A Minimum Wage Hike Is Really Just Another Tax

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minimum_wageby Jeff Boone

Today, here in Davis, a group of people are attempting to gather enough signatures for a ballot measure to raise the local minimum wage to $15 per hour.  Is this a good idea?  Are minimum wage hikes a good idea in general?

National minimum wage rates were initially established as part of the National Fair Labor Standards Act of 1938.  At that time the federal government set a minimum rate of 25-cents per hour.  Fast-forward to April of 1990 when the rate was raised to $3.80 per hour.   Then in July of 2009 the rate was set to $7.25 per hour where it stands today.  Note that California’s minimum wage is currently $9.00 per hour, and will increase to $10.00 per hour on January 1, 2016.

Supporters of minimum wage hikes are obviously good-intentioned.   They are driven by a social justice agenda to make life better for people in low economic circumstances.  In their drive to accomplish their goals, they deny the existence of negative consequences.   They point to specific economic studies and statistics that show little to no correlation with the government’s published unemployment rate.   But these studies and statistics ignore other troubling data and are very misleading.

Note that the following comes from the Federal Bureau of Labor Statistics.

During the 1990s the US experienced unprecedented economic growth as a result of the explosive expansion of computer industry, and related tech stocks.  As a result of this economic expansion, during the 90s the Employment-to-Population (EP) ratio grew from 63.2 to 64.6.  Then the tech-stock bubble burst and then 9-11 happened, and we hit a recession in 2001.   Since the beginning of that recession until today, the EP ratio has steadily fallen to its current rate of 58.8.

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This means that only 58.8 percent of the US population is working today, compared to 63.2 percent in 1990 and 64.6 percent before the recession of 2001.

Some make the case that our aging population is responsible for the decline in the percentage of people working.  However, that theory is debunked by the fact that our civilian labor force increased from about 126 million in 1990 to 156 million today.

Boone-2

For every worker retiring the US produced more than one new person needing a job.  It is clear that we have not created enough jobs.

Something else happened over this 24-year period.  We saw an increase in the number of part-time workers as a percentage of all workers.   It increased 11.8% (from 17% to 19%).

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In addition, we saw a drastic increase in the number of chronically unemployed people.  That rate went from under 10% of the total unemployed in 1990 to a staggering 36% today.

Boone-4

This means 36 out of 100 unemployed people have been unable to find a job in 27 weeks or more.

But, in my opinion, the statistic on our teenage workforce is the most troubling.   In 1990 15% of teenagers that wanted to work could not find a job.    Today that number is 20%.

Boone-5

Note that in many urban areas the numbers are as high as 50%.    How can a person launch an economically self-sufficient life if he/she cannot even find an entry-level job?

What has happened during the period of these troubling statistics?

One thing that has happened is that the minimum wage has been significantly hiked at the same time that global economic expansion accelerated, partially due to technological innovation and a move to a more information-based economy, and US labor rates started to level with a global labor market.

Every business has a break-even point and a bottom line.  For most businesses labor is the by far the greatest expense.   If you increase the cost of labor by raising the rate paid for labor, something has to change.  That something can be price increases that contribute to inflation.  There are people that support paying more for our products and services so that employees would be paid a higher wage.  However, in our current more competitive global markets there is limited price elasticity.  For example, if the local Target has to increase wages and charges higher prices, well then Amazon.com starts to look like the better place to shop.

Any sudden increase in labor costs cause businesses on the margins to fail.  Also, higher labor costs will cause a greater number of potential and prospective business plans to not pencil out.  This then means less business expansion and few business starts.  For example, if Davis raises its minimum wage to $15 per hour there will be fewer businesses able to start or expand precisely because they cannot demonstrate enough forecasted profit to allow them to attract or qualify for investment funds.  With less business expansions and few business starts, there are fewer jobs… especially entry-level jobs.

In addition to a reduction in the number and growth of entry-level jobs, minimum-wage hikes also make those remaining jobs exceedingly difficult to acquire for the very people that need them the most.

Hiring managers expect more from higher wage employees.  When the pay rate increases, managers are attracted to the candidates with more experience thereby knocking out the entry level rungs of the grow-prosperity ladder.  Soon those job seekers lacking experience are locked out of the job market because the government forced business to pay more for labor, and business expects more experienced workers in return.

A minimum wage hike is really just another tax… an ineffective tax at that.    It will appease short-term social justice goals but result in a constant depletion of opportunity for our young people and other people needing a hand up.  It might make our hearts feel better for a time, but it is completely wrong-headed.

So, if raising the minimum wage is not the solution for helping low wage-earners live a better life, then what is?

As often repeated: “it is the economy stupid.”

We need a growing economy that generates plentiful job opportunities, and education that focuses on increasing job-skills for areas where companies are hiring.

People don’t need a job as much as they need a career.  Minimum wage jobs are intended to be the first steps in launching a career.  A person should not be raising a family on a minimum wage job.  If there are people raising a family on a minimum wage job, then the root of the problem is not a too low minimum wage.  The root of the problem is too few career opportunities and too little job skills.   We know this to be the case.  Even $15 per hour is not enough to raise a family with children, and it does not equate to a good life for anyone that has to rely solely on that wage for an extended period of time.

Personally, what I would like to see is a lower minimum wage combined with some incentive for companies to implement a progressive wage-grade program that offers wage advancement commensurate with demonstrated skills development.   Most good companies already do this.  And some already pay more than the minimum wage for entry-level jobs in addition to having a progressive wage-grade program.

