Category Archives: minimum wage

Red Robin eliminates all busboys because of minimum wage hike

A mark of irrationality is the refusal to conform one’s belief and behavior according to compelling evidence.

I’m reminded of my faux-socialist friend erstwhile Stephanie’s immortal words, uttered in a fit of frustration when I proffered evidence contrary to her stance:

“I’ve made up my mind! Don’t confuse me with facts!”

Democrats champion mandatory minimum-wage hikes in the name of “social justice” and the well being of minimum-wage workers, against the market forces of supply and demand. In so doing, they ignore that pesky thing — empirical evidence that minimum-wage hikes actually hurt minimum-wage workers because employers inevitably resort to cost-cutting measures by firing those same minimum-wage workers.

The latest example is the casual-dining Red Robin chain restaurants.

The New York Post reports that as minimum wage hikes hit across the country this year, restaurant busboys, hoping for a bigger paycheck, are instead losing their jobs as chains look to cut costs.

One chain axing jobs is Colorado-based Red Robin, located mostly in Western states where the minimum wage has risen more quickly.

On Jan. 8, 2018, Red Robin announced it hopes to save about $8 million this year by eliminating busboys at each of its 570 restaurants. Citing labor cost (i.e., minimal wage) increases, Red Robin’s chief financial officer Guy Constant told attendees at the ICR retail conference in New York, “We need to do that to address the labor increases we’ve seen.”

Remaining staff are expected to pick up the slack once the busboys are eliminated. Restaurant consultant John Gordon points out that while costs will definitely be pared, the problem with slashing busboy jobs is that it cuts into customer service.

Michael Saltsman, director of the Employment Policies Institute (EPI), told FOX Business:

“I read that as minimum wage. Somebody like Red Robin, which has a lot of exposure in western states [where the minimum wage is rising faster] … this is sort of a burger and beer chain. If they can’t pass those increases off in higher prices … they have to find a way to do more with less. I think the loss, as the minimum wage goes up … [is the] hollowing out of entry-level opportunities.”

851Franchise.com editor-in-chief Nick Powills observed:

“From a business standpoint, [Red Robin made a] very smart move. From an employee standpoint, you just cut out $8 million worth of labor. The interesting thing about the minimum wage hike is that those that made the decisions to do it, did it on behalf of the employee … when intentions are good, and you can’t appease everybody, someone is going to eventually be on the short [end of the] stick.”

Last year, Red Robin already eliminated “expediters” — restaurant employees who take the food from the cooks and place it on plates for the servers — resulting in a cost savings of nearly $10 million.

According to the Daily Wire, a study conducted by EPI, analyzing employment trends from 1990 through 2017, found that each 10% increase in the minimum wage in California has resulted in a corresponding 2% decline in employment for affected employees. The impact was larger, 5%, for lower-paid workers.”

See also:

~Eowyn

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LA Times asks, “Why is liberal California the poverty capital of America?

nancy pelosi tweet

Demorats own this.

Doesn’t take an econ major in junior high to solve this riddle.

Kerry Jackson at the LA Timeswrote this op-ed piece: Guess which state has the highest poverty rate in the country? Not Mississippi, New Mexico, or West Virginia, but California, where nearly one out of five residents is poor. That’s according to the Census Bureau’s Supplemental Poverty Measure, which factors in the cost of housing, food, utilities and clothing, and which includes noncash government assistance as a form of income.

Given robust job growth and the prosperity generated by several industries, it’s worth asking why California has fallen behind, especially when the state’s per-capita GDP increased approximately twice as much as the U.S. average over the five years ending in 2016 (12.5%, compared with 6.27%).

It’s not as though California policymakers have neglected to wage war on poverty. Sacramento and local governments have spent massive amounts in the cause. Several state and municipal benefit programs overlap with one another; in some cases, individuals with incomes 200% above the poverty line receive benefits. California state and local governments spent nearly $958 billion from 1992 through 2015 on public welfare programs, including cash-assistance payments, vendor payments and “other public welfare,” according to the Census Bureau. California, with 12% of the American population, is home today to about one in three of the nation’s welfare recipients.

