There is a new pushback against minimum wage hikes.
With republicans in complete control nationally, odds of meaningful legislation are the national level are slim.
And at the state and municipal level, some places that passed hikes want to scale them back or eliminate them.
The Wall Street Journal asks Has the Movement to Raise the Minimum Wage Reached Its Limit?
Cities and counties from Portland, Maine, to Los Angeles have successfully passed local minimum-wage increases, but recent resistance in seemingly friendly territory suggests a momentum shift.
The newly elected Baltimore mayor last month vetoed an increase of the local wage floor to $15 an hour by 2022, despite favoring the policy as a candidate. Earlier this year, the top elected official in Montgomery County, Md., outside Washington blocked a similar measure despite the county previously being at the forefront of local minimum-wage increases.
“I want people to earn better wages,” Baltimore Mayor Catherine Pugh, a Democrat, said in an interview. “But I also want my city to survive.”
Lawmakers in several other states also are pushing back against local minimum-wage increases. At least four municipalities in Cook County, Ill., have opted out of the county government’s move to raise the minimum wage in the Chicago suburbs to $13 an hour by 2020. Iowa Gov. Terry Branstad, a Republican, approved legislation in March to roll back higher minimum wages already approved in four counties. In Flagstaff, Ariz., council members just amended a minimum-wage increase approved by voters in November to slow the pace of increases.
Deli meat producer Dietz & Watson, which employs about 250 workers at a West Baltimore processing plant, threatened to move operations to Kentucky, Ms. Pugh said. The company didn’t respond to requests for comment.
A local businessman, Ron Furman, who runs a craft candle-making business that hires people with employment barriers such as criminal records, told city officials that if the bill were enacted, he would open a planned factory in neighboring Baltimore County.
“There’s a limit when you’re trying to compete with products made in Vietnam and China,” he said.
Cost Spiral and Competition
Manufacturing and service phone support jobs left the US for elsewhere due to wage cost differentials. Although manufacturing is now returning to the US, it is not because wages are rising elsewhere but because robotics eliminated so many people.
Proponents of minimum wage hikes are willing to toss to the dogs small local businesses like the Emily Bruno, the brewery owner mentioned in the above article.
Bruno says an increase to $15 an hour would raise her labor costs by $300,000 a year, nearly equal to the brewery’s annual profit.
States like Illinois already suffer from an exodus of people and businesses. Higher minimum wages and higher taxes cannot possibly help.
The problem is not that wages do not go far enough. The problem is the Fed is hell-bent on forcing prices up in an inherently price-deflationary world.
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Mike “Mish” Shedlock
What’s the stock ticker for that company making robots and self-service-place-your-order boards….?
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Everyone should work. The more oars in the water the faster the boat goes. Some people are worth only $2/hour. Some jobs are worth only $2/hour. If you don’t make a profit for the employer then you won’t be hired.
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This, but more than this. Jobs give people their identity and self-esteem. Let all people work, including the handicapped, by allowing businesses to pay them what they are worth. It’s cheaper to take a guy earning $2 an hour and supplement his wage than it is to have him earn $0/hr and give him the extra $2, too.
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FEE commented on this subject as well.
https://fee.org/articles/after-studying-basic-economics-mayor-vetoes-minimum-wage-increase/
Public officials are only in favor of minimum wage hikes to buy votes. When all is said and done, only public unions get guaranteed minimums and by a factor of 5x and up what the “free market (no such thing)” will yield.
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Let’s face it, the vast majority of white Americans are under-educated, opioid addled, video game players. I can’t imagine any of them being worth 1/2 the minimum wage. We need to push for more immigration from hard-working Mexicans, Jamaicans and Chinese to get this country moving again.
And get rid of all of these white people, big government regulations. If you need a green light to drive through an intersection your obviously an idiot. And food and water are not constitutional rights. Go back to Europe where you came from.
Wait. I might have gone off on a tangent there…
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/sarc
Fixed it for you.
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The problem isn’t that they’re under-educated, addled, video game players. The problem is they draw government checks.
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… and I always considered myself to be an over-educated, addled, video game player.
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Opioid addled?
I think you are confusing opiods and cannabis…
Use the correct terminology, not like the Deep State who would like to link marijuana and heroin in everyone’s minds.
Cannabis is bad enough.
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“Cannabis is bad enough.”
…only when you can’t find any.
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That was funny if sarcastic. Mish swears he does not allow racist posts. I expect both your post and this post to disappear. If not I would like equal time for some counter racism.
Racism is healthy. Every person should be proud of who he is and what he and his ancestors have accomplished in comparison to all others.
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“Proponents of minimum wage hikes are willing to toss to the dogs small local businesses like the Emily Bruno, the brewery owner mentioned in the above article.
Bruno says an increase to $15 an hour would raise her labor costs by $300,000 a year, nearly equal to the brewery’s annual profit.”
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If you cannot afford to pay your workers a reasonable living wage for the are you do business in, then perhaps your business isn’t viable and you should not be in business in the first place.
If your business only works paying China level wages, then move to China!
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Assininity
Here’s reality: If you cannot survive without government mandates or government subsidies your business is not viable
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Excellent. I’m good for removing most if not all government subsidies to both businesses and individuals.
But how many people do you think would be able to stay in their houses if the government removes say, the mortgage interest deduction?
Be careful what you wish for. It might come true.
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“But how many people do you think would be able to stay in their houses if the government removes say, the mortgage interest deduction?”
My guess is more than you think.
Here’s some information to ponder.
The standard deductions for 2016 are $6,300 for individuals and each married person filing separately, $9300 for heads of households and $12,600 for married filing jointly.
The first year of interest, which is the highest, is $8949.89 on a 30-year $150,000 loan at 6%.
