I’m told Clinton’s welfare reform barred immigrants from obtaining welfare for five years, but after a few years Congress scrapped that requirement.)

  3. Barack Palin

    Everyone who is contributing to our society receives enough to live on as calculated by the location in which they are living. It comes as a single payment from the federal government.

    You keep beating this dead horse.

    1. hpierce

      Tia’s idea could work, BP… all we need is to reform the IRS code, eliminate all deductions and set the Fed Tax rate to 99%.  Simple.

    2. Tia Will

      BP

      Only dead because you declare it so. Social safety net programs were dead prior to their existence also. They exist now whether or not they are loved, whether or not they are the most efficient form of support.

    1. Biddlin

      Milton Friedman’s “Negative Income Tax” proposal always made sense to me, as a cost effective, non-intrusive way of raising the living conditions for poor people.

      ;>)/

    2. Frankly

      On this Robb Davis and I agree in principle.  I would be open to scrapping every of the 70 government programs to provide benefits to the poor with one that makes a graduated means-tested payment to meet a living wage standard.  That would be it.  Nothing else.  Simple. Transparent.  Easy to do the math.  Easy to catch politicians finding new ways to rob working people to give to the lazy class in return for votes.

      The benefit would kick in beginning at age 22.  Younger adults with children could apply for an exception.

      But if working age, unless permanently disabled, you have to work to qualify for the the benefit.

      College students and funding for college is another challenge.

        1. Frankly

          I think we need another reform to help kids afford college.  But if we do direct vouchers to students, which I am in favor of, no schools should get any public assistance aside from that.  I don’t want the schools to get lazy increasing costs.  They should compete on value to the students.  The student would hold the power of the purse to change behavior of the colleges if the colleges want to attract the student.

          The voucher would need to be set at an average cost of tuition and then keyed to inflation from that point.  Any student going to a more costly college would need to supplement the cost, or the school would need to provide financial aid and means-tested or other tested scholarships.

          The way I would like to see it work, every student that is a legal resident pulling a full load up until they are 24 would get a voucher that would cover their average tuition costs, and then they would also get a means-tested monthly allowance.  After age 24, they enter the adult program.  If they want to move on to higher degrees, they would have to pay for it out of their own pocket or with student loans.

        2. TrueBlueDevil

          I’m told low-income kids have lots of options with good grades, but it is the middle income kids who are socked.

          Why have college costs skyrocketed so much the past 3 decades?

          Students also now often – even at Davis – they want a car, demand a smart phone, and many other amenities we did without.

        3. Davis Progressive

          low income students do have a lot of options, middle class kids are being screwed.

          however, when you say students want a car – less so than 20 years ago.  they want a smart phone (marginal additional cost on a family plan), they want other amenities (some), but the huge cost increases dwarf those marginal costs – cost of housing and tuition.

        4. TrueBlueDevil

          The $1,000 per bedroom rental cost when the West Village opened surprised me, that doesn’t sound “affordable”, unless students bunk 2 to a room. (Does that include meals?)

          Now the campus is tearing own some of the last truly affordable student housing? Doesn’t make sense… all to be “net zero”?

    3. Topcat

      On this Robb Davis and I agree in principle.  I would be open to scrapping every of the 70 government programs to provide benefits to the poor with one that makes a graduated means-tested payment to meet a living wage standard.

      And I agree with this approach in principal too.  Politically, implementing this has virtually no chance of implementation.

    4. Robb Davis

      I should note that I do not agree with everything in this article, BUT, I do think the issue of multiple programs to support those living in poverty is problematic.  Knowing people who qualify for and receive a mixture of these benefits I can say with great confidence that they have at least two downsides: 1) they have a huge transaction cost for recipients–managing, submitting paper work for, and dealing with compliance takes time–time that is at a premium for many working poor people.  2) they are administered by people and, believe it or not, transactions with the programs’ gatekeepers can be demeaning and dehumanizing.

      I see no downside to try to streamline these various support programs into simple cash transfers but I very much doubt this will happen because all such programs spawn their own institutions that exist to keep them going.  This is not an “anti-government” rant, merely an acknowledgement that systems that arise to serve certain ends often become ends in themselves.

      1. Sam

        The focus of that article is to point out that raising the minimum wage in Davis is not going to help a large group of poor workers at or near the poverty line.

        I agree with you that the current system of having multiple programs of support is a terrible idea for a bunch of different reasons including the ones that you mentioned. Setting up a “negative income tax” is a much better way to handle things.

        1. TrueBlueDevil

          But all of the students will see increased costs every day. With the last minimum wage hike, UCD students immediately saw prices hiked at the CoffeeHouse.

          There are several other factors which work against a negative income tax.

          – Moral / ethical reasons – there will be a certain segment – 10%, 20%, 30% who take their check, and instead of paying rent or buying food, will buy drugs, gamble, or buy sushi. Some will end up on the street, others worse.

          – The Machine. The Machine likes to pass out jobs, especially patronage jobs, there are tens of thousands of jobs which go to these government workers. Are you really ready to lay off government workers in 70 departments? The workers, unions, and agencies will all fight to protect their fiefdoms.

          Issues like these are why both Reagan’s and Clinton’s welfare reforms were embraced by many.

          Gavin Newsom fought the welfare lobby in San Francisco when he created “Care, not Cash”, and simple tracking and verifying steps found fraud rates of up to 50%!

        2. Davis Progressive

          “Moral / ethical reasons – there will be a certain segment – 10%, 20%, 30% who take their check, and instead of paying rent or buying food, will buy drugs, gamble, or buy sushi. Some will end up on the street, others worse.”

          better for them to live on the streets and starve right now? you’re argument that people having more money means more will be on the streets? why do you care if people want to do drugs, gamble or buy sushi?

        3. TrueBlueDevil

          That is a vexing question that many citizens grapple with. We don’t like to see people living in boxes under freeways, though many choose to live there over government housing. I think some assisted living situations have shown success, not sure if they have been rolled out yet. I saw some highlighted when I did some volunteer work in the Tenderloin in San Francisco.

          Second, you may think different, but many citizens don’t like their hard-earned monies going to Spicoli so that he can get high and watch Jerry Springer midday. We don’t like that. Many detest that.

        4. Sam

          Robb-Ok, I don’t agree with all of the article you posted either, but think that it is a good start in the right direction.

          TBD and DP- Funny you posted those comments on morality. When Henry Ford increased wages the workers only got paid half in actual wages. The other half was given out as a bonus if they met certain “Social” requirements. If you gambled or drank, you did not get the bonus. Women had to be single and supporting a family. If they were married and worked or if a man was married and his wife worked outside the home you did not get the bonus.

  4. Topcat

    Now let’s see what happens when we increase the single mothers wage from $9/hr. to $15/hr. Her wage would increase from $18,720 per year to $31,200 per year.

    In reality this is most likely NOT what would happen.  In the real world, employers look closely at their costs and make adjustments to accommodate changing conditions.  An employer who is faced with a drastic wage increase from $9 to $15 per hour can do a number of things.

    Raising the prices for the goods or services they provide is one option.  This will likely decrease demand for those goods and services so the employers will have less need for labor.  The employer can adjust by reducing the employee’s hours, or laying off some employees.

    Another option for an employers faced with cost increases is to decide that it’s not worthwhile staying in business, and just shutting down.  It’s very common for small employers to do this.  We’ve seen many employers come and go over the years.

    Another option for employers is to increase use of automation so that less employees are needed to do the same amount of work.  We are seeing this in retail with the increased use of self checkout machines.  Technology is starting to be adopted in the restaurant industry to automate the ordering and payment processes.

