Filed under: Capitalism, Domestic Policy, Economy, Freedom, Politics, Regulation, Unemployment | Tags: Fight for $15, Low-Wage Workers, Unintended Consequences
The law of unintended consequences strikes again. Low wage workers in Seattle spent months agitating for a city-wide $15 an hour were successful in their agitation. The City of Sea-Tac (the area surrounding the Seattle-Tacoma airport) had passed a $15 an hour bill. The state wide minimum wage locally was already $9.32.
Workers in local hotels and restaurants and in the airport soon found out that the raise was not as profitable as they had assumed. Hours were cut. Workers suddenly had to pay for their own parking and their own lunches. Politicians, those unfamiliar with basic economics, often assume that they are lifting poor people out of poverty. Not so fast.
Some workers across the city are suddenly asking their bosses to give them fewer hours, because the higher wage is forcing them off the welfare programs they rely on, so they can earn less to avoid losing assistance.
Who are low-wage workers, and why can ‘t they get higher pay? A very large percentage are young people in their first job, learning how to work. A hike in the minimum wage law that is unrelated to economic growth, means the hike will be an unemployment act for young people. Ideally, the low-wage worker will learn on the job, skills that are transferable to better jobs. Most employers prefer to hire skilled workers than beginners.
Looking through the images of “Fight for $15″ protests, it’s clear that the main driver and sponsor of the protests was SEIU, hoping to unionize fast food workers. The main target was McDonalds. Oddly enough, a very large percentage of McDonalds restaurants are franchises or small-businesses, who are no more capable than other small businesses of absorbing the cost of a government-ordered increase in wage costs. Restaurants in Seattle are closing at higher than normal rates.
No one has ever doubted that it’s quite possible to increase employment and the minimum wage at the same time. But it happens when the economy is growing and demand increases. And, contrary to Mr. Obama’s usual bragging, the economy is not growing healthily.
Most people have encountered low-wage workers who hate their jobs, are unpleasant, but say the required “Have a nice day.” A worker in a local store fits that description, and adds to it tattoos on arms and neck, and ear-lobes stretched out to take huge disks. A long-sleeved shirt would take care of the tattoos, but the earrings will limit his future job prospects.
On the other hand, my grocery had a box-boy, high-school and Jr. College age, who always appeared to enjoy his job, remembered my name, and that I had two cats, and was cheerful and efficient as well. He’s gone on to college now, but he will do well in life.
If you work hard and become the best worker in your current job, you may be ready to move up. Work is not meant to be just a payment to you, but fair pay for fair work. There are plenty of unskilled workers ready to take those jobs you sneer at, and there are other replacements who don’t protest and don’t demand time off, overtime nor sick pay.
I should probably add that this is a case history in the way government welfare is set up to keep the recipients from turning to real work to escape dependence. They are not into helping people on welfare to become self-supporting.
Filed under: Economy, Freedom, Capitalism | Tags: Free Enterprise, Creative Destruction, The Way Things Work
One more short lesson to make you think about things differently.
Filed under: Economy, Freedom, Capitalism | Tags: Free Enterprise, The Way Things Work, Spontaneous Order
Another short economic lesson in the way things work.
Filed under: Economy, Developing Nations, Freedom, Capitalism | Tags: Free Market Capitalism, Arthur Brooks, Mark J. Perry
Here is a chart of one of the most remarkable achievements in human history: the 80% reduction in world poverty in only 36 years. In 1970, 26.5% of the world’s population were living on $1 or less (in 1987 dollars) to only 5.4% in 2006 — led by the 97% reduction in the poverty rate in East Asia (excluding Japan and Hong Kong) from 58.8% to 1.7% over that time period. (Mark Perry: AEI)
It’s the greatest achievement in human history, and you never hear about it.
80 percent of the world’s worst poverty has been eradicated in less than 40 years. That has never, ever happened before.
So what did that? What accounts for that? United Nations? US foreign aid? The International Monetary Fund? Central planning? No.
It was globalization, free trade, the boom in international entrepreneurship. In short, it was the free enterprise system, American style, which is our gift to the world.
