Pathological Altruism In The News

Those soft hearted politicians decided to help the working poor by increasing the minimum wage. They were warned by economists that such an increase in the minimum wage would not have the desired effect. They went ahead and did it anyway, and the predicted consequences have now been documented:

Seattle Min Wage Hikes Crushing The Poor: 6,700 Jobs Lost, Annual Wages Down $1,500 – UofW Study

By Tyler Durden, ZeroHedge

Just last week we noted that McDonalds launched plans to replace 2,500 human cashiers with digital kiosks like the ones below (see: McDonalds Is Replacing 2,500 Human Cashiers With Digital Kiosks: Here Is Its Math):

Of course, no matter how much anecdotal and/or hard evidence is presented to liberals on the negative consequences on higher minimum wages they simply can’t be convinced it’s a bad idea. Somehow, the basic economic concept that raising the price of good (i.e. wages) would somehow destroy demand (i.e. employment levels) for that good just does not compute in the minds of progressives.

Never the less, below is yet another study from economists at the University of Washington that reveals some fairly startling takeaways about Seattle’s minimum wage. Per the chart below, minimum wages in Seattle increased from $11 in 2015 to $13 in 2016 and $15 in 2017 for large employers.

To our total shock, the study found that higher minimum wages caused a 9.4% reduction to total hours worked by low-skilled workers, or roughly 14 million hours per year. Given that a full-time employee works 2,080 hours per year, that’s equivalent to just over 6,700 full-time equivalents who have lost their jobs, just in the city of Seattle, courtesy of moronic politicians who don’t seem to grasp basic mathematical concepts.

They have the political class they deserve.

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  • yetanotherjohn

    There was an old joke in the 70’s about a liberal is a conservative who just hasn’t been mugged yet. With the left decreasing take home pay by forcing the increase in wages and Obamacare in an ever increasing double digit rise in premiums, how long until those on the bottom realize that they are being mugged by the leftist so that the left can preen about their virtue of ‘living wage’ and ‘free health care’.
    Capitalism has lifted more people out of poverty than all the government programs combined. Messing with what works leaves us poorer off.

  • Joe_Miller

    It’s a good way to tell good economists from bad economists. Does raising the minimum wage increase or decrease employment? Robert Reich says it raises employment. He’s a bad economist.

  • Yep, saw this coming a while ago. The higher minimum wage will make it cost effective for businesses like McDonalds to automate.

  • Walter_Cronanty

    As always, Congress leads the hypocrisy parade on this issue:

    Since 2012, the labor-union driven “Fight For $15” movement to raise the federal minimum wage from the current $7.25 an hour to $15 an hour has demonized employers like McDonald’s, Wal-Mart and Starbucks, among many others, for not paying workers “enough.” Responding to this, Democrats in Congress now have 184 co-sponsors for a bill to do just that….Of the 184 congressional supporters of the bill — nearly all Democrats — 174, or 95%, pay their own interns nothing, according to the Employment Policies Institute.

    • Hypocrisy seems to be the dhimmocrats sole point of consistency.

      • Walter_Cronanty

        If it weren’t for double standards, they’d have no standards at all.

    • WHO’S THE BUSTER

      Employers, such as Wal-Mart, enjoy substantial corporate welfare as evidenced by this study conducted in 2013 and cited in Forbes.

      Walmart’s low-wage workers cost U.S. taxpayers an estimated $6.2 billion in
      public assistance including food stamps, Medicaid and subsidized
      housing.” The study was cited in Forbes in 2013, but I highly doubt the numbers have gone down.

      https://www.forbes.com/sites/clareoconnor/2014/04/15/report-walmart-workers-cost-taxpayers-6-2-billion-in-public-assistance/#5402e221720b

      They examined one store in Wisconsin and found that a single Walmart Supercenter cost taxpayers between $904,542 and $1.75 million per year, or between $3,015 and $5,815 on average for each of 300 workers.

      Corporate health care at its finest.

      • Hank_M

        From your linked article….

        “Americans for Tax Fairness, a coalition of 400 national and state-level progressive groups, made this estimate using data from a 2013 study by Democratic Staff of the U.S. Committee on Education and the Workforce.”

        No thanks.