    As you can see, any of these adjustments that employers make will result in less work for the lowest skilled employees.  This is the issue that the advocates of a drastic increase in the minimum wage just won’t talk about.

    1. Alan Miller

      This is the issue that the advocates of a drastic increase in the minimum wage just won’t talk about.

      Man, you are really confused.  Since government and business owners have infinite money, they will simply pay the higher wage to their employees and everyone will be happy.  Thank God for infinite money!

      1. Topcat

        Man, you are really confused.  Since government and business owners have infinite money, they will simply pay the higher wage to their employees and everyone will be happy.

        Yes….I forgot that all employers are wealthy and have more money than they know what to do with.  I think I’ll go to the bank now and see if I can get them to tell me where my infinite money is 🙂

    2. Miwok

      You are right AM! I didn’t think of that when I went to work recently and could only work 20 hours a week. Many people I talked with who used to work more have been cut back, then the rent and ACA drove them to desperation. These figures only work if the employers do not cut back everyone to less than 30 hours a week, like the mass exodus of workers from employer-sponsored plans as soon as ACA was announced. Most jobs in the “growth” category are part time to make up for all the people whose hours are cut back and now have to have pizza delivery jobs to pay the rent and ACA.

      So if 100% of the people are cut back then get a second job to make up for it: Double the jobs! Unemployment goes down, right?

    3. Justice4All

      As someone who is an advocate for raising the minimum wage to an actual living wage, and as someone who works in the retail industry, I can honestly say that I am more than willing to talk about business concerns, automation, and closing up shop. I do it practically every day.

      Automation: There are automatic checkout machines where I work. They are often more trouble than they are worth, and still require a monitor to insure that the orders are rung up correctly. In my experience, these are sometimes useful, but mostly they have a net zero impact on labor, due to the increase in shrink that comes with them. Moreover, automation is going to happen regardless of the cost of labor. Its been happening since the beginning of the industrial revolution. As far as the restaurant industry goes, I have seen those auto pay stations. They still require an actual server, they just let the customer get out of the restaurant faster, thus freeing up the table for more customers.

      Small business shutdowns: As it has been said here many times, businesses often fail. In Seattle, where they have implemented the 15$ minimum wage, employment is up in affected sectors, and new business creation in those sectors have increased. This is also true in San Jose, San Francisco and Oakland. Much of the fear mongering about small business closures are in fact, just that. This isnt to say that we at Davis Citizens for a Living Wage are not sensitive to the concerns of small business located here in town, we are. We would like to have their constructive input on this issue.

      Many issues discussed in this thread can only be addressed at that national level. But since the federal government is incapable of actually doing the people’s business, raising the minimum locally is a good way to address some of these issues, locally.

      1. Barack Palin

        In Seattle, where they have implemented the 15$ minimum wage, employment is up in affected sectors, and new business creation in those sectors have increased. This is also true in San Jose, San Francisco and Oakland.

        How do you know the full effect of the $15 minimum wage when it hasn’t actually taken place yet in Seattle?

        For Large Employers(501 or more employees)
        Pay$11/hour.
        Beginning 2016, pay a reduced hourly rate if the employer makes payments toward an employee’s medical benefits plan.
        Large employers will reach$15/hourin 3 to 4 years.
        For Small Employers(500 or fewer employees)
        Pay$11/hour.
        Or pay$10/hourand make up the$1/hourbalance with employee tips and/or payments toward an employee’s medical benefits plan.

        Small employers will reach$15/hourin 5 to 7 years

        San Jose’s minimum wage is $10.30, Oakland’s is $12.25, and S.F.’s is $12.25
        So we really don’t know how much a $15/hr. minimum wage will hurt businesses or communities because from what I can find it hasn’t been instituted anywhere yet.

        1. Don Shor

          Yes, to put it simply: they haven’t “implemented” the $15 wage in Seattle, they’ve just passed the ordinance. If you tell me I’m going to have to pay $15/hour in three years, it won’t affect my hiring practices right now.

      2. Barack Palin

        There are automatic checkout machines where I work. They are often more trouble than they are worth, and still require a monitor to insure that the orders are rung up correctly. In my experience, these are sometimes useful, but mostly they have a net zero impact on labor

        I don’t agree.  I shop at Safeway and Save Mart where they have four automated machines with just one clerk watching over and the lines are often long to those registers.  Often times only one non automated clerk assisted checkout line is open.

      3. Topcat

        I shop at Safeway and Save Mart where they have four automated machines with just one clerk watching over and the lines are often long to those registers.

        Yes, the automated checkout machines do seem to have reduced the number of checkers.  As people get used to the machines they get easier and faster to use.  I have gotten pretty good at using them myself and I don’t have to deal with the often unpleasant checker.  Obviously Safeway and SaveMart believe that the machines are worthwhile or they would remove them.

  5. Frankly

    Good work Sam Houston.

    Just so more people understand what is really going on here… Democrat politicians are running out of other people’s money within the current high tax scheme they have concocted.  The ethical left-leaning politician would get to work cutting the size, pay and benefits of the public sector union workforce – the one that is sucking more and more money from the system that would otherwise be used to help people in need.  That way Democrats would have more to satiate their bleeding hearts to make sure everyone is cared for equally to some standards they determine.

    But we don’t have any ethical politicians.  Instead, we have crafty and devious people that accumulate their wealth by figuring out how to send even MORE money to these public sector unions… the same ones that finance Democrat campaigns.

    So, as you are running out of money to pay your union pals you decide to push what is really just another tax on private business – one of your favorite whipping boys that you have worked so hard with your medial pals to foment voter anger over.  You force these business to raise the minimum wage.  This will decrease the pressure on social program funding.  This is turn will make the budget look rosier and it will help you make a case for giving your public sector union pals a raise.

    You know that this will not be helpful to many of the most vulnerable people, but they are righteous sacrificial lambs to get what you want.  Besides, voters can’t do math and have short memories, and you can come back again to the public ATM when the cries for help get loud enough again.

     

    1. TrueBlueDevil

      I hadn’t thought of this angle. Wow.

      I asked this elsewhere, not sure if you saw it. Is there still a risk that Californian won’t be able to pay all of it’s bills in the future? I believe that Governor Brown nibbled around the edges of pension reform for new hires, but did little to nothing as far as current workers…  and then on top of that he added a High-Speed Train to Nowhere … and given the millions of workers we are bringing in to the bottom end of the lower class, I have to believe we have some monumental problems developing.

      1. Frankly

        Yes, there are huge problems developing.  If you plot the REAL pension liability gap (not the artificially high returns that CalPers reports), and you factor an additional data point change of the increased life expectancy of people in general… you get a massive ballooning of debt that will just kill subsequent generations.

        Now throw in economic downturns, a likely war with China and Russia or radical Muslims, and the US is heading for a probably collapse.  But instead of working to shrink the gap in this city, in this state, in this country so that the US and communities have the financial strength to weather financial storms… those politicians of the left are busy trying to extract even more from the private economy to push the gap even larger.

        We are beyond fully-leveraged, yet to those social justice crusaders that failed accounting and economics, we just have to harvest more from the money trees that they are sure grow in the backyard of every CEO.

        1. TrueBlueDevil

          I continue to be naive. When I heard we had some record revenues come into the state, my gut reaction was “Great, let’s pay off some of our long-term debt! Pay down $5, $6, $7 Billion on our bonds … imagine how that would help our budget and credit rating!” Reality then kicks in when I realize there are state propositions, laws, and politics that prevent this.

          Same with Davis. Unexpected revenues come in… roads in a precarious state … fast-track a new RFQ and make more progress this summer. Another failed naive thought on my part.

