Unintended Consequences & the $15/hr Minimum Wage

Wendy's image problem or stealth use of  Rule 5?

Somehow this issue is trending on Facebook. And you must already know that Donald Trump is going to be asked about this tomorrow (so too Hillary Clinton who will say "it's wrong" and then be she'll be left alone).

The real effect of the demand for minimum wage is on clear display at Wendy's.  Replace people with self-serve kiosks.  The unintended consequences for asking for an unreasonable wage relative to the work effort is - no more minimum wage jobs.

Progressives just don’t understand the fact (not science fiction) that robots are about to take over the majority of jobs (and especially low-paying jobs) in the coming decades.

That, and the real minimum wage is actually $0.00.

...After strikes and the demand that the minimum wage be raised to $15/hour, fast food chains have decided that instead of paying someone $15 to push buttons with pictures of food on them, it would be much more cost effective for companies to just roll out self-service kiosks that they can pay $0.00 an hour without benefits so customers can push buttons with pictures of food themselves.

This will become a campaign issue, guaranteed.  But the important thing to understand is this:

1.  Consumers benefit from increased efficiency in the forms of lower cost 

2.  Companies can only attract and keep customers by improving price and/or quality and/or customer service experiences.

3.  The natural tendencies for companies that survive is to improve what they do in those areas.

4.  Distortions to the capitalist operating system result in distortions to markets for everything - including labor.

Item 4 leads to offshoring of jobs to where labor is cheaper and requirements for companies in terms of taxes and even red tape are less cumbersome.  Now it also leads to onshoring of jobs by using robots.

People arguing for a minimum wage do not understand that their actions, their demands, have consequences.  Someone, or something, will do the jobs that they refuse to do, at an even lower wage.  At some point this becomes too low for anyone.  Perhaps the cost of maintaining a robotic cook becomes too expensive for the company.  In a situation where the floor is reached, things change. Wages adjust.  There becomes a natural equilibrium via the "invisible hand". People stop learning to serve burgers and start learning to program robots because that's where the money really is.

It's all common sense.  Unfortunately common sense has become a precious commodity these days.

I wonder if the DNC is paying minimum wage.

Hat Tip to Drudge.

(Washington, DC) – Judicial Watch announced today that it filed a complaint with the Federal Election Commission requesting that it investigate the Democratic National Committee (DNC) for having “knowingly hired” an illegal alien, Cindy Nava, to help craft the committee’s 2016 political message and communications. Judicial Watch filed its complaint on August 25, 2015.

A June 8, 2015, story in The Washington Post reported that the DNC hired Nava with full knowledge of what DNC chair Rep. Debbie Wasserman Schultz (D-FL) termed Nava’s “undocumented status.” The news report details that “Despite not yet attaining legal status, Nava is working for the Democratic National Committee as one of a crop of fellows from around the country helping the party organize ahead of a presidential election that President Obama predicted would feature immigration as a major issue.” The Spanish language newspaper El Nuevo Herald reports that Nava would help coordinate DNC outreach to “women, youth, and Hispanics.”

Federal law prohibits foreign nationals from participating “directly or indirectly in the decision-making process” of federal, state, or local election-related activities.

Dirty politics. 

Minimum Wage is a self-defeating notion

This is only part of the reason why:

Here's another thought - you think companies that want to raise the minimum wage that they pay are doing it out of magnanimity? C'mon liberals think about it - these are the same companies you hate and believe are evil. If they want it, it's for the purpose of competitive advantage, or it's because they're going to offshore staff, and it won't really impact those jobs they deign to keep here. Suckers.

CBO kinda making sense. Doesn't matter to Obama.

The Congressional Budget Office (CBO) has reported that Obamacare will cost jobs.  Now they are saying that raising the minimum wage will cost jobs.  When did the CBO start making sense?  On some level , they are reporting things in a less partisan, premeditated way than when they were offering crutches for Obamacare.  And the president's signature piece, is indeed in need of that crutch.  That's the real reason he's pushing for a minimum wage increase now.