I will state, assert and defend the statement that if you love the poor, if you are a good Samaritan, you must stand for the free enterprise system, and you must defend it, not just for ourselves but for people around the world. It is the best anti-poverty measure ever invented.
(Arthur Brooks, President, AEI)
Filed under: Capitalism, Domestic Policy, Education, Freedom, Politics, Regulation | Tags: Entrepreneurship Taught Early, The Administrative State, The Lemonade Stand
From The Economist:
ZOEY and Andria Green, who are seven and eight respectively, only look innocent. With their baby faces and cunning, they managed to lure patrons to their illicit enterprise: a lemonade stand outside their home in Overton, Texas. The girls were in business for about an hour in June, selling popcorn and lemonade to raise money for a Father’s Day gift, before local police shut the operation down. Not only were they hawking without a $150 “peddler’s permit”, but also the state requires a formal kitchen inspection and a permit to sell anything that might spoil if stored at the wrong temperature. As authorities are meant “to act to prevent an immediate and serious threat to human life or health”, the officers understandably moved swiftly in.
They took away the teeter-totters, and the merry-go-rounds, and park playgrounds have become so boring kids don’t want to be bothered. Farmers’ markets proliferate, but who qualifies as a farmer? Goods made in home kitchens are a ‘grey area’. Some states have passed “cottage-food laws” allowing people to sell ‘Non-potentially hazardous food such as baked goods, sometimes permitted, but the rules are odd and fussy, and different locations have different rules. Rhode Island allows farmers to peddle their goods, but bans everyone else. Oklahoma rules apply only to bakers who may sell up to $20,000 worth of breads and cakes as long as the sales take place in their homes but not in a market. Minnesota allows the annual cap at $18,000 for sellers who register with the state and take a safety course. Across state lines, you run into federal law.
Health authorities worry about the risk of unlicensed kitchens, though just what the dangers of lemonade are is unknown. There are lots more cottage food laws, and no increase in botulism.
Alas for the Green girls, lemonade is not covered by Texas’s cottage-food law, as it might spoil if it is not properly stored. But the pair have learned a valuable lesson about commerce and regulation. They discovered that if they gave the lemonade away free, but put a box on the table for tips, they could still make money because the “payments” thus became donations. Their father must be proud.
Powerline outlines the perils of the Administrative State. It’s going to take a lot of unraveling.
Filed under: Freedom, History, The United States | Tags: All Men Are Created Equal, Declaration of Independence
In 1858, Abraham Lincoln’s Fourth of July speech looked back for 82 years to the Declaration of Independence and at its meaning:
We find a race of men living in that day whom we claim as our fathers and grandfathers; they were iron men, they fought for the principle that they were contending for; and we understood that by what they then did it has followed that the degree of prosperity that we now enjoy has come to us. We hold this annual celebration to remind ourselves of all the good done in this process of time of how it was done and who did it, and how we are historically connected with it; and we go from these meetings in better humor with ourselves—we feel more attached the one to the other, and more firmly bound to the country we inhabit. In every way we are better men in the age, and race, and country in which we live for these celebrations. But after we have done all this we have not yet reached the whole. There is something else connected with it.
We have besides these men—descended by blood from our ancestors—among us perhaps half our people who are not descendants at all of these men, they are men who have come from Europe—German, Irish, French and Scandinavian—men that have come from Europe themselves, or whose ancestors have come hither and settled here, finding themselves our equals in all things. If they look back through this history to trace their connection with those days by blood, they find they have none, they cannot carry themselves back into that glorious epoch and make themselves feel that they are part of us, but when they look through that old Declaration of Independence they find that those old men say that “We hold these truths to be self-evident, that all men are created equal,” and then they feel that that moral sentiment taught in that day evidences their relation to those men, that it is the father of all moral principle in them, and that they have a right to claim it as though they were blood of the blood, and flesh of the flesh of the men who wrote that Declaration [loud and long continued applause], and so they are. That is the electric cord in that Declaration that links the hearts of patriotic and liberty-loving men together, that will link those patriotic hearts as long as the love of freedom exists in the minds of men throughout the world.