          Frankly, have you factored in the retirees with savings, their pensions and real estate equity, who will leave the state?

        2. Davis Progressive

          “I continue to be naive.”

          at least you admit it.  😉

          there are all sorts of problems with your formulation for the city in particular.  first, you bought into the line that unexpected revenues came in.  they did not.  we simply got the revenues from the tax increase.  without the tax increase, guess what, we’re in the read.

          second, the city can’t just put out an rfq now and get roads done.  those contracts have already been let.

          third, even if they could, the city has about $15 million for roads this summer – my guess is there is a limit to how much construction they can do at once anyway and they are probably about at it.

    2. Alan Pryor

      But we don’t have any ethical politicians.

      Hmm..Robb Davis – How do you feel about this statement?

      Frankly, I am guessing you have no idea how revealing comments like this are and how seriously it demeans the positions you espouse. Blanket disparaging statements like this do not serve your cause. I can only imagine your response if someone said “we don’t have any ethical business people”.

       

      1. Frankly

        I should have written that we have few knowledgeable and honest politicians.  You are right to call me out on that statement.

        But if you are not ignorant, and you pursue a policy that you know will cause impacts that you ignore or dismiss, then I absolutely put you in the unethical class.

        we don’t have any ethical business people

        I hear that all the time.  It is inferred from our President and politicians on the left on a regular basis.

        This minimum wage hike is part of that war between the politicians on the left and business owners.  The politicians on the left are aided and abetted by business-ignorant and economy-ignorant social justice crusaders like yourself.

        1. Frankly

          Sorry.  I am very agitated about this.  It hurts what I work to accomplish trying to increase the number of jobs in the state.    You are not unethical.

        2. TrueBlueDevil

          Frankly, and others, how could we re-energize the small local shopping centers in Davis which struggle? Would removing the need for a supermarket as an anchor tenant solve a big hindrance?

           

        3. Robb Davis

          TBD–I do not have an answer for you… yet.  This is something I discussed a bit with Mark West and Don Shor during my campaign and I am interested in figuring it out but… I have not had time to raise yet.  Apologies.  An important issue I believe.

          Frankly–no problem.  I was NOT in a fetal position (no comment as to whether I was sucking my thumb or not, however)

        4. Frankly

          Robb – If you are in a fetal position it is probably because you are coiled and ready to strike!  And the thumb sucking… just note the cake in close proximity with a thumb-sized hole in the frosting.

          TBD – I think the grocery anchor requirement is a problem.   It is a problem for many reasons, but one of the biggest is that grocery stores are the most likely to fail just below the top on the list… restaurants.

          I think part of the problem is simply the reality of American life.  Many of us that have traveled to old Europe and other places have been smitten with a slower pace of life… one where things are in walking distances and values are different.  The social engineers then go to work trying to force the same with development policy.  But the problem is that the design is like oil in the water of regular life.

          Also, many of those old Europe societies sustain themselves on tourism dollars.  And even then, their financial systems are clearly unsustainable.

          70% of working Davis residents work outside of Davis.  They work and commute.  They have limited discretionary time.  They have limited discretionary dollars.  They seek the optimum dollar value in consideration of time.  They are also picky about their stuff.  If they can shop at Costco in Woodland, why pay a premium to shop in a small neighborhood market that does not carry all their preferred stuff?

          Rob White nailed what is going on… the social engineers think in terms of scarcity… that they can alter behavior and create a utopia from implementing policy that causes scarcity of choice.  But the world is too flat and people are too busy and have too few dollars and they are picky.  They will seek abundance elsewhere.   As so all the Davis social engineers accomplish is pushing people outside of town to get what they need and want.

          The better idea is to build what the people need and want, and just do it attractively so we are not assaulted by ugly form and function.

          1. Don Shor

            TBD – I think the grocery anchor requirement is a problem.

            Actually, at this point I think that’s only a problem for one neighborhood center, and as long as Westlake Market is willing to stick it out it isn’t a problem even for that one. The vacancy problem in the East Davis shopping center seems to have been resolved by the Dollar Tree/Grocery Outlet combo, which appears to be very popular. Our other neighborhood centers have viable grocery stores.

  6. Justice4All

    So, there are a couple things I would like to clear up. One, we are not talking about raising the minimum wage to 15 over night. Two, many of the premises this article is basing its arguments on are false. (we will elaborate in our official response)  Most low wage workers have unpredictable hours, and practically never have the same hours week to week (it makes the math problem harder).

    We at the campaign are willing to compromise to address the concerns of the small business community. We are citizens who genuinely care about all Davis citizens, that means the small business community too. We live, shop, and work here, and we want to see the small business community thrive. To that end, we are willing to collaborate with the small business community to implement an ordinance that everyone can live with.

    I appreciate the tone and candor of the writer in this case. It is important that we have a discussion about poverty and the working poor in our community, as it has largely been unaddressed publicly. This means that reasoned discussion based on facts are important, especially from parties that do not always agree with each other. This is how we find common ground and better solutions for everyone in the community.

    We will certainly write a response, in order to continue the constructive public dialogue on issues of poverty in our community.

    1. Biddlin

      While I am a longstanding advocate for a living wage, I find your disingenuous introduction and non-responsive answers to questions posed by many posters sufficiently off-putting to reject your message, solely on the messenger’s demeanor. Perhaps you need to step back and see the difference between negotiating MOUs in Sactown and promoting an initiative.

      ;>)/

      1. Justice4All

        Im not exactly sure what you are referring to. Im trying to keep up with all the posts, but my time is somewhat limited. Can you direct me to which questions go unanswered? And what is this MOU business in Sac that you are talking about? This is news to me. How precisely have I been disingenuous? Im perfectly willing to discuss any and all issues related to this issue.

      2. Topcat

        Can you direct me to which questions go unanswered?

        You claim to be interested in addressing the issue of poverty.  There are a large number of people in society that have various disadvantages that make it very difficult for them to find work.  These include people with mental illnesses, people with developmental disabilities, people with criminal records, people with poor language skills, people with poor interpersonal skills, and people with poor work habits.  Many of these people are currently unemployed and are finding it difficult or impossible to find legitimate work.

        If Davis were to implement a drastic raise in the minimum wage far above the California State minimum ($10 per hour as of January 2016) the most disadvantaged people in society will find it impossible to find work in Davis.

        What would you propose that these people do?

  7. Edgar Wai

    For the second situation where a single mom end up losing benefits, couldn’t they opt to work less? So a raise from $9 to $15 means they only need to work 24 hr instead of 40 to maintain the same level of benefits.

    For the employer, it is the difference between hiring 1 person to fill 40 work hours, or 2 people to fill the same 40 work hours. If the employer already did not hire full time to avoid benefit costs, and the demand of filling the position is inelastic, then the result is that the employer will be hiring addition person. In other words, job is created.

    I didn’t talk about what would happen if the positions are elastic because this article doesn’t have the data for it.

  8. Davis Progressive

    i think people need to resign themselves that while $15 per hour seemed ridiculously optimistic last year, it is coming.  i wouldn’t be surprised if the legislature goes up to $13 statewide in this session.  sf, oakland, san jose, la have already gone to $15.  sacramento will likely have to follow.

    i get that it will increase costs, but it is an incremental increase and employers will be able to adjust a bit on the fly.  in the short term, some will overreact and cut positions, but in the longer term, they’ll adjust.

    1. Frankly

      They’ll adjust.

      There you have it folks.  Ignore the facts.  Ignore the logic.  Ignore the math.  Ignore the impacts.  It is the political thing being done and it will get done because of tyranny of the majority and blind ideological pursuits.