But just forcing a minimum wage hike on all businesses is a harmful idea.  It may be good-intentioned and the current political buzz; but, at least over the last couple of decades, it is clear that minimum wage hikes have hurt the very people they intended to help.

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74 thoughts on “A Minimum Wage Hike Is Really Just Another Tax”

  1. Pingback: 2014 MINIMUM WAGE ILLINOIS 2014

  2. Topcat

    Thank you Jeff Boone for a thorough and well presented analysis of the effects of a minimum wage hike to $15. I just wish that those who are behind this effort could read and understand the full consequences of a mandated increase in the Davis minimum wage to $15 per hour.

  3. Barack Palin

    It bogs my mind how anyone can possibly back this proposal and not realise the damage that will result in the loss of jobs and businesses to our community.

    1. Barack Palin

      So if I work at McDonalds in Hillsborough, Beverly Hills or Atherton CA I should be entitled to a wage that entitles me to live there? What would that liveable wage be, $50/hour?

      1. D.D.

        Someone has to cook your kid’s happy meal, clean the bathroom, and wipe down the kid’s play area. Then take a bus for an hour or more to an acceptable lower middle class or lower income neighborhood to cook their own kid’s dinner, I guess.

        1. Barack Palin

          That’s the point, there’s a lot of places I would like to live, but I have to live where I can afford it. You make it sound like I should be entitled to live wherever I want.

          1. Davis Progressive

            that’s a fair point. but the other thing i think we need to consider is what obligation a community has to provide housing for the people who work in it. i’m not saying every person who works in davis must live here, but it is exploitation to hire people from other communities and then put the onus on those other communities to provide housing for your workers.

          2. Barack Palin

            Maybe the communities they currently live in should provide better jobs. They should be thankful that Davis has jobs for them to work at and still be able to live in whatever community they have chose.

          3. Tia Will

            So Barack Palin

            If all they can afford is a slum, they should be grateful for the ability to commute to Davis to their low wage job so that you and I can continue to live in a lovely prosperous community ? I sincerely doubt that anyone is choosing to live in some of the areas that our economic disparity makes a necessity for them.

          4. Barack Palin

            Please Tia Will, where are the slums around here? Methinks you’re blowing this out of porportion. And what does where anyone lives have to do with our ability to live where you or I live?

          5. Tia Will

            Slums may have been a loaded choice of word. However, from 22 years of working in various areas of Sacramento I can guarantee you that their are neighborhoods that I would not feel safe entering at night. My point stands even if my descriptor does not.

        2. Topcat

          I go to a lot of retail establishments in Davis and I talk with lots of people around town. I’ve found that most of the workers in the retail stores, restaurants and service businesses around Davis live in Woodland, West Sacramento, or Dixon because it is more economical for them to live there and commute into Davis. Most of the workers I talk with have cars and commute by automobile. The commute from Woodland is quite reasonable as it only takes about 15 minutes and Dixon or West Sacramento is only slightly longer. Most of the workers I’ve talked with do not consider the commute to be a burden and most of them prefer the communities they live in to Davis.

          1. Don Shor

            The overwhelming majority of my employees have always lived in Davis, over 30+ years as an employer here.

          2. South of Davis

            Topcat wrote:

            > I go to a lot of retail establishments in Davis and I talk
            > with lots of people around town. I’ve found that most of
            > the workers in the retail stores, restaurants and service
            > businesses around Davis live in Woodland, West
            > Sacramento, or Dixon

            Then Don wrote:

            > The overwhelming majority of my employees have
            > always lived in Davis, over 30+ years as an employer
            > here

            It sounds like Don employs smarter than average people since it usually does not make financial sense to commute from out of town to a minimum wage job by car. The new AAA number say it costs $0.60/mile to drive an average car ($0.77/mile for an average SUV).

            Just the cost of driving to and from Woodland or Dixon every day in average car will cost close to $300/month and take over 10 hours a month (if you never hit traffic). If you work OT for the 12 hours you save commuting you have another $100+ a month (SAVING almost enough to rent a room in Davis).

        3. South of Davis

          D.D. wrote:

          > Someone has to cook your kid’s happy meal,

          When was the last time you heard of a Davis parent buying a kid a happy meal? The Davis McDonalds on Covell closed a while back and I’m betting more Davis parents take their kids hunting then feed them happy meals…

          > Then take a bus for an hour or more to an acceptable
          > lower middle class or lower income neighborhood

          If you hunt around you can find rooms for rent in Davis for under $500/month and it you want to pay less it does not take an hour to get to Woodland by bus (I can run from Davis to Woodland in under an hour)…

          1. D.D.

            I was replying to the Beverly Hills comment. But there are times during the day where it might take a person quite a while to ride the bus home to Woodland. Also, if you want to rent a room in Davis, for “$500”, and you have one child, good luck with that.

          2. South of Davis

            David wrote:

            > My daughter likes happy meals.

            I dare you to yell that out loud at the Farmers Market on Saturday….

          3. Tia Will

            “My daughter likes happy meals”

            Now might be a good time to nip that in the bud for her long term health.

      2. South of Davis

        BP wrote:

        > So if I work at McDonalds in Hillsborough, Beverly Hills or
        > Atherton CA I should be entitled to a wage that entitles me
        > to live there?

        Hillsborough, Beverly Hills and Atherton have a lot of $3 million + homes, but none of them have a McDonalds…

        1. Barack Palin

          Okay SOD, the point was I making was a low paying job whether it be a McDonalds or some other job. Thank you though for correcting me. How about a homeowner that pays a maid minimum wage? Does that pass your test?

