Economics

Minimum Wage Goes Up, Up, Up Like a Flying Machine

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The federal minimum wage is climbing by 11 percent, to $7.25 per hour, today. Are you sufficiently stimulated yet? 

To dampen your enthusiasm, the Associated Press dug up a few choice quotes from heartless capitalists unwilling to pay workers anything north of starvation wages:

At Bench Warmers Bar and Grill in the southeast Kansas farming town of Chanute (pronounced sha-NOOT), owner Cathy Matney has decided to let some of her dishwashers go rather than pay all 22 of her employees more.

"It's bad timing," said Matney, whose waitresses and cooks will have to pitch in with scrubbing pots and pans. "With the economy like this, there's a lot of people who are out of work and this is only going to add to it."

Ryan Arfmann, who owns a Jamba Juice shop in Idaho Falls, Idaho, will be cutting hours to his staff, which is made up largely of college students, high schoolers and homemakers who want to make a few bucks.

"Am I going to fire anybody, no," Arfmann said. "But kids understand there's going to be hours cut." 

Meanwhile, onward marches the fine Washington tradition of completely ignoring the possibility of unintended consequences:

Backers of the increase say it's long overdue for millions of the nation's working poor. Rep. George Miller, D-Calif., authored the 2007 minimum wage legislation, which increased pay for the first time in a decade.

"A higher minimum wage helps working families' budgets and results in increased spending on local business, which is good for everyone," Miller said in an e-mail. He did not say whether he would have pushed to raise the minimum wage in an economic climate like the current one, and he did not immediately respond to a message left Thursday with his spokesman. 

Nothing, nothing, about this plan could possibly go wrong.

Steve Chapman wrote about this dangerous minimum wage increase yesterday:

If you're a minimum wage employee, your job will pay more, but only if it still exists. These days, most companies are scrutinizing every position on the payroll to make sure it's worth the cost. Raise the toll, and some employees will find they are no longer valuable enough to make the cut.

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  1. Backers of the increase say it’s long overdue for millions of the nation’s working poor.

    I would think some of the last couple quarter’s worth of layoffs had something to do with anticipating this mandated pay increase.

    Better to be working poor than unemployed poorer.

  2. When discussing minimum wage increases in non-libertarian company, I always make the argument that such increases hurt the very poorest in society the most. That is, those living at the margins. People living out of homeless shelters who are trying to transition into the workforce, the mentally disabled, etc.

  3. Hey if the government feels that it can make a business pay whatever, please raise the MM to $100/hr. We’ll all be rich!

  4. >Hey if the government feels that it can make a >business pay whatever, please raise the MM to >$100/hr. We’ll all be rich!

    Yee-hee-hee! ***IMAGINES BALLOONS FLYING EVERYWHERE***

    And yeah, Invisible Finger, I agree. In Canada, I remember too many unemployed people… especially while living in Vancouver. When I traveled to Austin, TX around that time it was like job wanted signs everywhere. My conclusion was the same: Better to be working and struggling than not working at all and feeling suicidal and even poorer $$$-wise.

  5. “Am I going to fire anybody, no,” Arfmann said. “But kids understand there’s going to be hours cut.”

    So the net pay will be the same?

    Sounds like a WIN for the employees. I assume they’ll have to work harder during those hours, but that also means less time wasted, and more time getting wasted…

  6. “Sounds like a WIN for the employees. I assume they’ll have to work harder during those hours, but that also means less time wasted, and more time getting wasted…”

    At a place like Jamba Juice, this probably means there will be fewer people working at a given time, and understaffed when there are large crowds.

  7. people working at a given time, and understaffed when there are large crowds.

    Or maybe there aren’t any large crowds due to the high unemployment and downward economy.

  8. owner Cathy Matney has decided to let some of her dishwashers go rather than pay all 22 of her employees more.

    “It’s bad timing,” said Matney, whose waitresses and cooks will have to pitch in with scrubbing pots and pans.

    Incidentally, this is comparative advantage in a nutshell. Because the higher valued employees now have to spend time doing lower valued work, the average value of their labor goes down. Dropping the minimum wage means lower valued work can be given to lower-skill workers while the higher-skill workers can do higher valued work for higher pay. Everyone is better off.

    Borrowing a title from a 1987 New York Times editorial, “The Right Minimum Wage: $0.00.”

  9. Raise the toll, and some employees will find they are no longer valuable enough to make the cut.

    Even if nobody were fired, there’s still the effect of the minimum wage on hiring.

    It’s time for this racist* law to be tossed on the ash heap of history.

    -jcr

    *yes, racist. We first got minimum wage laws in this country because white factory workers didn’t want blacks from the south taking their jobs.

  10. $1 > $0

    Pretty simple concept. Especially when you figure the person taking the risk on that $1 is not going to give it to you out of their compensation for risk. (evil capitalists)

  11. I still believe that minimum wage laws guarantee an artificially low base wage for employers. I don’t see it as “you have to pay at least this much.” I see it as “you only have to pay this much.” I think the base wage in many sectors would have drifted higher than the minimum wage the law requires.

  12. CHANUTE!!!!!!!!!!!!!!!

    BENCH WARMERS!!!!!!!!!!!!!!!!!!!

    I eat there!

    And I needed to know whether Bench Warmers was one word or two… apparently it’s two.

    (I’m laying out an ad for them.)

    Evil Capitalists! Bench Warmers received the Chanute Business of the Year this year too, those wicked sons of bitches.

  13. And no one in Chanute thinks of themselves as a “farming town”.

    Rural, sure. But we do things other than farm here.

  14. It’s time for this racist* law to be tossed on the ash heap of history.

    -jcr

    *yes, racist. We first got minimum wage laws in this country because white factory workers didn’t want blacks from the south taking their jobs.

    Apartheid-era white South Africans passed minimum wage laws for the same reason, and they were open about the reasons for passing the law. Modern liberals don’t have the same motives, but the effect of a law doesn’t depend on the motive.

  15. I still believe that minimum wage laws guarantee an artificially low base wage for employers. I don’t see it as “you have to pay at least this much.” I see it as “you only have to pay this much.” I think the base wage in many sectors would have drifted higher than the minimum wage the law requires.

    I still believe that taxes on gas guarantee an artificially low price for gas. I don’t see it as “you have to pay at least this much.” I see it as “you only have to pay this much.” I think the price of gas would have drifted higher than it would have in the absence of a tax on gas.

    So your argument is more generally applicable, you see.

  16. I’ve been having about a dozen conversations on this very topic over the last few days… It remains somewhat astounding that people don’t want to believe the consequences of these kinds of things are inevitable.

  17. I heard a saying once…”Out of the frying pan, into the fire”…..can our government really be this stupid??

    What did they think was going to happen if you forced employers to pay their hourly employees more per hour…..oh that’s right, they didn’t think. I’m sorry for the people that are being layed off because small companies can’t afford to keep them, but can you fault a small business owner for cutting man power or hours in order to save themselves and their own families? Instead of flying to NY to take his wife to dinner and a play on our dime, Obama should think about the little people out here who can’t even keep or find a $7.25 per hour job.

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