      The adjustment has already taken place.  The adjustment is record under-employment and discouraged workers.  Increasing the minimum wage to $13 or $15 will just accelerate it.

      Lefties are clear in their design for a new world order where workers are victims simply because they have to work, so unless business will pay enough, it is better to have more low-income people not working and supported by government.

      1. Davis Progressive

        what facts, logic and math?  i have seen conflicting studies but most suggest there is a short-term hit followed by a longer term benefit.

        1. Frankly

          Back in 2007, 66% of Americans had a job or were actively seeking work. Today, that number is at 62.9 percent — the lowest level since 1978:

          This only goes back to 2005, but note the slope.

          http://data.bls.gov/timeseries/LNS11300000

          So the studies that you have read that suggest a long-term benefit ignore the drop in the labor participation rate that has gone on for some time.

          And there is another thing to consider… we have lost manufacturing jobs and the economy has shifted to knowledge workers and service workers.  This is another change that is directly attributable to the cost of US labor compared to the global market of labor.

          When you push the minimum wage up from a social engineering basis, it does cause the markets to adjust.  They will adjust by doing more of the same.

          Globalism is causing a global wage leveling.  Industrialized countries that had reached high wage levels are facing a problem being competitive in the global labor market.  We are getting close to the point where it makes economic sense for companies to bring back manufacturing to the US… thus providing career paths for a lot of workers… especially young people… that are in short supply.

          When we force raise the minimum wage, it will put pressure on the next tiers of wage levels to also be raised.   And this will have a chilling impact on domestic business starts and expansions.  That possible return of manufacturing jobs to the US will be stalled again.

        2. TrueBlueDevil

          Good points. I’ve read that our stable, growing, and less-expensive energy costs played a major role in this possible shift of manufacturing jobs coming home. If you can get a product from a US company in 2 weeks versus 4 months from China, that is a clear advantage.

          Obama could have helped this by approving the Keystone XL pipeline, and other pro energy steps, but he seems lost.

        3. Frankly

          Yes, that too.  It demonstrates the simple math that seems lost on many here.  Reduce the cost of doing business and attract business.  Increase the cost of doing business and the opposite occurs.

          Energy costs are big expense items for manufacturers.  So are shipping costs in consideration of the cost of goods sold.   But labor is still the #1 cost for most manufacturers.  Increase the cost of labor and the alternatives become more financially attractive.

          Note that the same government operatives and supporters that demand increased minimum wages are also the same to demand we punish business with extreme environmental regulations.

          The business market is like a garden that returns a bounty.   The political left keeps taxing it demanding greater yield per acre and ignores that global yields are falling due to fewer gardens.

        4. TrueBlueDevil

          I know business people who’s hands are tied because of the massive worldwide demands for fiber optic cabling. Google and others are doing massive rollouts. There is a long lead time, and a big cost to ship. Why the heck don’t we produce fiber optic cabling here??!! My guess is labor costs, regulations, and probably unbelievable environmental regulations. Another area we shoot ourselves in the foot.

          I occasionally tell my sweetie liberals are poor at math, which puts me in the dog house.

        5. Frankly

          At least you can build your own dog house… but with materials imported from all over the world.

          Without getting into details, my family ran a business that used toothpicks.  Toothpicks were invented in the US and produced in the north east… Maine, etc.   Then Canada.  about 10 years ago no more… all in China.  And the quality of the beechwood and birch used for Chinese toothpicks is crap.

          A producer in Canada made a go of it again… and failed.  Labor costs are too high.  Insurance costs are too high.  Regulation costs are too high.  There was not enough margin to make it work.

          The drop in energy prices (no thanks to government) have been a promising bright spot for bringing back manufacturing to North America, but labor costs are still an impediment.

        6. TrueBlueDevil

          Think about this, Frankly. We had the massive Rim Fire which killed tens of millions, hundreds of millions of trees. But the extremists prevent even a small percentage of that lumber from being used, while at the same time creating another fire danger, and giving more food for the beetle infestation.

          Instead of harvesting 2% or 3% of that dead wood – and letting LIVE trees live – why not harvest 20%, 40%, 50% … and then use the funds generated to replant the forests!!??

          Loggers would get needed jobs, lumber prices would drop, and at the same time we could thin out some of the trees where the beetle infestation is occurring.

          No, that makes too much sense.We need 1 million trees for 3 burrowing owls.

          Think about the cumulative effects. Lower energy prices, lessen onerous unneeded regulations, dramatically lower the cost of generic lumber … imagine how this could help business and jobs!

        7. Robb Davis

          Frankly:

          And there is another thing to consider… we have lost manufacturing jobs and the economy has shifted to knowledge workers and service workers.  This is another change that is directly attributable to the cost of US labor compared to the global market of labor.

          You rarely talk about the role of a generation of strong dollar policies both actively promoted (Reagan) and tacitly accepted (everyone else) for over a generation.  So, no, the loss of manufacturing jobs is not directly attributable simply to US labor costs.  There has been a deliberate policy that has made it cheaper to produce offshore and export to the US.  The result has been a loss of good jobs and stagnating and declining wages.  The causal mechanisms of job loss are far more complex than you suggest.

        8. Sam

          The loss of manufacturing jobs is very complex and a strong dollar policy did have something to do with it. However, there is a reason that car companies are building enormous plants in the South right now. It is mostly due to the low labor costs and less restrictive business environment.

        9. Frankly

          The causal mechanisms of job loss are far more complex than you suggest.

          They are from an economist’s perspective, but not so much from a business owner/CEO perspective, IMO.  And weak dollar policies are no economic panacea.

          Theoretically a weak dollar is better coming out of a recession.  But those theories were developed before so much globalism.  I think a lot of what makes a currency strong or weak is confidence and not so much policy.  And now more than ever it is confidence relative to the other currencies.

          Now, theoretically a strong dollar is supposed to be better for individuals because it improves domestic purchasing power.

          I get your point… a strong dollar makes exports more expensive and will cause some manufacturers to put operations in other places because of the higher relative cost in the strong currency location.

          But we have had some period of dollar weakening after the Great Recession, and we did not see any measurable bump in exports.

          The problem with this overlay of strong or weak dollar on the rise or fall of domestic business growth and jobs growth is that the average business decision-maker would not be able to forecast the relative position of currency markets to any level of accuracy to support a decision.  The feasibility is much less economic, and much more business.  Profit and loss projections primarily.  And cost of labor is generally one of the top considerations.  Labor costs can be projected much more accurately than can the global currency markets.

          Business is really pretty simple in that it pursues profit.  And profit is simply revenue minus expenses and taxes (net profit).  The global market is the global market.  The economic world is flat.  The global customer is the global customer no matter where your operation is based from.  The variable are the expenses.

          As long as the US is the higher-cost location it will lose out on those jobs.

           

      2. Alan Pryor

        Lefties are clear in their design for a new world order where workers are victims simply because they have to work

        Wow! “Earth to Frankly…You have left our radar screen and no longer appear to be in a logical earth orbit….Please return so we can have a rational converstaion

         

         

         

        1. Alan Miller

          You have left our radar screen and no longer appear to be in a logical earth orbit

          You have failed to consider that your radar needs adjustment.

      3. TrueBlueDevil

        There will be many adjustments, we know that, which will take a few years to settle out. I think there will be less start ups on the low end, and this will give a greater push towards some companies opening or moving to Texas, Florida, or Mexico.

        Hillary Clinton will clearly play the race card over and over again (she played it recently), and the victim card, as most of their other policies have failed. She can’t talk about the State Department or Clinton Foundation!