        • WHO’S THE BUSTER

          LOL, yeah, didn’t see that coming. I was just wondering how long it would take for the numbers to be questioned due to the source.

          So, do the numbers sound wrong to you? By all means, present numbers that indicate otherwise. You have to admit that at first glance they don’t sound unreasonable.

          Look at similar studies regarding many low wage jobs. You will also be surprised by the percentage of people receiving Medicaid and/or food stamps that either work full time or live in homes where one person is employed full time.

          What happened?

          Easy, in the past, people without an education or specific skill set could still earn a very good living. I will use my own local economy, but other regions had industries that could be similar. You did not have to be educated, brilliant, or even speak English, to be hired into an auto factory for assembly line work. Overtime was a given and they earned what would easily be the equivalent of over a $100k a year in current dollars, with full benefits and retirement after 30 years. Are those jobs ever coming back? Of course not, and new hires at local auto factories do not make anything near those wages.

          Unfortunately, there are few jobs for people in the current economy that allow for a good living without a unique skill set; in other words, most Americans. That alone explains Trump’s victory as he promised he could, in essence, turn back time. Somehow he convinced people that those old “steel jobs” were coming back. It is easy to sell such a ridiculous fantasy to a receptive audience.

          So what are these new jobs for the people Trump calls the poorly educated? Wal-Mart, McDonald’s or, until recently, the retail industry. Heck, even for people with a good education it is different. Want to meet someone with an MBA? He will gladly cut carpet for you at Home Depot.

          So what does this mean? That a large swath of Americans will need some form of assistance or the large employers in today’s economy will have to raise wages. If Wal-Mart pays $11 an hour, their employees qualify for Medicaid and food stamps. Sounds like corporate welfare to me. Doesn’t bother me, but people should realize that we are paying part of the wages for Wal-Mart employees.

          I know, these are not meant to be careers, but those are the jobs for the “regular” people that formerly worked at Chrysler and had a home, a cottage and sent their children to college.

          People now need skills to get a well paying job, but luckily the children of immigrants graduate college at a higher rate than the average American (36% of U.S.-born children of immigrants are college graduates—5 percent above the national average). Those steel jobs are not coming back, but there are ways to prosper in the current economy.

          • Scalia

            I was just wondering how long it would take for the numbers to be questioned due to the source.

            Questioning the data due to the source is what you do on a routine basis.

      • Walter_Cronanty

        The logical inconsistencies in your comment are typical of those on the left.
        1. Walmart is not receiving “corporate welfare” by paying its employees less than $15.00 an hour. This argument necessarily implies that without the government giving out “food stamps, Medicaid and subsidized housing,” Walmart would be forced to pay $15.00 an hour in order to get anyone to work there. An easy test for this implication – cut all government benefits and see how many people quit their jobs at Walmart.
        2. When it is more economical for Walmart to install kiosks/robots instead of paying $15.00 an hour to employees for check-outs/stocking shelves, how much will the then unemployed workers cost the US taxpayers?
        3. Suppose it is somehow empirically shown that, today, $15.00 is, indeed, the magical, bare minimum “living wage” [Is that for one person, a couple, a family of four? Who knows, but we’ll just say it is, just like progressives do]. So, today, all Walmarts [and similar stores], all McDonalds [and similar fast food stores], all grocery stores, all “Dollar” stores, all hardware stores, all gas stations, and just about every other commercial entity is forced to pay at least $15.00 an hour to each employee. Do you believe that prices at all of those entities would go up so that the entities could stay in business while paying at least $15.00 an hour to each employee? If so, your $15.00 an hour “living wage” is no longer sufficient to be a “living wage.” What is the “new,” magical “living wage?” It’s like an English Bulldog chasing his cropped tail – ain’t never going to catch up.
        4. I agree with Hank M’s comment. No thanks.

        • Brett Buck

          3. Suppose it is somehow empirically shown that, today, $15.00 is, indeed, the magical, bare minimum “living wage”…
          . So, today, all Walmarts [and similar stores], all McDonalds [and similar fast food stores], all grocery stores, all “Dollar” stores, all hardware stores, all gas stations, and just about every other commercial entity is forced to pay at least $15.00 an hour to each employee. Do you believe that prices at all of those entities would go up so that the entities could stay in business while paying at least $15.00 an hour to each employee? If so, your $15.00 an hour “living wage” is no longer sufficient to be a “living wage.” What is the “new,” magical “living wage?”