The generous spending, then, has not only failed to decrease poverty; it actually seems to have made it worse.

In the late 1980s and early 1990s, some states — principally Wisconsin, Michigan, and Virginia — initiated welfare reform, as did the federal government under President Clinton and a Republican Congress. Tied together by a common thread of strong work requirements, these overhauls were a big success: Welfare rolls plummeted and millions of former aid recipients entered the labor force.

The state and local bureaucracies that implement California’s antipoverty programs, however, resisted pro-work reforms. In fact, California recipients of state aid receive a disproportionately large share of it in no-strings-attached cash disbursements. It’s as though welfare reform passed California by, leaving a dependency trap in place. Immigrants are falling into it: 55% of immigrant families in the state get some kind of means-tested benefits, compared with just 30% of natives.

Self-interest in the social-services community may be at fault. As economist William A. Niskanen explained back in 1971, public agencies seek to maximize their budgets, through which they acquire increased power, status, comfort and security. To keep growing its budget, and hence its power, a welfare bureaucracy has an incentive to expand its “customer” base. With 883,000 full-time-equivalent state and local employees in 2014, California has an enormous bureaucracy. Many work in social services, and many would lose their jobs if the typical welfare client were to move off the welfare rolls.

Further contributing to the poverty problem is California’s housing crisis. More than four in 10 households spent more than 30% of their income on housing in 2015. A shortage of available units has driven prices ever higher, far above income increases. And that shortage is a direct outgrowth of misguided policies.

“Counties and local governments have imposed restrictive land-use regulations that drove up the price of land and dwellings,” explains analyst Wendell Cox. “Middle-income households have been forced to accept lower standards of living while the less fortunate have been driven into poverty by the high cost of housing.” The California Environmental Quality Act, passed in 1971, is one example; it can add $1 million to the cost of completing a housing development, says Todd Williams, an Oakland attorney who chairs the Wendel Rosen Black & Dean land-use group. CEQA costs have been known to shut down entire homebuilding projects. CEQA reform would help increase housing supply, but there’s no real movement to change the law.

Extensive environmental regulations aimed at reducing carbon dioxide emissions make energy more expensive, also hurting the poor. By some estimates, California energy costs are as much as 50% higher than the national average. Jonathan A. Lesser of Continental Economics, author of a 2015 Manhattan Institute study, “Less Carbon, Higher Prices,” found that “in 2012, nearly 1 million California households faced … energy expenditures exceeding 10% of household income. In certain California counties, the rate of energy poverty was as high as 15% of all households.” A Pacific Research Institute study by Wayne Winegarden found that the rate could exceed 17% of median income in some areas.

Looking to help poor and low-income residents, California lawmakers recently passed a measure raising the minimum wage from $10 an hour to $15 an hour by 2022 — but a higher minimum wage will do nothing for the 60% of Californians who live in poverty and don’t have jobs. And research indicates that it could cause many who do have jobs to lose them. A Harvard University study found evidence that “higher minimum wages increase overall exit rates for restaurants” in the Bay Area, where more than a dozen cities and counties, including San Francisco, have changed their minimum-wage ordinances in the last five years. “Estimates suggest that a one-dollar increase in the minimum wage leads to a 14% increase in the likelihood of exit for a 3.5-star restaurant (which is the median rating),” the report says. These restaurants are a significant source of employment for low-skilled and entry-level workers.

Apparently content with futile poverty policies, Sacramento lawmakers can turn their attention to what historian Victor Davis Hanson aptly describes as a fixation on “remaking the world.” The political class wants to build a costly and needless high-speed rail system; talks of secession from a United States presided over by Donald Trump; hired former attorney general Eric H. Holder Jr. to “resist” Trump’s agenda; enacted the first state-level cap-and-trade regime; established California as a “sanctuary state” for illegal immigrants; banned plastic bags, threatening the jobs of thousands of workers involved in their manufacture; and is consumed by its dedication to “California values.” All this only reinforces the rest of America’s perception of an out-of-touch Left Coast, to the disservice of millions of Californians whose values are more traditional, including many of the state’s poor residents.