        In Seattle, the Mayor made an extremely political choice to enforce the new minimum wage law, bypassing the 4 recommended candidates for a transgendered person from the Obama Administration who never even applied for the job.

        http://www.thestranger.com/news/feature/2015/06/03/22323383/seattle-finally-hired-someone-to-enforce-its-new-minimum-wage-law

      4. Tia Will

        Frankly

        The adjustment has already taken place.  The adjustment is record under-employment and discouraged workers.”

        I find this statement really confusing. A few posts up, we have the assertion that it is too soon to tell the effects of the $15.00 /hr minimum wage since it has no yet been implemented. Now we have you asserting that “the adjustment has already taken place. ” Adjustment to what ?  I thought the topic here was an increase in the minimum wage. Did you introduce some other “adjustment” and I just missed it ?  Can you clarify ?

        1. Frankly

          Yes, you need to look at the larger trend for the labor participation rate.   Most economists agree that the run-up to the housing and financial market downturn that was the great recession was really a delayed correction in US real economic circumstances.   So looking through that we can see a constant decline in the labor participation rate since about 1989 (again adjusting for the false modest rise during the housing bubble).  Interestingly enough, it was in 1989-1991 that a big minimum wage hike was approved at the Federal level… a 27% increase from $3.35 to $4.25.   In fact, that was one of the biggest two-year jumps ever on a percentage basis.  In today’s inflation-adjusted terms, it took the wage from $6.18 per hour to $7.16 per hour.   Of course today it is $7.25 per hour at the Federal level.

          If you look at the inflation-adjusted real value of the Federal minimum wage between 1960 and today, it is $7.72 dollars per hour.   So you can make a case that we have not kept up.  But we are really not that far off either.  We are certainly in no way able to justify a $15 per hour jump in the minimum wage based on the historical record.  And note too that we have loaded up on other government benefits to low income people that did not exist previously.

          Again though, the problem is the real-economy-adjusted labor participation rate beginning in 1989.  It flat-lined and fell.  And it is still falling.  And raising the minimum wage at this time will steepen the fall.

        2. TrueBlueDevil

          Frankly, don’t I also have this right? With the Affordable Care Act, some employers chose to hire more part-time workers, which hurts employment, while Obama also greatly expanded various transfer payments (welfare, food stamps), and relaxed border enforcement. He also relaxed Clinton’s welfare reform. I’ve seen articles that claim that we have record low labor participation rates. Also, if anyone has ever spent any time in LA, San Diego, or on a construction site, we have a massive underground economy that didn’t exist in 2000 or 1990. Watch any of these home remodel programs, especially in Arizona, LA, or Texas, hear the numbers they get for modest or major remodel jobs, and then try to calculate how they got those minuscule numbers. It is either lies for TV, or they are paying a lof of guys $10 an hour or less for their work.

          Contrast that with the numbers they rarely give on the program Holmes on Homes (Canada), or a show from Seattle … the job costs were 3x, 4x, 5x the amount… and the quality was substantially better.

        3. Davis Progressive

          you don’t have it right because the aca bases their mandates on fte.  “The employer mandate is based on full-time equivalent employees, not just full-time employees.”

          1. Don Shor

            TBD may be obliquely referring to the issue of the mandate that employers with 50 or more employees cover those who work 30 or more hours a week.
            http://www.insurancejournal.com/news/national/2015/01/07/351863.htm
            Republicans keep introducing legislation to raise that to 40 hours a week. Their argument is that the mandate is causing employers to drop part-time employees below 30 hours. Their “solution” is to expand the exemption to everyone under 40 hours. Needless to say, that would reduce the number of employees covered.

        4. TrueBlueDevil

          Yes, the ACA encouraged employers to hire more part time workers, and to convert FT to PT, in order to avoid ACA mandates.

          The results of Barack Obama’s policies after 6.5 years are clear. He has spent over $7 Trillion in debt spending (and “stimulus”),

          and we have the slowest economic recovery since WWII. Q1 has been revised to negative GDP growth. More businesses are closing than opening.

        1. Barack Palin

          So we really have no idea how a $15/hr. wage will effect any community do we?  Especially a smaller community like Davis that will make us an outlier.

        2. Davis Progressive

          do we ever?  but, a few points.  first, if we become an outlier, i suspect it will be in several years with us having $15 and the statewide number will be more like $13.  i don’t see that it’s going to make a huge difference locally.

        3. TrueBlueDevil

          But we do know the laws of Supply & Demand. We know that when you raise the cost, people will economize. If you raise wages and related employee costs by 75%, I promise you that there will be varying effects across the board. Less with some, more with others.

          Along with Obamacare, I surmise this will decrease full time work.

        4. Davis Progressive

          of course.  but that is only part of the equation.  there is also a market that comes into play in terms of supply and demand both for labor as well as for cost of goods and services.  moreover, the opponents of minimum wage also fail to account for the impact of increased salaries on the economy.  you have more people with more money willing to pay for goods and services and you may well overcome the increased costs of labor.  and that’s what a lot of the longer term studies show – immediate cutbacks in anticipation of increased costs countered long term by more money for the working class and therefore a stabilization and benefit across the board.

        5. TrueBlueDevil

          I can see the cost of going to the movies going up, and in economics we have something called “substitutes”. Redbox, Netflix, and other choices are almost a perfect substitute for going to the movies.

          Likewise, I can see less trips for fast food when their costs rise.

          I’d also guess this will give more incentive to hire illegal immigrants.

        6. Davis Progressive

          “I can see the cost of going to the movies going up, and in economics we have something called “substitutes”. Redbox, Netflix, and other choices are almost a perfect substitute for going to the movies.”

          i haven’t gone to the movies in years, cost is ridiculous, i’m actually rather amazing that the market has imploded yet.

          “I’d also guess this will give more incentive to hire illegal immigrants.”

          that’s you’re real concern.

        7. TrueBlueDevil

          My concern in a dramatic raise in minimum wage may have a dramatic affect on those who can’t absorb it. We may be removing the first few rungs on the ladder to success. We may lose jobs to Texas, Mexico, or closing shop.

          I still enjoy good movies, blockbusters, on the big screen, if it weren’t for the darn smart phones and impolite behavior. I buy tickets at Costco, so that gets the cost down to $8 a ticket. I also do enjoy the small indie movie houses, and a few offer food, wine, & beer, making it a good night out for the adults for “date night”.

        8. Alan Pryor

          To True Blue Devil

          ”We may lose jobs to Texas, Mexico, or closing shop.”

          Can you suggest any Davis minimum wage jobs that will move to Texas or Mexico – not fast food, not retail, not movie houses, not restaurants, not health care workers, not farm workers, not construction workers or painters, not gardeneres. In fact, I can’t think of any…can you?

          As far as closing shop, our article last week gave a number of examples of the experiences of San Jose and San Francisco where businesses actually expanded and the number of minimum wage jobs increased, not decreased, when minimum wages were raised. Do you have any examples to the contrary?

        9. TrueBlueDevil

          Alan, I was talking on a state level, but if raising the minimum wage has all of these amazing results, why not $30 or $40 an hour?

          The average UCD student may see their college debt raised a few thousands dollars with this increase.

      1. Alan Miller

        moreover, the opponents of minimum wage also fail to account for the impact of increased salaries on the economy.

        Forgive them . . . for they know not what they speak.

        1. Sam

          In fact, I can’t think of any…can you?