  4. Tia Will

    Jeff Boone

    I very much appreciate your clear presentation of the problem as you see it. It however does not address several points that I see as critical for people on the lower end of the economic scale having been there for a substantial portion of my life. So using your comments for the basis of discussion:

    “In their drive to accomplish their goals, they deny the existence of negative consequences.”
    I do not believe that even the most ardent supporters of this minimum wage increase deny their could be negative consequences. I believe that unlike you, they believe that the benefits outweigh the potential negatives and there are examples of adjacent communities in which this has indeed been the case.

    “This means that only 58.8 percent of the US population is working today”
    This is I believe a critical misconception and basic cause of economic inequality in our country. I believe that far more than 58.8 % of our adult population are actually working ( in the sense of engaging in an activity that benefits not only themselves, but also our society as a whole), they just are not counted because their efforts do not draw an actually salary. This would include homemakers, many caretakers of children and the elderly, students, volunteers in many different areas of our community and probably many groups I have not mentioned. All are engaged in activities that promote a healthy society and yet are not compensated. Now certainly this is not an argument for or against the $15.00 minimum wage but rather a criticism of our financial system that does not compensate certain individuals while allowing others to become rich by providing “services” that in some cases are much less valuable than those I have listed. To me the root problem is not exactly how much we compensate, but that we have designated large numbers of people to receive no compensation for actual work and then call them
    “unemployed”.

    “Minimum wage jobs are intended to be the first steps in launching a career.”
    The key words here for me are “are intended to be”. Unfortunately for far too many, the entry level job does not lead to advancement for many reasons. You are working with a model which is a reflection of an ideal, not reality.
    I’ll use my mother as an example. I could use any of a huge number or women I have met in my practice over 30 years.
    My mom played by the rules of her time. She did not complete high school, but quit to get a job in a dime store having learned that it was a woman’s role to get married and be supported by her husband. Her dime store job was for spending money and to contribute what she could to her very large family. She did get married, never developed any skills other than homemaking, never learned how to drive since that was not needed in how she was taught that a woman functioned in the world. Unfortunately, in her mid 40’s, her husband died leaving her in a most precarious position with no marketable skills, no high school diploma, living rurally without transportation
    and with two children to raise and the house that our father had built as our only asset. Maybe my mother
    “shouldn’t” have been raising children on less than a minimum wage, but that was her reality.

    ” I would like to see is a lower minimum wage combined with some incentive for companies to implement a progressive wage-grade program that offers wage advancement commensurate with demonstrated skills development.

    The outcome of this suggestion is to tilt the playing field even further in favor of business owners. In effect you are recommending using hunger or poverty conditions as the “incentive” for the low wage earner, while offering
    government help by “incentive” ( meaning I trust some sort of economic benefit) to businesses who are already at a huge advantage with regard to their employees ( possibly not at the mom and pop level, but certainly true for large corporations.

    So since you are using an “ideal model” I will follow suit. I would prefer a system that recognizes and compensates at a living standard above the poverty level anyone who is making a positive contribution to our society whether than is child raising, taking classes, driving a cab, cashiering, ditch digging, being a doctor or a CEO. I am sure that we all recognize that each of the above “jobs” is necessary for our society to function, so why do we decide to count some as “employed” and others as not ?

    I also do not see the minimum wage increase as a great solution. I would just take things much further in the opposite direction that you promote and would consider everyone who is actually working as “employed” and compensate them above the poverty level.

    1. Don Shor

      I would prefer a system that recognizes and compensates at a living standard above the poverty level anyone who is making a positive contribution to our society

      Providing a minimum income is a different thing than mandating a self-sustaining income on employers. For example, the Swiss are voting on providing a minimum income to all residents. http://www.businessweek.com/articles/2014-01-16/inequality-fight-swiss-will-vote-on-minimum-income
      And it is an idea that has some support among conservatives, as a way to replace some of the social welfare safety net: http://www.pbs.org/newshour/bb/swiss-consider-welfare-overhaul-guaranteed-minimum-income/
      More to the point, it spreads the cost out on taxpayers, rather than focusing just on business owners.

    2. South of Davis

      Tia wrote:

      > I very much appreciate your clear presentation of the problem as you
      > see it. It however does not address several points that I see as critical
      > for people on the lower end of the economic scale having been there
      > for a substantial portion of my life.

      Not many people in their 60’s who have been out of Med school for 30 years ever write:

      “points that I see as critical for people on the lower end of the economic scale having been there for a substantial portion of my life.”

      Can you let us know what you mean by “lower end of the economic scale” (is it under $100K)? and “substantial portion of my life” (is this the 4 years of undergrad working as a server?)?

      > we have designated large numbers of people to receive no compensation for
      > actual work and then call them “unemployed”.

      We don’t call them “not in the labor force” (see below from the BLS):

      People with jobs are employed; People who are jobless, looking for jobs, and available for work are unemployed; People who are neither employed nor unemployed are not in the labor force.

      > My mom played by the rules of her time. She did not complete high
      > school, but quit to get a job in a dime store

      Who wrote the “rules” that said it was a good idea to drop out of High School? Can you find a quote from ANYONE in the past 70 years (post WWII) going on record to say “the rules for you girls is to drop out of high school”? Sure a lot of woman dropped out of High School in the 40’s (just like a lot of girls get drunk and text topless selfies) but for the most part just about everyone was telling woman to graduate from High School just like today “for the most part” people ate telling girls that texting dozens of topless photos to guys you want to hook up with is a bad idea…

      > I would prefer a system that recognizes and compensates at a living standard
      > above the poverty level anyone who is making a positive contribution to our society
      > whether than is child raising, taking classes, driving a cab, cashiering, ditch digging

      What (in dollars per month) is the compensation you think I should get for “taking classes”?