          Hey, I know – tell the businesses that they *can’t” raise their prices! That guy running the local Dollar General store is one of those lousy 1% exploiters of the workers, why should he be permitted to profit from the work of others? Maybe if we had some commissars to go around telling people how much to charge? See, problem solved.

          • Walter_Cronanty

            Gosh, I never thought of that. I’m sure Buster would be proud to be a commissar making $15.00 an hour – equality and all that.

          • WHO’S THE BUSTER

            I am a staunch capitalist, never said otherwise, but it is easy to look at numbers and understand the ramifications.

            I have owned a business most of my life and pay exactly what the market will bear, no more or less. I outsource whenever possible, buy foreign goods if they are cost efficient and

            If I was running Wal-Mart would I raise wages? Of course not, why should I? But I also recognize that we are picking up the tab for part of their labor expenditures.

            What will be the result of cutting off their food stamps and Medicare? More sick people that are hungry.

            The whole idea that the poor need to be punished and that a little “tough-love” will solve our current problems is foolishness. Do people think the poor will decide to move somewhere or finally accept that job at GM they have been avoiding? If it was 1968, well sure, that is a viable argument, but now? I am sorry, no.

            Our economy is changing, there will be a wider division between the “haves” and “have-nots.” I am a pragmatist. What is the lowest number necessary to allow people to have some semblance of a living? Tax breaks for billionaires will not fix the problem. Do you think billionaires will increase spending because of a tax break? Heck, even corporate tax breaks will not have the impact they might have had decades ago. We are a mature economy. They are not going to dramatically increase hiring or build new factories, but shareholders will prosper. Well, they might invest in a few more robots. Heck companies have dramatically decreased spending on R&D because the return on investment is not realized quickly enough to justify the expenditure to shareholders. A CEO that decides to increase R&D spending is quickly negotiating his parachute.

            Face it, one reason people want to reduce help to the poor is because they are angry that they work hard for a living and darn it, some people are getting stuff for free. Is it because it makes fiscal sense? Nope, they are simply angry.

            Knowing that employment will change in the future, what is the most cost effective way to maintain a functioning society? Paying the highest per capita rate in the world for healthcare that is not anywhere near the top is not a good start.

          • Walter_Cronanty

            You know, I didn’t call you on it the first time, but – – – my comments that you’ve replied to have nothing to do with healthcare. That’s a whole ‘nother ball of wax.
            So, in summary, you need the government to force you, and every other business owner in the US, to do what you think is the right thing to do, even though you don’t know what the consequences will be. Nuff said.

        • WHO’S THE BUSTER

          All industries will put in kiosks, robots or any kind of automation at every opportunity, as they should.

          Robots do not complain, call in sick, need medical care or be limited to one shift. There is no magic number where the company deems a robot is necessary.

          Despite the negative societal implications, if I am a shareholder when is the time for automation? Yesterday.

          This is going to be common for a wide array of industries and there is nothing that can done to stop this trend.

          • Walter_Cronanty

            Thanks for answering my questions.

      • Retired military

        Obama was in office for 8 years. He had supermajority in the house and senate for 2 of those. Yet this persisted. The question is why? Oh wait. Facts that you don’t want to address.

  • The plan isn’t really to elevate the status of the poor. The plan is to create a mob of unemployed, angry people, susceptible to envy of the rich, who ‘stole” their money and opportunities (Evil, greedy corporations who won’t give them a job or a living wage!!!)
    They’re cannon fodder for the anarchists. And Democrats.. (But I repeat myself!)

  • Brett Buck

    My God, who could have predicted this would happen, other than EVERYBODY?

  • Vagabond661

    I think they know what the effect is. It gives them their desired result. More people on government assistance.

  • Walter_Cronanty

    Department of Unintended Consequences :

    For some workers, pay raise comes with loss of cheap child care

    When the minimum wage in California rose to $10.50 an hour Jan. 1, more than a million people got a raise. But for an untold number of families across the state, that pay bump could price them out of child care.