An Observation on a $10 Minimum Wage Idea

Via MSNBC, (H/T Hot Air), Senator Barbara Boxer argues that the U.S. needs a higher minimum wage.  Say $10 per hour. Let me add my two cents. First, here's Boxer on MSNBC:

Here's an idea, let's just make every American rich by raising the minimum wage to $50 per hour. There's a reason that's not possible - no one will hire anyone. It's the same argument as the implications that Obamacare heaps upon employers. But we've discussed the perils of the minimum wage here before, and that's not my latest observation. My more recent observation came from my wife when they were raising the minimum wage here in Ontario Canada to $10 per hour.

 

She was debating a few co-workers who said that a raise in the minimum wage would help them even though they made significantly more than the minimum wage.  She argued that the reverse was in fact true.  She pointed out that while those whose work efforts were less valuable than their own (meaning the work of her co-workers) were now making more for doing the same work, and therefore her co-workers' value, relatively speaking, had fallen.  Awesome point! I must add that I am proud of my wife for taking on co-workers in this fashion and indeed, converting a few of them to her line of thinking.  That's always tough.

 

Setting aside all of the arguments about it putting people out of work (which ultimately it will do), there's an expansion on the idea that my wife put forth.  If you are someone making $13 per hour and you are wearing yourself out to do so, there are now less lucrative but less tiresome jobs available.  It might be worth the step back for the sake of your health.  Alternately, you could stop working as hard because you didn't get an inflationary raise to keep you equidistantly ahead of your minimum wage counterparts working at McDonald's.  So you slack.  Productivity goes down and the job goes to India.  And we are back to putting people out of work - just not the people at the minimum wage level this time.

 

But I could be wrong.  Barbara Boxer could be a genius with all of the answers and I'm an idiot....Nah!

Tipping Point Achieved (almost)

No.

The dependency culture may now be officially irreversible, at least in 70% of all states.

Via Fox News:

Welfare pays more than a minimum-wage job in 35 states, creating little incentive for Americans to take entry-level work and likely increasing their long-term dependency on government help, according to a new study by the libertarian think tank Cato Institute.

The finds come 17 years after the Clinton administration, with bipartisan support from Congress, passed landmark welfare reform legislation that was supposed to move Americans away from entitlements and into the workforce.

However, “welfare benefits continue to outpace the income that most recipients can expect to earn from an entry-level job,” the study authors said. “And the balance between welfare and work may actually have grown worse in recent years.”

Among the other findings is that welfare in 13 states pays more than $15 an hour, compared with the federal hourly minimum wage of $7.25.

 In 13 states you get double the minimum wage for staying at home?  To use the tired expression, in what universe does that make sense?

 

Of course you can expect to hear from liberals the logic-deficient argument that the situation simply requires that the minimum wage needs to be increased to above the welfare rate.  Of course doing so would simply drive businesses out of those states or ultimately, if it were a federally mandated minimum wage, off shore.  The unintended consequence (or perhaps intended) of such action would be drive yet more people onto welfare rolls.

 

If the Cato findings make headlines, expect the left to try to shape the language of the debate.  Expect minimum wage and welfare to go the way of global warming (now AGW or climate change) and be replaced with terms like living wage, and poverty threshold. The important thing for conservatives to do is not let that hijacking occur.  The issue is simple:

 

Welfare payments are too high, welfare rolls are too high, and jobs are the answer. Period.

Limited Government

Recently the Gadfly posted an excellent Milton Friedman video, and it reminded me to post another Milton Friedman video wherein he discusses limited government. If you want to make the argument about limited government to friends and family and don't know where to begin, study the video - Friedman makes excellent points and they are easy to absorb. If you don't feel confident enough to discuss it with others, just show them the video. It's about half an hour, but worth the watch.




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