      1. Tia Will

        Valid questions, I’ll address them one by one.

        1)I lived well below the poverty line from the time I was born until I accepted federal money as part of an agreement to work for the Public Health Service after getting my license.
        Before my father died when I was nine, we did ok primarily because we owed no rent or mortgage since he had built our house himself. He was a good hunter and fisherman so we had enough food. We picked fruit to supplement in the appropriate seasons. All that was gone when my father died. Mother managed to keep us barely afloat, but definitely below the poverty line by social security, baby sitting and cafeteria bussing jobs. From the time I was 18 all though college I worked and supported myself at minimum wage jobs supplemented by house cleaning and baby sitting.
        So this was how i lived until I was in my early 30s.

        2. My mother was born in 1917 to an uneducated family of subsistence farmers. Enough said about that ? I think that you are making the assumption that everyone receives the same message about work, family and roles. I can tell you that while there is less of that kind of thinking now, it is by no way extinct especially among religious conservative folks from a number of traditions.

        3. You can define employment anyway you like. This does not change the fact that many hard working people live below the poverty line because our society does not value their contribution.

        4. I don’t know how much you should receive, I would propose the amount necessary to maintain a single individual above the poverty line. After all, if we were to enact my system, you would not have to support a spouse or children or elderly parent since the society as a whole would provide them with the same stipend to maintain them above the poverty level.

      2. South of Davis

        Tia wrote:

        > I would prefer a system that recognizes and compensates at a living standard
        > above the poverty level anyone who is making a positive contribution to our society
        > whether than is child raising, taking classes, driving a cab, cashiering, ditch digging

        Then I asked:

        > What (in dollars per month) is the compensation you think I should get for
        > “taking classes”?

        I appreciate Tia taking a shot at answering my questions (even if she did not come up with a number) but as someone has taken classes, raised, kids, drove a limo, worked as a cashier and done lot of ditch digging, tree cutting and painting it seems to me that in Tia’s dream world where we all get paid the same nothing would get done since just about everyone would “take classes” if you could do it and get paid the same as ditch digging or cashiering…

        1. Tia Will

          “Tia’s dream world where we all get paid the same nothing would get done since just about everyone would “take classes”

          And I think you underestimate people’s desire and willingness to defer immediate gratification in order to follow their dreams. I did not have the vaguest idea how much the education would cost, or how much I was likely to make as a doctor when I applied to medical school. It simply did not occur to me to look into those aspects of this as a career choice. I simply knew that this was what I wanted to do. I think that if people did not have to worry about where their next meal or their health care was coming from there would be a number of very positive consequences. I’ll give a few examples.

          1. No person would ever have to stay in a job that they hated or were ill suited for because of its benefits.
          2. No individual would ever have to stay in an abusive relationship ( of which I have seen many) because they were trapped by financial need.
          3. No one would ever have to downscale their dreams because they had to help support siblings or other dependent members of their family.
          4. No one would be devastated financially by a health crisis, either their own or
          a member of their family.

          Also, you are making the assumption that everyone prefers studying to physically active endeavors. This is demonstrably not true. Some people prefer physical jobs or jobs in which they perceive themselves to be more autonomous to studying.
          My sister was a case in point. She hated to study and disliked being given any kind of instruction so much that her solution was to open her own cleaning business.

          Finally, you are putting a spin on my comment that I did not place there. I never said that every one would be paid the same. I said that no one’s compensation would be below the poverty level. I appreciate the concept that some people will want to trade more of their time for money. In my “dream world” anyone could earn more by putting in more time. People could get compensated the same for “overtime” thus having the ability to earn more.

    3. Sam

      Tia,

      You are missing a few things. If your mom was in the situation described above and had one $8/hr. full time job she would actually make/get the following per year:
      Wages $16,640
      Earned Income Credit 5,372
      Child Tax Credit 2,000
      Food Stamps 5,964
      Total $ 29,976

      That is equal to about $14.40 per hour worked. She would have paid no taxes and received free medical care from the State. She is also eligible for a free cell phone and reduced rate PG&E.

      The point that you are missing is that if the minimum wage is increased to $15 per hour there are less jobs that require no skill and therefore it would put your mom in that situation into a worse position.

      1. South of Davis

        Sam wrote:

        > You are missing a few things. If your mom was in the situation described
        > above and had one $8/hr. full time job she would actually make/get
        > $29,976 a year.

        Don’t forget the $12K a year in rent discount you can get on a new 2 br apartment in Davis if you make minimum wage and have a kid:

        http://city-managers-office.cityofdavis.org/Media/Default/Documents/PDF/CMO/Affordable-Housing/newharmony-affordable-app-2012-07-06.pdf

        Under the Medi Cal and the ACA you will get ~$12K more in free healthcare getting you equal to about $54K the Obamaphones, PG&E discount and free breakfast and lunch at school for the kids will get you to about $56K and lines up with the quote from the link below (that also has a great graph):

        “the single mom is better off earnings gross income of $29,000 with $57,327 in net income & benefits than to earn gross income of $69,000 with net income and benefits of $57,045.”

        http://www.zerohedge.com/news/2012-11-27/when-work-punished-tragedy-americas-welfare-state

        1. Tia Will

          Sam and South of Davis

          Let’s suppose for the moment that all of your numbers are correct and an individual manages to avail themselves of all of these programs, let’s look at some of the costs ( both monetary and non monetary)

          1. All of this programs are insecure in the sense that they have been relentlessly fought, attempted to be repealed, held political hostage at the cost of millions and millions of dollars spent to defeat them that could have been spent on implementing the programs, on education, on health care itself, or on any number of endeavors that would have actually helped people rather than enriching lawyers and lobbyists and promoting the careers of opposition politicians. These programs are not guarantees, but rather a frail patchwork subject to being gutted depending on who wins the next election cycle.