With a permanent majority in the state Senate and the Assembly, a prolonged dominance in the executive branch and a weak opposition, California Democrats have long been free to indulge blue-state ideology while paying little or no political price. The state’s poverty problem is unlikely to improve while policymakers remain unwilling to unleash the engines of economic prosperity that drove California to its golden years.

h/t PJ Media

DCG

Pelosi: Wage increases and bonuses from tax reform are “crumbs” and “so pathetic”

Please continue to let this woman continue to be the representative of your party, demorats!

h/t Twitchy

DCG

Liberal logic: After passing new soda tax, Seattle to spend $500K to study the effect on businesses

government solve all problems

Shoot first, then aim.

All Seattle proggies had to do was look at what happened in Philadelphia after they passed a soda tax (layoffs and plunging sales).

In June, the Seattle City Council approved a new soda tax that goes into effect on January 1. Proggie councilmember Tim Burgess said this: “The scientific evidence is incontrovertible … sugar-sweetened beverage consumption leads to negative health outcomes. Communities of color and young people are disproportionately targeted by the beverage industry’s advertising and marketing campaigns. Black children and teens see twice as many ads for soda and other sweetened beverages compared to white children and other teens.”

The new soda tax places a .0175 per ounce fee on sweetened beverages. The tax is paid for by distributors but you know they will pass the cost onto the customer.

The city estimates it will raise more than $23 million from the tax in 2018, which it intends to put toward reducing the academic achievement gap between white and minority students, as well as expand access to healthy food.

Jason Rantz at MyNorthwest.com reports that the city of Seattle is reportedly spending $500,000 to fund a UW study to look into the impacts of the soda tax on, in part, businesses, because the business community has stated this is bad for them.

Don’t be surprised if after spending a half million taxpayer dollars, the city undermines the study, such as they did with a minimum wage study earlier this year, to cover the true effects of this new tax.

That’s liberal logic for ‘ya!

DCG

Willing to make an exception: Socialist Alternative Seattle seeking items from Amazon

socialism

Hey friends, Socialist Alternative Seattle needs some gifts. They’ve registered with Amazon and have a “wish list” of items you can purchase from the largest internet retailer in the world!

You can’t make this stuff up. What an epic self-awareness fail.

About the Socialist Alternative:

“Socialist Alternative is a national organization fighting in our workplaces, communities, and campuses against the exploitation and injustices people face every day. We are community activists fighting against budget cuts in public services; we are activists campaigning for a $15 an hour minimum wage and fighting, democratic unions; we are people of all colors speaking out against racism and attacks on immigrants, students organizing against tuition hikes and war, women and men fighting sexism and homophobia.

We believe the Republicans and Democrats are both parties of big business, and we are campaigning to build an independent, alternative party of workers and young people to fight for the interests of the millions, not the millionaires.

We see the global capitalist system as the root cause of the economic crisis, poverty, discrimination, war, and environmental destruction. As capitalism moves deeper into crisis, a new generation of workers and youth must join together to take the top 500 corporations into public ownership under democratic control to end the ruling elites’ global competition for profits and power.

We believe the dictatorships that existed in the Soviet Union and Eastern Europe were perversions of what socialism is really about. We are for democratic socialism where ordinary people will have control over our daily lives.”

