American Elephants


The Unintended Consequences of Demanding Higher Pay by The Elephant's Child

15Apr15-seattle-march_crowd2

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.



Raise the Minimum Wage, But Beware Unintended Consequences! by The Elephant's Child

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McDonalds has added 62.000 employees in the United States. My guess would be that to be their response to ObamaCare, cutting back workers to 30 hours a week or less to conform to the mandate to pay for health insurance for all full-time workers. If everybody gets their hours cut in half, you need twice as many workers.

In Europe, McDonalds is drafting instead, 7,000 touch-screen kiosks to replace cashiers. The touch screens will accept only debit or credit cards, helping to spell an end to cash and coins. The move is intended to boost efficiency and make ordering more convenient for customers. McDonald’s Europe President Steve Easterbrook notes that the new system will open up a goldmine of data. They could potentially track every Big Mac, McNugget and shake in your order. What that information tells them, I’m not sure. A follow up with a mandatory diet program?

People who are sure that we need to raise the minimum wage to $15 an hour or more, need to be aware that there are consequences. Momentum Machines automates the whole process, and there is a point where a machine that doesn’t demand sick leave and always shows up for work on time is cheaper than paying an undependable person.



The President Is Going to Fix Education By Rating Colleges: by The Elephant's Child

Harvard Economics professor Greg Mankiw recently shared an email he had received from an Adjunct Professor who has been teaching multiple sections of economics for ears at several colleges and Universities in the state of Indiana. This is not just a complaint about the perils of the life of a part-time professor,  and they have reason to complain. Do read the whole thing

With the implementation of the ACA (Affordable Care Act) these institutions are giving notification to their part-time faulty [sic] that their individual teaching schedules will now be limited to three sections. At the college this will likely result in the cancellation of 20-25% of the class sections in economics, and I would assume other areas will have a similar result. The students are not fully aware of the situation and many will be surprised that their desire to get a college education is now being impacted by the need to avoid the full implementation of the ACA.

Because of the huge increase in costs mandated by the ACA, one business after another is making sure that their low-wage or part-time workers work no more than 29 hours which the Obama administration has decided is the dividing line between those who get their health insurance paid for and those who don’t.

The consequences, fewer classes available to the student; more reliance on online classes; as previously mentioned — more reliance on robots, which means fewer jobs for teens, which means more young people living with parents for extended years, which means parents are unable to save as much for retirement, and so on.

The president, meanwhile is out campaigning again on a bus tour about fixing the cost of education: He wants the government to start rating colleges on their effectiveness, and if you are getting financial aid, they want to assure that you are doing your part to make progress towards a degree. Colleges will be rated on their tuition costs, rates of graduation and earnings of graduates. I wonder if he has ever asked himself why tuition coats are so high? For years, every time the government raises the amount a student can borrow in college loans, tuition goes up because the government has said that students can take on more debt.

The liberal assumption that if something needs be done, it must be done by government — is the source of much of the trouble in America today. There are very few things that government can do well — as we can see clearly in current policy.



Liberals Never Think Through The Consequences of Their Policies! by The Elephant's Child

Next year is an election year, so, as naturally as night follows day, Democrats are pushing for an increase in the minimum wage. Whole industries are cutting back the working hours of their employees by more than half because of the requirements of ObamaCare — because they cannot afford to be forced to pay for health insurance for their low-wage workers, and stay in business at all.  It is not because these industries are mean — it’s because businesses actually have to pay their bills and earn enough to stay in business. Perhaps you have noticed, a lot of businesses have closed their doors?

Democrats’ obliviousness to the role of profit and loss might have something to do with the fact that few if any Democrat politicians have ever worked in the private sector, but only in government, where it is quite obvious that nobody worries about such things — there is never enough money to do all the things desired, and who worries about debt? You can always raise taxes on the rich and big corporations. Having cut back employee hours to be able to stay in business, companies are likely to double their salaries?

Obama wants to raise the minimum wage to $9 an hour and boost it annually to keep pace with inflation. Ten states make cost-of living adjustments including Washington state where the minimum wage is $9.19 an hour  the highest in the country. Locally, there’s a demand to raise it to $15 an hour. Is the logic “Oh, the economy is bad, and more people are part time — so we have to raise the minimum wage?”