          2. For the individual parent living below the poverty line, these programs are not easily accessible and come with a huge amount of paperwork, regulation, deadlines and other obstacles, in my opinion, largely designed to keep as many as possible from actually accessing the benefit. The hours spent accessing services are hours spent not taking care of one’s children, working, studying, or in some other way contributing positively to our community.David has written on the difficulty of access a number of times.

          3. There is huge inefficiency in having a plethora of different programs all administered at various levels by some branch of government. A stipend that keeps each individual above the poverty line would provide the possibility of allowing those involved in the current hodge lodge of programs to pursue other endeavors.
          I would think that this would be seen as a huge plus by any who eschew what they perceive as “big government” since it would cut out the middlemen and provide the compensation directly to the individual similarly to social security now.

          1. Sam

            Tia

            To get two of the three benefits that I mentioned all you have to do is file a tax return. At that income level you can have it done by someone else for free and is one sheet of paper.

            The Earned Income Credit has been around for 40 years and has been EXPANDED by every president in that time period, never cut. There are no “lawyers or lobbyists” involved.

          2. Sam

            That is funny. But more seriously, everyone forgets that there are huge safety nets to make sure that her moms situation is taken care of. I think that is important. However, things like moving up the minimum wage actually hurt people in that situation.

  5. Themis

    Here we go with the dooms day scenarios. These graph might be interesting but the fact is they are not really relevant. This is a local issue and unemployment in Davis, is dropping, as well as, unemployment statewide and nationally.
    Here is a link showing Davis’ unemployment statistics, which is much more relevant than using national statistics.
    http://ycharts.com/indicators/davis_ca_unemployment_rate

    Here is a link to a study done by EPI showing that raising the minimum wage would benefit GDP and provide modest employment gains.
    http://www.epi.org/publication/bp357-federal-minimum-wage-increase/

    1. DT Businessman

      “These graph might be interesting but the fact is they are not really relevant. This is a local issue…”, which is why you then go on to cite a study on the impact on national GDP to bolster your case. Hm.

      Oh, then further down the thread you cite a CBO report. That’s local?

      “As you can see the big scary numbers taken as a whole are really not that scary broken down to actual costs.”

      What’s scary is the inconsistent arguments.

      -Michael Bisch

      1. DT Businessman

        I want to make clear here that I’m open minded about this. Higher wages and a booming economy, what’s not to like. The problem is the proponents have yet to make their case. First they said studies overwhelmingly prove that raising wages is good for the economy. Then it’s called to their attention that a lot of studies prove the opposite. To which they respond, “Well, we discount those studies”. Then they say national studies undermining their case aren’t relevant. Then they cite national studies to prove their case. Then they say we’re in a booming economy, so we can afford to dramatically increase wages. Booming economy? Where? Here in Davis? Please cite the statistics!

        Let’s not forget that David a few days ago was saying the proponents can’t engage in a community dialogue, hence, can’t make their case because they’re too busy gathering signatures.

        Apparently, there’s no point in being open minded because the proponents don’t have time to make a compelling case even if they could. At what point do you roll your eyes and just give up listening?

        -Michael Bisch

  6. Themis

    Actually, I was just reading the CBO report on raising the minimum wage to $10.10 (I realize in Davis it would be $15). Even though the headlines in newspapers scream it will costs businesses $15 billion the real facts are:

    The increased pay would boost employers’ wage costs by just 0.003 percent, or about one-third of a penny for every dollar spent on salaries.

    The federal government would incur just $2 million in added wage costs for the entire decade ending in 2024.

    As you can see the big scary numbers taken as a whole are really not that scary broken down to actual costs.

    1. South of Davis

      Themis wrote:

      > As you can see the big scary numbers taken as a whole are really
      > not that scary broken down to actual costs.

      Just like a $50,000 per person tax in Davis ($200K for a family of four) might sound like a big deal, it “only” represents 0.0002% of GDP and “As you can see the big scary numbers taken as a whole are really not that scary broken down to actual costs”…

  7. Themis

    lol on the headline! I don’t know who wrote it but it illustrates my previous point perfectly and has been keeping me laughing all morning.

    A Minimum Wage Hike Is Really Just Another Tax

    Since when are wages considered a tax on business!

    I’m still waiting for all the graphs that show when raises in minimum wage caused soaring unemployment.

  8. Jeff Boone

    Since when are wages considered a tax business

    When the government mandates a minimum wage in lieu of other taxes that they then use to redistribute in the form of benefits to low income people, then yes, this is just another tax.

    Low income circumstances should be temporary. If you really care about the people in low income circumstances you would advocated for other solutions than an increase in the minimum wage. Why would we want people stuck in the minimum wage?

    Here is something to consider… 80% of people currently in the top 10% of earners had previously worked for the minimum wage.

    1. Tia Will

      Jeff

      “Here is something to consider… 80% of people currently in the top 10% of earners had previously worked for the minimum wage.”

      Now let’s consider in this context the question that BP was asking of me. How many of these people were working for spending cash as teenagers and did not actually “need” the money, vs how many were “bootstrapping” themselves into better financial circumstances ? Also, where did you come by this particular statistic ?