From the socialist’s Facebook page:

“Lots of people have helped us pull this space together! We still need a few things, can you help? Donate things you don’t need anymore OR check out our Amazon wish list. https://www.amazon.com/…/1FG05OEQP…/ref=nav_wishlist_lists_1

From their Amazon wish list:

Socialist Alternative is an activist organization. We are workers organizing in our workplaces, students organizing in our schools, and activists organizing in the streets. We are trying to set up our new party center in Seattle to help professionalize our work, can you hlp by purchasing something from our shopoing list”

Some of the items requested include an EARISE M60 Audio PA System (starting at $269.99), a soft cozy shag area rug ($59.00), a 5’ folding portable plastic table ($69.95) and Poo-Pourri Before-You-Go toilet spray ($8.89).

I guess they requested that last item because they are full of you-know-what!

h/t MyNorthwest

DCG

Busted: Emails show that minimum wage advocates, academics coordinated to boost the new $15 Seattle wage

shock

From MyNorthwest.com: It’s been alleged that supporters of Seattle’s minimum wage law sought to undermine a study from the University of Washington that painted a less-than-perfect picture of what’s followed. And a paper trail leading back to city officials may have further solidified those allegations.

When the Seattle City Council passed the $15 minimum wage law it commissioned the University of Washington to study its affects on the local economy and workers. The recent UW study found that the economy absorbed the first wage increase from $9.47 an hour to $11 an hour. But after wages increased again, some businesses cut workers’ hours, meaning that despite getting a higher wage, workers didn’t earn from as many hours.

However, another study from the University of California at Berkeley’s Institute for Research on Labor and Employment found the wage law to be mostly positive.

But an email trail, which can be found at Forbes.com, led to some evidence that Forbes contributor Michael Saltsman called “not pretty.”

Among the findings, according to Saltsman, is a request from Mayor Ed Murray’s office asking the people at Berkeley to “omit any mention of the forthcoming University of Washington report from its write-up.

“Unfortunately, for them, I think they put a lot of coordination in email form that was accessible via public records request,” he told KIRO Radio’s Dori Monson. It certainly raises questions about objectivity, Dori pointed out.

The email trail also reveals that the press release for the Berkeley study was written by a PR firm that was also used by Fight for $15, strong proponents of the minimum wage law.

The Berkeley study, it appears, was also rushed to meet the timeline for the anniversary of the law, Saltsman said.

Go here to listen to the Saltsman interview.

DCG

Shocker, not: UW study finds Seattle’s minimum wage is costing jobs

shocked face

From Seattle Times: Seattle’s minimum-wage law is boosting wages for a range of low-paid workers, but the law is causing those workers as a group to lose hours, and it’s also costing jobs, according to the latest study on the measure passed by the City Council in 2014.

The report, by members of the University of Washington team studying the law’s impacts for the city of Seattle, is being published Monday by a nonprofit think tank, the National Bureau of Economic Research.

That law raises Seattle’s minimum wage gradually until it reaches $15 for all by 2021.

The UW team published its first report last July on the impact of the first jump in Seattle’s minimum wage, which went in April 2015 from $9.47 to $10 or $11 an hour, depending on business size, benefits and tips.

This latest study from the UW team looks at the effects of both the first and second jumps. The second jump, in January 2016, raised the minimum wage to $10.50 to $13. (The minimum wage has since gone up again, to the current $11 to $15. It goes up again in January to $11.50 to $15.)

The team concluded that the second jump had a far greater impact, boosting pay in low-wage jobs by about 3 percent since 2014 but also resulting in a 9 percent reduction in hours worked in such jobs. That resulted in a 6 percent drop in what employers collectively pay — and what workers earn — for those low-wage jobs.

For an average low-wage worker in Seattle, that translates into a loss of about $125 per month per job.

“If you’re a low-skilled worker with one of those jobs, $125 a month is a sizable amount of money,” said Mark Long, a UW public-policy professor and one of the authors of the report. “It can be the difference between being able to pay your rent and not being able to pay your rent.”

The report also estimated that there are about 5,000 fewer low-wage jobs in the city than there would have been without the law.

The researchers focused on “low wage” jobs — those paying under $19 an hour — and not just “minimum wage” jobs, to account for the spillover effect of employers raising the pay of those making more than minimum wage.