    This year, for the first time, two parents working full time at minimum-wage jobs, with one child, will be considered too well off to qualify for state subsidies for day care and preschool. It’s been 10 years since the state set the threshold for who is poor enough to get the benefit, which is pegged to 2005 income levels….

    Department of “Who’da Thunkit

    In one sense, increasing the minimum wage is unambiguously good: It gives the poorest workers in the country a raise after decades of stagnant pay. And a rising wage floor will also lead employers to bump up wages for experienced employees who earn slightly more than the minimum to preserve the hierarchy.

    The economy is a complex machine, though, and what seems like a straightforward tool to make people richer can force them to make wrenching choices.

    California gives the poorest parents in the state a discount on their day-care and preschool expenses, which came to hundreds of dollars a month for parents of 403,561 kids last school year.

    But the state has not raised the income limit to qualify for child-care subsidies since 2007, when it determined that to get the discount, a family of three had to make $42,216 or less, which was 70% of the state’s median income in 2005. The income limit rises for larger families.

    Department of “Dear God, Not a Raise!”

    For years, parents have been turning down promotions and raises at work so that they can keep their benefit, say advocates and child-care professionals.

    Until October, May Martinez and her husband were taking in less than the income limit on his salary as a security guard at CBS Studios. Martinez, 27, is studying toward a bachelor’s degree and got a subsidy from the state to put her 4-year-old and 2-year-old in day care in Santa Clarita while she was in class.

    Then Martinez’s husband got a promotion, and a $4-an-hour raise. She was thrilled — until she told her kids’ day-care center the news.

    The Center for Early Childhood Education, at the College of the Canyons in Santa Clarita, notified Martinez that the raise would put the couple over the income threshold that the state set for child-care subsidies.

    Instead of paying $167 each month to the center for half-day care, Martinez would be charged the market rate of $2,400.

    After paying for rent, utilities and food, the new day-care costs would outweigh the new income from Martinez’s husband’s promotion. “By a longshot, we would be in the hole,” Martinez said.

    At first, Martinez’s husband tried to turn down the pay bump, begging his supervisors to give him the promotion without the raise. No dice. The couple had serious conversations about turning down the new job altogether, but neither wanted to risk angering his bosses.

    Department of “Guess Who Didn’t See This Coming”

    “Many legislators, probably including the governor, did not
    realize the impact the minimum wage would have on the cost of providing child
    care,” said Kim Kruckel, the executive director of the Child Care Law Center, a
    legal advocacy nonprofit in San Francisco.

    In August, the state Senate Appropriations Committee held
    back a bill that would have updated the criteria for child-care subsidies to
    use the current state median income because of concerns that it would be too
    expensive. The Department of Finance estimated that raising the threshold would
    lead to costs “in the low tens of millions.”

    Department of “Damn, This Economics Stuff is Hard”

    Lisa Wilkin, who runs 10 child-care centers across Los Angeles, says she’s run out of places to cut costs. The executive director of the Child Care Consortium reluctantly cut two administrative positions last year and is set to release five more teacher assistants this year to adjust to rising pay.

    But there’s only so much whittling she can do; California mandates that child-care centers employ one adult for every four infants they take in.

    “If you have one less person working a shift at a restaurant maybe the service is slower, but if you have one less person in child care you are breaking the law,” Wilkin said. She used to cover 100% of employees’ health, dental and life insurance, but this year she is considering asking them to chip in.

    “It is a low-wage industry. I desperately want to pay my teachers more money,” Wilkin said. But she said she can’t charge much more than she already does, because the state limits the amount that centers get to look after the children of low-income parents.

    This year, centers will get a standard rate of $875 a month for full-time preschool for each child with a subsidy. Some of that cost is paid by the state, and some is paid by parents, depending on their income.

    In reality, the cost to child-care providers for offering a month of full day preschool ranges from $800 to $1,500, depending on the area.

    The minimum wage bumped up pay for entry level workers at Wilkin’s centers, but she hasn’t been able to boost more experienced teachers’ salaries by much.

    If child-care providers have to keep cutting benefits and compressing their pay scale, they may find it hard to keep workers, said Kristin Schumacher, an analyst at the nonprofit California Budget & Policy Center.