          I can. The Yolo Crisis Nursery was barley able to raise enough money to stay open. Their largest expense is labor and almost all of that labor is paid less than $15 an hour. It would be nearly impossible for them to survive a 66% increase in labor cost and they would have to close. Davis would lose a valuable resource that helps parents with young children crisis.

          http://www.davisenterprise.com/local-news/yolo-crisis-nursery-earns-licensing-thanks-donors/

           

           

        2. Topcat

          The Yolo Crisis Nursery was barley able to raise enough money to stay open. Their largest expense is labor and almost all of that labor is paid less than $15 an hour. It would be nearly impossible for them to survive a 66% increase in labor cost and they would have to close. Davis would lose a valuable resource that helps parents with young children crisis.

          Yes Sam.  It seems that the members of the “Davis Citizens for a Living Wage” think that all employers have lots of extra money and can easily raise pay without adverse consequences.

          In reality, many of the employers that utilize lower paid workers are social service organizations and non-profit organizations; thrift shops, homeless shelters, child care services, elder care services and others.

          As I have pointed out in a number of posts, a drastic raise in the local minimum wage will hurt the most disadvantaged people in society the hardest.  I this really what we want?

        3. Justice4All

          I find much of the rhetoric in this thread disturbing. There are posters here who are literally putting words in the mouth of the campaign. AS a founding member of Davis Citizens for a Living Wage, I cannot understand why some of those who may disagree with a concept of a 15$ minimum wage refuse to engage in reasoned discourse.

           

          We advocate for the working poor in Davis because there are not institutions in town that do.

  9. Barack Palin

    What hasn’t been considered are the families where the main wage earner makes around $20/hr.  They’re scraping by but they won’t see any more earnings from the wage decree but they will see their costs in Davis dramatically rise from the inflation caused by business’s extra labor costs.

  10. Barack Palin

    I took my family to dinner last night.  Burgers and Brew, six of us.  The bill came to $135, my tip was $20.

    If waiters end up getting $15/hr. I will feel they no longer need to be tipped so as my food costs go up waiters can expect to see less in tips from me if any.

    1. Frankly

      They can and will just include an 18% gratuity if people stop tipping.  Doing some traveling around the state… that is getting to be the norm these days.

      I think you need to sell off some of your family if you cannot afford to feed them.

      Or, stop going to restaurants and dine at home more often.

      That is what we are more likely to do out of financial necessity.

      1. Barack Palin

        I’ve travelled to Europe 8 times in the last 4 years (I had kids in the Army over there) and their waiters are well paid.  Tips are not expected and if you do tip you just round up the bill to the next 5 Euro increment.  43 becomes 45 and so on.  That’s what should happen here in Davis if their wages go up to $15.  If restaurants try and include an 18% gratuity then I will let them know that they won’t get my business.  If enough of us do that they’ll get the word.

        1. TrueBlueDevil

          Recall Bill Clinton’s huge added luxury tax on yachts and sports cars? I didn’t fight it, it didn’t affect me! Yacht sales plummeted, so did all the areas where it hit. Yacht builders laid off their blue collar crews, many went out of business, and they lobbied Congress to repeal the tax!

          I later met a man who bought a boat, he told me he sailed out to international waters with his lawyer or accountant, conducted the purchase there, and avoided the whole tax altogether.

          Consumers will alter their behavior.

        2. Frankly

          Lucky to have Army kids in Europe.

          Mine is stationed in Texas and South Korea… neither really on our bucket list!

          I am on the fence with the automatic gratuity.  It is really a weird practice if you think about it.  The problem is that we have people stiffing… and this causes service employees to second guess and stress over who might stiff them.   And that isn’t good for service quality.  I have to say that most of the places that I have been to that include the automatic gratuity have had better than average service quality.

          It also saves me from the difficulty and embarrassment dining with friends and family that don’t know how to tip and generally don’t tip enough but still demand to pay the bill or pay dutch.

          On the surface it seems like an erosion of choice, but in reality, if we don’t like the service, we can complain to the management and no longer dine/shop there.

      2. Topcat

        Or, stop going to restaurants and dine at home more often.

        That is what we are more likely to do out of financial necessity.

        Yes, that is exactly what will happen.  When prices go up, people adjust their consumption to consume less or substitute other goods and services. The employers of the people who provide these goods and services will then cut back hours or lay off employees.

        The overall result will be less job opportunities for the people who provide these goods and services.

  11. Frankly

    Let’s not forget about automation.

    Meet the $22k industrial robot that you program by simply holding his arms and doing what you want it (him?) to do.

    http://www.rethinkrobotics.com/baxter/

    See it at work… think the guy in the background doing the same job is worried?   https://www.youtube.com/watch?v=oD9DE0HjMM4

    See how it is programmed… https://www.youtube.com/watch?v=RDvgNB2OZxI

    Let’s see… $22k.  No healthcare, so sick days, no breaks, no whining, no harassment and discrimination claims, no jobs for people except those that make and service the robots.

     

    1. Justice4All

      Havent we had this automation discussion before? It seems somewhat like groundhog day. Automation will happen regardless. Its been happening since the industrial revolution got started.

  12. Justice4All

    Im quite disappointed in many of the posters here. I feel that there is a lot of internet tough guy stuff going on here. Lowering oneself to Ad Hominem attacks does not improve your argument. Getting angry because someone disagrees with you does not make you correct. The only way to improve society and government policy in a democracy is through public dialogue. Much of the commentary here is more appropriate for an echo chamber, rather than reasoned debate. Whatever our differences, it is important to recognize the humanity of your ideological opponents.

    1. Sam

      Justice- You have not addressed anything that I have pointed out in my article. How are you going to address the negative effects on low income families if you increase the minimum wage?

      That is not an “attack” it is a serious question for your group to consider. Please respond.

      1. Justice4All

        I met with some of our team today to discuss exactly how we are going to respond. A reasoned response will take some time, as in order to accurately and rigorously refute the premises of the arguments put forward by your article. This will require a lot of local data, like the numbers of full time low wage workers, what the average number of hours worked by these folks are etc. We also need data on the wait time for affordable housing for low wage workers specifically. (not large families or seniors affordable housing).

        Your article was well thought out, and while I think its flawed, I need data to support my reasons why I find it flawed. Finding that local data is difficult. Ill try and give you a preview here, but we will probably publish another article in the Vanguard within a week.

        One: The articles assume the single mother example will continue to seek full time work. Given the exceptionally high cost of child care, this is unlikely. It is more likely (in my opinion, still looking for data to support this claim) that the single mother will choose to continue work, but work more like 30 hours a week as opposed to 40.

        Two: The article assumes (for mathematical purposes) that low wage workers are currently able to find full time work at one job. I can tell you from experience, that this is not the case in the low wage economy locally. Low wage workers typically have more than one job. (still need to find local data to support this claim)

         

        Three: The article assumes there is available affordable housing in town. Section 8 housing is a mess, and is insufficient regardless. To assume that a worker would have affordable housing in Davis is unreasonable, given the shortage for actual working families. Im going to get with the Housing Alliance to see if I cant get local data on the shortage.

        Four: Rent in this town is out of control, (even at 40 hours a week at 10$ an hour a two bedroom apartment in Davis goes for 1400, and that is all of a worker’s after tax income) and the cost of that rent is not driven by the wages of low wage workers. Its driven by other sources, like student loans, a general housing shortage, much of the rental market being controlled by a few wealthy owners, and college savings money from affluent families. I realize that these are general terms, and are going to be difficult to prove, considering I am not an academic, nor am I an expert in the local real estate market. What I am is an expert in watching the price of rent in this town skyrocket over the last few years, and not seeing wages keep up with the huge increases in rent.

         

        Thats the best I can do for now. I hope that helps. Once our team puts together a report, we will publish it here.