For instance, an employer who raised the pay of the lowest -aid workers to $13 from $11 may have then given those making $14 a boost to $14.50. (The team had also tested lower- and higher-wage thresholds for the study, and the results did not change, members said.)

To try to isolate the effects of the minimum-wage law from other factors, the UW team built a “synthetic” Seattle statistical model, aggregating areas outside King County but within the state that had previously shown numbers and trends similar to Seattle’s labor market.

The researchers then compared what happened in the real Seattle from June 2014 through September 2016 to what happened in the synthetic Seattle.

In addition to earnings, the report analyzes data on work hours— relatively rare in minimum-wage studies, the researchers said, since Washington is one of only four states that collects quarterly data on both hours and earnings.

Other studies on minimum wage have typically used lower-wage industries, such as the restaurant sector, or lower-paid groups such as teenagers, as proxies to get at employment, they said.

That was the case with a University of California, Berkeley study released last week that found Seattle’s minimum-wage law led to higher pay for restaurant workers without costing jobs in 2015 and 2016.

The UW team’s study actually corroborates the Berkeley conclusion, finding zero impact from the minimum-wage law on restaurant employment — when taking into account jobs at all wage levels within the restaurant industry.

But the UW researchers did conclude that, for low-wage restaurant workers, the law cost them work hours. (Specifically, though the actual number of hours worked by low-wage restaurant workers in Seattle increased a slight 0.1 percent from the second quarters of 2014 to 2016, the researchers’ “synthetic Seattle” model showed that if the minimum wage law hadn’t been in effect, there would have been an 11.1 percent increase in hours for those workers.)

Michael Reich, a UC Berkeley economics professor who was lead author on the Berkeley report, said he found the UW team’s report not credible for a number of reasons.

He said the UW researchers’ “synthetic” Seattle model draws only from areas in Washington that are nothing like Seattle, and the report excludes multisite businesses, which employ a large percentage of Seattle’s low-paid workforce. The latter fact was also problematic, he said, because that meant workers who left single-site businesses to work at multisite businesses were counted as job losses, not job gains in the UW study.

Reich also thought the $19 threshold was too low, and he said the UW researchers’ report “finds an unprecedented impact of wage increases on jobs, ten times more than in hundreds of minimum wage and non-minimum wage studies. … “There is no reason,” he said, that Seattle’s employers of low-paid workers “should be so much more sensitive to wage increases.”

Jacob Vigdor, a UW public policy professor and one of the authors of the UW report, stood by the team’s findings.

“When we perform the exact same analysis as the Berkeley team, we match their results, which is inconsistent with the notion that our methods create bias,” he said.

He acknowledged, and the report also says, that the study excludes multisite businesses, which include large corporations and restaurants and retail stores that own their branches directly. Single-site businesses, though — which are counted in the report — could include franchise locations that are owned separately from their corporate headquarters. Vigdor said multisite businesses were actually more likely to report staff cutbacks.

As to the substantial impact on jobs that the UW researchers found, Vigdor said: “We are concerned that it is flaws in prior studies … that have masked these responses. The fact that we find zero employment effects when using methods common in prior studies — just as those studies do — amplifies these concerns.”

He added that “Seattle’s substantial minimum-wage increase — a 37 percent rise over nine months on top of what was then the nation’s highest state minimum wage — may have induced a stronger response than the events studied in prior research.”

As to how the UW team’s findings jibe with the Seattle area’s very low unemployment rate, tight labor market, and anecdotes from hospitality employers desperately seeking low-wage workers, Vigdor said that, based on data and what he’s hearing from employers, businesses are looking to hire those with more experience.

“Traditionally, a high proportion of workers in the low-wage market are not experienced at all: teens with their first jobs, immigrants with their first jobs here,” he said. “Data is pointing to: Since we have to pay more, employers are looking for people with experience who can do the job from Day 1.”

DCG