      1. Jeff Boone

        55% of minimum wage earners are 25 year old or younger. 100% of people comprising the top 10% of wage earners were 25 or younger at some point in their lives. Eight out of ten of them worked for minimum wage at some point in their live.

        Did you ever work for minimum wage? I did.

        Who else reading this worked for minimum wage or close to it at some point in your life? I am guessing that most would have to admit to it.

        1. Tia Will

          Jeff

          Your numbers may be accurate, but they do not address the point I was making.
          For those 25 and younger, there is a reasonable chance that they are using the minimum wage as “entry level” from which they plan to move up or to supplement the support provided by their parents.
          There is also a reasonable chance that some of them are attempting to raise their own children on this minimum wage.

          And what about the 45% ,if one assumes your numbers are correct, they have a higher probability of having family to support and / or because they are over 25, it would seem reasonable to suspect that the system of “using that entry level position” as a stepping stone for some reason has not worked out for them.

          My post clearly indicated that I had worked a number of jobs which left me at or below the poverty level. I was there for about 30 years of my life depending on how you count it. I was successful in getting myself out of poverty and into the top 10%. But I did not do it alone. I did it with significant amounts of government assistance. I do not deny that others have achieved the same without government assistance ( read investment in my future). My point is that we could save ourselves a lot of societal grief and loss of human potential if we would support each other in our efforts to move up instead of maintaining an outdated
          “survival of the fittest model which is what you tend to advocate.

  9. South of Davis

    Jeff wrote:

    > When the government mandates a minimum wage in lieu of other taxes
    > that they then use to redistribute in the form of benefits to low income
    > people, then yes, this is just another tax.

    Maybe California is worried about losing its #1 ranking:

    Here are the highest “taxing” states in the US:

    1.California 13.3%
    2.Hawaii 11%
    3.Oregon 9.9%
    4.Minnesota 9.85%
    5.Iowa 8.98%

    http://www.zerohedge.com/news/2014-04-18/these-are-americas-most-and-least-taxing-states-and-everything-inbetween

  10. Tia Will

    South of Davis

    “Here are the highest “taxing” states in the US:”

    This information is meaningless without some kind of determination of what an “optimal” amount of taxation would be. People in our society tend to equate the word “taxes” with “bad”. Not necessarily so. It would seem to me that it depends upon the value of what those taxes are going to pay for. If the expenditures provide for a higher standard of living, or more desirable environment, perhaps the other states are taxing too little.
    Context matters.

  11. Barack Palin

    Went to Safeway on Poleline and there where two signature gatherers out front for the minimum wage ballot measure. I wish they had asked me but they seemed to be concentrating on young people. Both walking in and out they were getting business.

  12. Tia Will

    BP

    I see this as a positive sign. Anything that will engage the younger folks in engaging in their community can only be for the good whether or not you agree with the message. At least it is giving them something to consider and drawing them in to the conversation.

  13. wdf1

    Mary Fallin Signs Ban On Minimum Wage Increase

    Oklahoma Gov. Mary Fallin (R) signed a bill Monday prohibiting cities across the state from establishing mandatory minimum wage and employee benefits, including vacation or sick leave days.

    Advocates of the new law contend that efforts to increase the minimum wage across various municipalities could potentially harm local business communities.

    “This bill provides a level playing field for all municipalities in Oklahoma,” state Rep. Randy Grau (R), a backer of the bill’s House version, said on Monday, according to the Associated Press. “An artificial raise in the minimum wage could derail local economies in a matter of months. This is a fair measure for consumers, workers and small business owners.”

    Opponents of the measure view the move by Oklahoma Republicans as retaliation against an initiative underway in Oklahoma City, where organizers have been gathering signatures to raise the city’s minimum wage from $7.25 an hour to $10.10, in line with President Barack Obama’s federal minimum wage proposal.

  14. Topcat

    The discussions that have resulted from the proposal to raise the minimum wage in Davis have been interesting and wide ranging. It is obvious that there are major disagreements about the positive and negative consequences of such an increase. There are well meaning, thoughtful, and caring people on both sides of the issue.

    One aspect of the proposal that concerns me has not been discussed much; the effect that a minimum wage increase would have on the very lowest skilled workers. The people I am talking about here include people with mild disabilities. I have several family members that fall in this category. One has a mild mental illness. She is
    capable of performing simple tasks under close supervision and would benefit greatly from the ability to work at
    a simple part time job. She gets by on family and government support, but she could be a productive member of society if opportunities for simple low skilled work were available to her. She has been having a hard time finding work she can do at $8 per hour. I am concerned that if employers are forced to pay $15 per hour, nobody would even consider hiring her.

    I also have a relatives who is autistic. In his case, he is not able to deal with interaction with people, but he could do work that involved routine tasks such as stocking shelves, janitorial work, or yard maintenance. Again, I am concerned that no employer would consider hiring him if they were forced to pay $15 per hour.

    I have also been around many other people with intellectual, developmental and emotional disabilities who could benefit greatly from doing some sort of useful work. You can meet some of them in the non-profit thrift shops around Davis if you wish.

    I don’t know Bernie Goldsmith, Joaquin Chavez and Ian Lee, but I would be very interested in hearing what they propose for low skilled and mildly disabled people to do if they are priced out of the market? Should all of these people become panhandlers, burglers, robbers, or prostitutes? Should they work in the underground economy picking up odd jobs and day labor? Should they try selling drugs? Should they collect welfare and food stamps? Should they live off of SSI disability payments with no hope of productive employment?