         

      2. Justice4All

        Something to consider is that I will always ALWAYS try and see the best in people. I really appreciate you putting this article together. Its important that we as a community have these discussions, on VERY serious issues and this is a great way to do it. I will always try and not take things personally. My frustration comes when people resort to name calling, punditry, or Internet tough guy acts etc. I understand that I also do not always meet my high standards on this issue, but I do try to push the discussion in a direction of reason and facts based analysis.

         

        I do not consider this article or any other like it an attack, rather a point in a public debate, which is one of our goals (in the campaign) to begin with.

    2. Edgar Wai

      Is it easy to convince current minimum wage earners that raising the minimum wage will benefit them?

      In 100 people earning $9/hr, the net spending is $900/hr. At $15/hr, that same spending could only hire 60 people.

      40% job loss seems unrealistically large. Any percentage less than that is a net gain for the minimum wage earners.

      Here, net gain also means redistribution. It is a redistribution of job positions among the fellow minimum wage earners.

      So, to convince them to support this plan is like saying: fellow minimum wage earners, let gather and support a plan with an effect where some of you may lose your job to support some other of you to earn more.  Let’s do this!

      Do you have a problem convincing current minimum wage earners that this plan is good for them?

    3. Edgar Wai

      The math is interesting where a raise from $9 to $15 is less than double. So if a minimum wage earner compares himself against coworkers and think: “I am better that 40% of my coworkers, if some one will be let go that won’t be me”, then they would support the plan and they will have the majority.

      If the raise is from $9 to $20, then less than half of them would think that they have the upperhand. The population of minimum wage earners wouldn’t have a majority itself to support it.

      Assuming that the number of voting minimum wage earners outnumber the number of voting business owners,  the population of minimum wage earners is the determinant in reaching a majority of the decision will be made by majority rule.

      So this may be why, even if the proposed value had nothing to do with living wage or social justics, $15 (instead of $20 or $30), is The maximum amount the democratic system could afford a majority rule by default.

      1. Edgar Wai

        By the last paragraph I meant even if the correct minimum wage is determined to be $20/hr, such proposal would have a hard time gaining majority support. So the max is around $15, which is lower than $18, accounting for majority of business owners and unemployed people going against it.

  13. Barack Palin

    Much of the commentary here is more appropriate for an echo chamber, rather than reasoned debate. Whatever our differences, it is important to recognize the humanity of your ideological opponents.

    That can be said for both sides of this debate.

  14. Tia Will

    Justice4All

    I actually thought that you and Don Shor were going down a good path when you were discussing the possibility of exemptions for teen workers still at home and/or for very small businessmen in order to prevent them from having to eliminate positions or close entirely in the worst case scenario. I do not see why some form of “means testing” could not be applied to determine qualifications for exemptions.

    A while back, I had posted a link about teen exemptions in Australia as a way of preserving the “entry level job ” for actual entry level employees instead of expanding these non living wages to those who actually need the money to live on. It seems to me that the conversation too involve devolves into “you don’t understand”. No, no “you don’t understand” than making an honest attempt to understand the others point of view and play with the pros and cons of each idea until a feasible solution is reached. I hope that you will not give up on this effort.

    1. hpierce

      Still, it’s hard to grasp the concept of a “minimum wage” if it isn’t.  I recall labor folk objecting to a “training wage” and I see more problems legislating a separate, lower wage for those with cognitive/emotional/other challenges.  That being said, the realities are such that we might want to deal with ‘sub-minimum’ wages.  It needs to be up to the proponents of the $15/hr wage to address those issues, IMO.

      1. Justice4All

        Well, I can’t say on behalf of the whole campaign that we approve of such things. But for me personally, I would be willing to do some give and take with the broader small business community to make sure a 15$ minimum wage would be implemented in such a way as to help rather than hinder. In the Seattle 15$ minimum wage deal, they put in training wages etc.. That is something we would be open to under the right circumstances.

        Ideally, a working group would be put together between representatives of Labor, the small business community, our organization and the city council to put together a proposal that works for all parties.

    2. Justice4All

      We at the campaign had a spirited discussion about the prospects today. Im actually optimistic that we can have a similar deal to the Seattle one. That one is insanely complicated, but it does really address the concerns of the business community while ensuring that all workers over 18 get to 15$ eventually. Ill be reaching out to Don sometime this week to open a discussion with the broader business community. I should say that Don is certainly not one of the posters I was referencing with that previous post. I am certainly not giving up.

       

      Like I always say here, we are sensitive to the needs of smaller, local businesses. We patronize them, we live here in town and have a vested interest in seeing them thrive.

      1. Don Shor

        I’m not really the one you need to talk to. I’m not involved in any of the local business organizations. You should talk to Matt Yancey, CEO of the Chamber at ceo@davischamber.com, and Davis Downtown (Michael Bisch is President, Stewart Savage is executive director — http://davisdowntown.com/ddba-board-and-staff/).
        Of the two, Davis Downtown represents more retailers than the Chamber.
        Exempting businesses with employees less than 10 or 30 or 50 would mitigate the impact on small local businesses. Key question would be how many employees Davis Ace Hardware has, since they are the largest locally-owned retailer and are the core business downtown. You don’t want to do economic harm to Davis Ace. Contrary to popular belief, it is not a franchise or part of a chain — Davis Ace is owned by a local family.

  15. Don Shor

    Let’s assume a small business has 500,000 in gross sales. Half of that is the cost of goods, leaving a gross profit of 250,000. 25% payroll cost (labor plus taxes and payroll costs) comes out of that at 125,000, paying, say, $12/hour. That leaves about 125,000 for all other expenses and the owner’s draw.

    Most of those other expenses can’t really be cut. So if you tell the owner she has to pay $15/hour, suddenly that 125,000 becomes 156,250.

    Where is that $31,250 going to come from? You need to increase your revenues and gross profit by 12.5%. It’s a rare retail situation where you can count on a 12.5% increase in sales or profit based solely on growth of the business.

    The cost of your goods doesn’t go down. Your other expenses rarely go down. You can’t raise your prices 12.5% without some loss of business.

    So what really happens is the owner tries to whittle down the payroll cost some other way. Or takes home less money.

    We are told that increasing pay will cause these lower-income workers to spend more money locally, and that we will all see an increase in sales. Really? 12.5%? Doubtful. We are told that we need to do this to lift them out of poverty. So which retailers are going to benefit from this significant hit to their expense ledgers?  

    1. TrueBlueDevil

      Out of that $125,000 comes a lot more. Let’s say rent is $2,000 per month, that is $24,000 per year. Let’s say utilities are $500 per month, that’s another $6,000 per year.

      We’re down to $94,000 and we haven’t paid for insurance, advertising, marketing, any affiliate / franchise costs, business association fees, attorney’s / accountant, painters, trade shows, continuing education, co-op fees, website / IT costs, credit card charges, bad debt (uncollectable bills), new product development, employee theft, debt interest payments, and graphic artist costs to name a few.

    2. Topcat

      We are told that increasing pay will cause these lower-income workers to spend more money locally, and that we will all see an increase in sales. Really? 12.5%? Doubtful.

      The employees who are lucky enough to keep their jobs and get a raise from $10 (the 2016 California minimum wage) to $15 will spend most of that increase.  That increase will be offset by the decrease in sales to those unlucky people who are unemployed or underemployed when their hours are cut, or they are laid off by employers who can’t afford the increase.