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Ha ha ha. Now try buying in Calif, NY, Washington DC area and many more, where $150k MIGHT be enough for a 10-20% down payment!
In my area, it is hard to find many houses below $1 million and I don’t live in a particular ritzy area.
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Good one, Joe. You pulled up the most extreme examples and acted like it was the norm. Along with proof-by-personal-experience. Well done !
Did you confuse “more than you think” with “everyone?”
Ha ha ha, indeed.
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Most consumers buy a home (or car) based on monthly payment. Prices of houses would need to adjust lower to allow for higher tax (if any).
Lower prices for houses a good thing for consumers.
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The mortgage interest deduction is not that big.
The problem is the subsidization at the federal level (in all its forms) puts enough marginal-income people into houses which drives prices up – which artificially drives property values up – which artificially drives up revenue for local government – which drives up local government spending – which is a local subsidy to connected individuals.
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Agreed. One thing begets another. EVERYTHING in the universe is part of a system, dependent on other components of the system. Too few people are willing to embrace this.
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On a harsh and not unrelated note…
If in your personal life you cannot survive without government mandates and subsidies, your lifestyle is not viable.
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Government subsidizes roads, water. electric, cable utilities (through easments), auto fuels through the US military, property protection, personal protection, contract rights, and the list goes on.
Unless you are living in the woods, alone and naked, some part of your lifestyle is being subsidized by the government.
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Subsidies. I do not think it means (in the context we’re using) what you think it means.
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I think it means what it means, not what it doesn’t mean, which isn’t what it is but something completely different, if even that, which we cannot be sure of because it is something else anyway… could be a tree or whistling on a Tuesday. Then again, that something else could by coincidence fit the definition perfectly, then we would really be misled and the conversation might end with blank stares and people calling each other nuts. Nuts really, but worth considering all the same.
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Jon Sellers is one of those san fran cult members who thinks government provides electricity and water and (gasp) cable tv. You probably remember one of his fellow cult members saying “you didn’t build that, government built that”.
These people are the same idiots that have been running Venezuela into the ground the past few decades. Same group that bankrupted California — they will claim they just failed to pay bills on time, it wasn’t a bankruptcy. Stupid is not a strong enough word.
From the state that gave us hare krishnas, scientology and now neo-liberalism… another California cult has arrived to screw up the country
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I agree with Mish 100 percent.
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No one starts a business to [give] someone else a job, they put their capital at risk for a return on investment.
Mish comment: I added the word give.
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That’s is indeed how it works, Uncle Joe! Congratulations!
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So, markets are only viable for the employer but NOT the employee? If a business can’t earn enough profit to stay in business when his labor rates are not established by markets but government mandates, he should fail, but employees, regardless of their productivity, of market supply and demand, should be guaranteed a “living wage”, while seemingly at ease with the notion that a self employed person who is guaranteed nothing can just starve.
Besides, the notion that we can raise base wages and not see that reflected in net reduction of jobs AND consumer price increases is simple Koolaid delusion.
I believe our incomes are broadly a reflection of our relative productivity, and as we become competitively less productive our real wages will decline. If we force business employment costs up, then we can expect our participation in that process to have less relative value, especially if alternatives like technology are available.
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“If you cannot afford to pay your workers a reasonable living wage for the are (sic) you do business in, then perhaps your business isn’t viable and you should not be in business in the first place. If your business only works paying China level wages, then move to China! ”
Great ideas, Joe! Just what we need in the US: fewer businesses, less employment, more jobs in China. Yeah, that’ll work.
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What is a reasonable wage should be decided by the employer and employee? Why should anyone else meddle? Why should a third person decide what a ‘living wage’ is?
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If they called them “guaranteed unemployment laws” maybe fewer people would be in favor of them.
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Gimme more. Gimme more. Britney had it right.
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I think it would be a very good idea to set the price of everything to 1, globally.
Then there would be no confusion.
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Yes, the main problem is bank printing. Eliminate bankers confiscating goods via printing, and Joe average will have enough goods again.
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While I disagree with Mish on most of his economic prescriptions, the one place I agree completely is the requirement of 100% bank reserves. That would keep banks from creating new money and inflating bubbles in asset values.
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Jon
The Left is 100% anti the idea of 100% reserved banks as countries would necessarily be required to have very modestly sized governments, balanced budgets and essentially no welfare system. If you understood this I’m sure you’d change your mind.
Don’t get me wrong, there are many on the right (neo cons for example) who’d be anti it too.
Sound money leads to sound decision-making, by necessity, while loose money does the opposite (and allows for the funding of the welfare/ warfare state).
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I support a living wage.
Have a full time job but all my money goes to paying a living wage to the guy who cuts my lawn.
Can’t do it myself since I’m busy with my full time job to pay the lawn cutter and collecting bottles and cans for the deposit the rest of the time to support me.
I’m living the SJW dream!
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The problem is the Fed is hell-bent on forcing prices up in an inherently price-deflationary world. Mish
Deflation is good when measured in terms of how much time, energy, quality and quantity of materials and human labor needed to produce a given good or service. That’s material progress.
But deflation measured in money is NOT GOOD since it rewards money hoarding. But progress requires investment, not money hoarding (See Mathew 25:14-30 for confirmation) so deflation measured in money is ANTI-PROGRESS.
The problem then is not non-deflation when measured in money but how that deflation is countered. The proper way would be equal fiat distributions to all citizens. The improper way (the current method) is fiat creation by the central bank for the sake of special interests such as the banks and the so-called creditworthy of what is, in essence*, the public’s credit but for private gain.
*Because of extensive government privileges for the banks including deposit insurance.
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If you have time, please read my article concerning the minimum wage situation in the UK, which highlights the problems of minimum wage and was my first blog post. The problems of the minimum wage seem to be apparent in countries other than the USA and actually may be counter intuitive
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