  15. Robin W.

    The debate about whether an increase in the minimum wage benefits unskilled labor, as a general matter, is irrelevant to whether increasing the minimum wage in Davis alone, but not in neighboring municipalities, would have that effect. Raising the minimum wage by such a significant amount in Davis would (1) reduce the number of entry-level jobs in Davis, and (2) attract more skilled & experienced people from outside of Davis to compete for entry level jobs in Davis, potentially wiping out any possibility that unskilled people in Davis could find any work here. We are not big enough, like San Francisco, to raise the minimum wage here so significantly compared to our neighbors.

    1. Barack Palin

      You raise a good point Robin. Our local job seekers will not only face less job openings because for sure local employers will have to cut back but when there’s a job opening they will find they have more competition.

    2. Topcat

      Yes Robin. A basic understanding of how business and economics works tells us that a drastic increase in the minimum wage to $15 will result in less job opportunities for the low skilled and entry level jobs. Some businesses will have to cut back the number of employees they have or the hours that they have employees work. Other businesses may decide that they just can’t make a go of it and close up or relocate to a city that is less hostile to business.

      Another aspect of a drastic increase in the minimum wage is that there will be far less opportunity for part time and Summer jobs for teenagers and young people getting their first experience in the working world. Think about jobs such as lifeguards, playground leaders, and courtesy clerks at grocery stores.

      The people that are advocating for a $15 minimum wage are well intentioned and feel that they have the best interests of the working poor at heart. Unfortunately, I believe that they do not understand how much harm such a move would make to the employment opportunities for the least skilled workers in our community.

      For those in favor of a minimum wage increase I point out that effective July 1, 2014, the minimum wage in California is $9.00 per hour. Effective January 1, 2016, the minimum wage in California is $10.00 per hour.

  16. Themis

    The real fight against the raise in minimum wage comes from The National Restaurant Association and ALEC.
    These groups are fearful of what happens when voters go to the polls and vote on worker’s rights issues. When worker’s are polled on issues regarding minimum wage and sick leave, there is a lot of support among Republicans and Democrats (conservatives and liberals). In addition, voters in six cities agreed that every one has a right to at least five days of paid sick leave a year.

    According to a published report on American Labor standards, in 2011 and 2012, state legislatures undertook numerous efforts to undermine wages and labor standards.

    http://www.epi.org/publication/attack-on-american-labor-standards/

    Here are some of those laws:

    1.Four states passed laws restricting the minimum wage, four lifted restrictions on child labor, and 16 imposed new limits on benefits for the unemployed.

    2.States also passed laws stripping workers of overtime rights, repealing or restricting rights to sick leave, undermining workplace safety protections, and making it harder to sue one’s employer for race or sex discrimination.

    3. Legislation has been pursued making it harder for employees to recover unpaid wages (i.e., wage theft) and banning local cities and counties from establishing minimum wages or rights to sick leave.

    4.For the 93 percent of private-sector employees who have no union contract, laws on matters such as wages and sick time define employment standards and rights on the job. Thus, this agenda to undermine wages and working conditions is aimed primarily at non-union, private-sector employees.

    These laws are considered preemptive because they take away voter’s rights on worker related issues.

    1. Don Shor

      I disagree with all of those things that some state legislatures in red states are trying to do. I also don’t think minimum wages should be decided locally. A $15 minimum wage will distort the labor market in ways that will be undesirable for many of the same people that proponents are trying to help.

  17. Dave Hart

    When listening to the minimum wage debate I always hear the unspoken voice of the employer and the consumer whispering softly on the breeze:

    Employer: “How can I possibly pay any more? I’m barely making it now. If I have to pay more than minimum wage, I’ll go under. I wish I didn’t have to pay as much as minimum wage, but the government makes me.”

    Consumer: “If they raise the minimum wage, I’ll have to pay more for the thing-a-mah-jigs that I like so much and they already cost more than I want to pay. That’s why I drive my car back and forth to Woodland and add to the atmospheric carbon load so I don’t have to pay as much.”

    What I hear in both instances is people’s inner voices saying “I want someone to subsidize me.” If I can’t get the government to do it, I’ll take advantage of someone else. Boy, am I glad I’m not them.”

    When businesses can’t make it without exploiting people to the point that they cannot pay a living wage, they should go out of business. When we consumers cannot afford the goods and services we have become accustomed to, we can only cut back to a lower level of consumption.

    The ultimate libertarian solution consistent with the comments on this blog is to return to slavery or some kind of peasantry where we don’t have to pay ANY wages. Of course we will have to beef up our police and jail system to keep them all in line. Wait, that’s what we’re already doing as we allow the minimum wage to approach zero even at a measly $10/hour. Hey, things are in control. No worries.

    In the end, paying a living wage (a wage where one can meet all the basics of housing, food and clothing on a 40-hour work week) is only possible where there is high overall employment. It is a national question with only a national solution in our capitalist economy where a sovereign government has the authority to make such a thing happen. There is no inclination to do that by the state (not the State of California, but the “state”) which exists to do the bidding of a growing plutocracy or oligarchy (we can argue which it is). We are on a social collision course and the longer and deeper the crisis, the more disruptive and wrenching will be the solution.

      1. Dave Hart

        I never said it was a living wage. In fact, I said that $10/hour, over time, approaches zero in terms of buying capacity. Most of the comments on this page are critical of the concept of a minimal minimum wage like $15/hour. It’s pretty sad when there is so much “agreement” that it’s okay to pay people wages so low they can’t afford to live. It’s even sadder that there are so many people against even modest increases that would still not provide a living wage.