    3. Topcat

      Don: I hope you already take into consideration that many of the employers that utilize entry level and low income workers are social service organizations and non-profit organizations; thrift shops, homeless shelters, child care services, elder care services, and services for the disabled.  It also includes the City of Davis which employs people for short term (often Summer) jobs such as lifeguards and playground monitors.

  16. Justice4All

    Ill just point out that while Im not an economist or a business owner, I can tell immorality from morality. I find MAJOR issues with poverty wages, particularly at large employers here in town who can and should do much better. I feel its a fundamental truth that people who work full time should not live in poverty, and unfortunately, that is what we have here, in Davis, right now. For too long the working poor have been marginalized, ignored, forgotten, and condescended by the political class here in town. Its not right. Thats why we started this campaign, so we can talk about how to fix this issue of massive inequality here in our wealthy little bubble that is the peoples republic of Davis. Did you know that 10% of school children in our school system are from families who work, yet fall below the federal standards for poverty?

     

    The national government is proving itself incapable of addressing these issues for a variety of reasons. There are some promising bills coming out at the state level, but those still, are modest, considering the high cost of living here in town. Lastly ill just remind everyone that more than a math problem, this is a question of morality. Should people who work full time, live in poverty? In many ways it is the defining issue of our time.

    1. Topcat

      I feel its a fundamental truth that people who work full time should not live in poverty…

      I’d like to see you address the issue of the non-working poor.  This is a substantial number of people and it includes the most disadvantaged people in society.  A drastic raise in the minimum wage would price more people out of the work force.  What do you think the non-working poor should do?

      1. Justice4All

        Well, like I say, the non working poor will essentially be in the same boat as they were before. Minimum wage increases do not have any measurable effect on overall employment. Its a net zero effect. The only measurable outcome of increasing the minimum wage (other than lifting people out of poverty) is a decline in teenage employment. This can be explained as older, more skilled workers re entering the workforce because the pay is better. This could likely be addressed in any ordinance by having a training wage or some such, as they did in Seattle.

    2. Edgar Wai

      I think the question of morality here is not whether someone working full time should still be in poverty, rather, within the same company that is making a profit, should someone earn disproportionally more than the personal risk and cost the shouldered for the company.

      So far on the subtopic of implementing different rules for different employer, I don’t think the distinction should be drawn on whether the business is locally owned. It should be about fairness.

      For example, if an employer is earning a lot but paying his workers only peanuts, there is a sense of unfairness that should be addressed.

      On the contrary, if an employer is struggling trying to keep his employees employed, it makes no sense to force the employer to raise wages.

      So the determining factor has always been the fair share of the worker’s contribution for the profit that results.

      The actual equation that calculates the fair share our a worker has many variables. A law that tries to capture the spirit of such equation typically gets reduced (get stuck) to an approximation with 1 or no variable.

      A law that minimum wage is $15/hr is an approximation reduced to having no variable. That limitation in turn causes unfairness when a situation sits where the approximation deviates too much from the actual equation.

      To make the approximation better is to add variables. So the question becomes, what are some simple values that enforcement could check to see if a well to do business us paying its workers too little?

      Annual profit?

      Number of employees?

      (e.g. the minimum hourly wage cannot be less than half of the average hourly profit divided by workhour ratio of the employed

      Meaning:

      If a restaurant is making $180/hr profit and paying 6 work hours at $9/hr, we see that $180/2 = $90 while $9 x 6 =$54. The employer still has $90-$54=$36 in profit margin to pay the worker’s more. This employer can afford to pay around $15/hr for minimum wage.

      On the other hand, if another restaurant is making $90/hr while paying 6 work hours at $9/hr, we see that $90/2=$45 which is less than $9×6=$54. This employer does not need to pay the worker’s more under this law. So what if the worker does not earn enough to have a living wage? The worker is free to seek employment by a more profitable employer, but cannot force this employer to pay more wage because this employer cannot afford to do so. )

    3. Frankly

      Justice4All – I appreciate what motivates you is helping people.  I too am motivated to help people.

      Did you know that the average cost of living-adjusted minimum wage since 1960 is $7.62 per hour?

      So, I ask you, why are you and others now pursuing a doubling of that?  What has changed that justifies such a drastic redefinition of what the minimum wage was initially intended to represent?  And lastly, why do you ignore the points of negative consequences that have been provided in great detail.

      You point to the past as evidence that “things will be alright”… that business will just adjust… but again, there has never been a time in our history that the inflation-adjusted minimum wage was more than $10.50 per hour… and that was only for a short time.  If the average has been $7.62 per hour, why then are we not in agreement that maybe $8.50 or $9 is a reasonable target?  Especially in consideration of Obamacare and other benefits that low income people get today that they did not get in previous times when the minimum wage has averaged $7.62 per hour.

      Frankly, because I am, I think your are out of your league on this topic.   There are probably many other things you should be doing to help people other than this.

      1. TrueBlueDevil

        Dr. Thomas Sowell and Dr. Walter Williams have detailed how the establishment and then raises in the minimum wage have hurt inner city black youth the most. Their unemployment rater has skyrocketed along with the price hikes.

         

        1. Davis Progressive

          their analysis is questionable. the bigger problem is the loss of manufacturing jobs for unskilled workers combined with mass incarceration.  there haven’t been enough “price hikes” to have an effect.  in fact, if you track minimum wage over time, it’s gone down in real value.  so i think you need to be skeptical about their claims.

          also how do you account for the rise of the black middle class over the last forty years? blacks are far better off than they were in the early 70s. so how do they account for htat?

      2. Justice4All

        The previous post is riddled with falsehoods. Had the minimum wage merely kept up with inflation since 68, it would be 11$ per hour. Had it kept up with cost of living, it would be 16, if it kept up with worker productivity, it would be 22.

        Do you know what the cost of a single bedroom apartment in Davis is? The low end is 1000 per month. That is practically the entire after taxes  paycheck of a minimum wage worker, working 40 hours. 8.50 or 9 bucks an hour are poverty wages, and the whole reason we launched this campaign is so we can get the working poor OUT of poverty. No one who works full time deserves poverty, and that is what we have right here, right now in our community.

        We do not ignore the negative consequences as our opponents state them. If you read my commentary, you will see that we are going to publish a response within a few weeks, based on available, local data. We believe in rational, fact based analysis. We do not claim to know everything, but we have a significant amount of data to support our arguments. The data we have shows that increases in the minimum wage does not adversely affect employment, nor will it cause exodus of business.

        1. Don Shor

          Do you know what the cost of a single bedroom apartment in Davis is? The low end is 1000 per month.

          Most young adults share two-bedroom apartments, and don’t individually pay $1000 each for housing. By far the largest housing unit is the two-bedroom unit.

          The average rent for unfurnished two-bedroom apartments — which account for 46 percent of apartments leased by unit in the survey — was $1,373, compared with $1,275 in fall 2013.

          So two adults can split a $1373 unit, though many add a third or fourth renter to that mix.
          http://news.ucdavis.edu/search/news_detail.lasso?id=11157

        2. Barack Palin

          My daughter rented a nice 5 bed house with 4 of her friends for $600 each.  These are some of the situations that this group is ignoring.  They want you to think it’s always one poor guy or a family trying to rent an apt on just one minimum wage.

      3. Topcat

        Frankly, because I am, I think your are out of your league on this topic.   There are probably many other things you should be doing to help people other than this.

        Yes Frankly,  there are much better ways to help people in poverty and disadvantaged people than agitating for a drastic minimum wage increase.

  17. Topcat

    Did everyone see the article in the Enterprise on June 10th regarding the effort at the state level to raise the minimum wage?  It sounds like supporters of a higher minimum wage might have better success working for something at the State level rather than a local City of Davis ordinance.

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