        1. Don Shor

          It’s pretty sad when there is so much “agreement” that it’s okay to pay people wages so low they can’t afford to live.

          I don’t know what you mean by “approaches zero in terms of buying capacity.” As you can see from the link I provided, $9 – $11 is a self-sustaining income for individuals without children. Nobody who pays people $10 – 11 an hour is paying “wages so low they can’t afford to live.”
          I guess you need to tell us what you mean by “living wage” and how you arrive at your figures.

          1. Dave Hart

            The legal minimum wage is not yet $10.00 and according to my data source http://livingwage.mit.edu/ that is not a living wage today. By the time the legal minimum wage is $10/hour, inflation will have made that amount less than a living wage. If people who are critical of the legal minimum wage carried the day, we would still have a minimum wage of $1.25 like it was in 1968. That means effectively zero. Try living on it for a couple months. And I can tell you there are a lot of people out here trying to raise families on two $9.00/hour jobs. The only thing that astounds me is that there isn’t a lot more crime.

          2. Don Shor

            Your source roughly confirms the link I posted, that a living wage in Yolo County (your source) is $10.42 for a single person. Not $15/hour. Inflation is presently about 1.5%. No, you can’t readily raise a family on two $9/hour jobs.
            The minimum wage is paid to many people who are not raising families. In fact, most people who receive the minimum wage are not raising families.
            $9 – $11 is a living wage for people without children. The reality is that when you have children, you need about $20 – $25 an hour. So raising the minimum wage to $15/hour would cause undesirable side-effects without lifting poor families out of poverty. That’s why we need the safety net: earned income credits, food assistance, housing vouchers, all of those things we pay taxes to provide for poor families. I support those things. People also need access to family planning and inexpensive child care.
            At this point, I don’t know what you’re advocating.

          3. Dave Hart

            I I would vote to support $11/hour, $12/hour, on up. $15/hour is on the ballot and I will vote for it because the same dire negative arguments were made in the 1890s about the 40-hour work week and the 8-hour day. It was a lot of b.s. then and it’s a lot of b.s. now.

      2. Topcat

        All this discussion about a “Living Wage” is rather pointless. If the minimum wage is raised to $15 per hour in Davis the question is how many jobs will be eliminated due to employers cutting back, going out of business or not starting new businesses.

        The people who will be hurt the most are the least skilled members of society. Could someone explain how a low skilled person will be better off working no hours at $15 per hour than 40 hours at $10 per hour?

        1. Dave Hart

          One could argue they would be better off because they would have time to plot insurrection and revolution. That’s ultimately what will happen when enough people are pushed out of their comfort zone as the plutocrats garner more and more of the total income and total accumulated wealth. I dare say, even those who were middle class, small business owners who see a decline in their standard of living deep enough and fast enough will decide they’ve had enough. In our lifetime? I don’t have a crystal ball, but I have read history and it keeps happening over and over. The serious question is whether they go to the dark side and choose fascism as the answer to their problems.

  18. tribeUSA

    I hope the backers of the wage proposal consider a more moderate hiike of minimum wage to the range $10-$12/hour. I think this more modest hike would pass for sure even with many older voters; though I must concede with the large number of UCD students in town, the $15 proposal might pass if they are rousted out to vote.

    I’m personally voting against the proposal as it lurches to far to the other side; and would likely hurt businesses and skew the labor market. At $11/hr and working 50 hours/wk; the gross is about $2400/month. With about $400 going to taxes, this leaves about $2000 take-home. A single person can live decently (if frugal) on that in Davis; even being able to afford an older used car and health insurance (thanks to obamacare).

    I think a far larger number of people work within ~20% above minimum wage than at minimum wage; after a year or two of good work performance at minimum wage (many job/work places have limited promotion potential beyond this). So after a year or two of good work performance, a raise to ~$13/hr at 50 hr/wk gets you ~$2900/month gross; after taxes ~$2400 take-home. A single person can live quite decently on this in Davis; and even save maybe $$400-$500 per month if frugal.

  19. Topcat

    One of the most interesting aspects of the $15 minimum wage in Davis debate is that both the backers and the opponents seem to agree that there will be both positive and negative consequences.

    The positive outcome is that some low wage workers who are able to keep their jobs will be earning more money. We don’t know how many people fall in this category, but it seems logical that these employees would work at organizations that can’t physically leave Davis and won’t immediately go out of business. These might include hotels, motels, some restaurants and some retail stores.

    The negative outcome is that there will be fewer jobs available for low skilled workers. This is due to businesses and organizations cutting back on the number of employees they have and/or cutting back on the hours they have those employees working. Some businesses may go out of business because they just can’t make a profit with the drastic increase in employee costs. Other businesses may relocate out of Davis to communities that stay with the mandated California State minimum wage which is going to $10 per hour in January 2016.

    We can expect that there will be far less job opportunities for the most disadvantaged people such as those with mild mental illnesses, developmental disabilities, histories of drug or alcohol abuse and criminal records, or those with a lack of education or poor job skills. The backers of the minimum wage increase simply ignore these people and have no concern for them. The backer’s attitude is that the disadvantaged should just leave Davis and find work elsewhere or find a way to get by in the underground or criminal economy.

    We can also expect that there will be far less opportunity for part time work for teen agers (i.e. Summer jobs) such as lifeguards, playground leaders, restaurant, and retail store workers. Historically, these jobs have been a first step into the working world. It gave many people their first real experience with important skills such as punctuality, reliability, courtesy, and customer service.

    I hope that everyone can take a realistic look at the consequences of a $15 minimum wage in Davis and decide what type of community we want to be.

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