Every assumption Liberals make about the minimum wage is incorrect, as you can see from this quote from the Seattle Times:

Obama’s proposal is renewing the age-old debate between advocates who claim boosting the minimum wage pumps more money into the economy, helping to create new jobs, and business groups that complain it would unfairly burden employers and curb demand for new workers.

“Pumping more money into the economy” is discredited Keynesian economics. It does not help to create new jobs. •Only 2.9 percent of all workers work at the minimum wage. •More than half of minimum wage workers are between 16 and 24, work part-time and after school. •A hike in the minimum wage raises pay for suburban teenagers, not the working poor. •The average family income of a minimum wage worker is more than $53,000 a year. •Few are the primary earners in their families. •Two-thirds of minimum wage workers earn a raise within a year — as they gain skills. •An increase in the minimum wage simply eliminates beginner jobs for new workers.

When it became clear that beginners couldn’t adequately learn to manage a cash register and making change, that job was automated. There’s a lot to learn in a first job. It isn’t meant as a place to stay for a career. When people have skills, they don’t have to settle for a minimum wage job. A beginner who has to be trained to do a job isn’t worth anything to an employer until they learn to do the job..

Liberal compassion is, as usual, misplaced, and their remedies don’t work. Their belief that the minimum wage has to support a family is false. But they thought that forcing employers to offer health insurance to all their workers who worked at least 29 hours would mean that most low wage workers would get insurance from their employers. Instead they have managed to turn an enormous sector of America into part-time workers with no insurance. There are always consequences, intended or unintended.

hamburger robot

A new robot, Alpha Machine, from Momentum Machines serves up 360 hamburgers per hour. And it does it with such quality and efficiency that it will produce “gourmet quality burgers at fast food prices..”

With a conveyor belt-type system the burgers are freshly ground, shaped and grilled to the customers’ liking. When the burger has finished cooking, Alpha Machine slices the tomatoes and pickles and places them on the burger, which it then wraps up for serving. Momentum Machines claims that Alpha Machine will save a restaurant enough money to pay for itself in a year, enabling the restaurant to spend about twice as much on ingredients as they normally would. Customers can just put in their order, pay and wait at a dispensing window.

The next generation will add a custom meat grinding feature that could mix different meats — 1/3 pork, 2/3 bison for example — and char the burger while retaining juiciness. The company is planning the first restaurant chain with a cook staff of entirely robots.

There are always consequences.



A Short Course In The Destruction of the American Middle Class: by The Elephant's Child

Barack Obama Takes Campaign Bus Tour Through Pennsylvania

Back on July 30, Obama made a big speech about the middle class. Let me insert here that I have always believed in America as a classless society, but there are surely a lot of other people who are quite determined for us to have “classes.” That’s what Democrats do.

They talk a lot about classes. It’s OK if you are in the “middle class”, that is to be admired, but “the rich” are to be hated as a class, unless you are looking for campaign donations, people’s houses to rent for a vacation, celebrities to hang out with, or talking about those who donate to the other party. “The poor” are to be given stuff, entitlements, benefits, programs, everything but opportunity — which comes in the shape of things like approving the Keystone XL pipeline and its 20,000 jobs.  But I digress.

The president said “what we need to do as a country is to secure a better bargain for the middle class — a national strategy to make sure that every single person who’s willing to work hard in this country has a chance to succeed in the 21st century economy.”

Then he went into his usual line about fighting our way back from the worst recession since the Great Depression that cost millions of Americans their jobs. Sorry, the recession ended in June of 2009. Millions of Americans have lost their jobs on your watch, Mr. President, specifically because of your policies.

Anyone who insists that ObamaCare employer penalties are not having a major impact on work hours simply hasn’t been looking at the evidence. One hundred fourteen million workers are working 34.4 hours a week on average. But some industries have seen an unprecedented drop in work hours since ObamaCare became law: retail bakeries – 27.4 hours; services for elderly and disabled – 27.6 hours; home centers – 30.5 hours; general merchandise stores – 29.8 hours. A lot of folks have seen their hours (and income) cut in half.

Obama and his speechwriters put a pretty face on his speeches. Of course that’s what politicians do, because they want to be admired. But pretty words and well-turned phrases can do a fine job of concealing reality, and the reality is not pretty. The middle class in America is on a collision course with extinction. Here are a few important facts:

  • 76% of Americans live paycheck to paycheck
  • 27% of American have no savings at all
  • 46% of Americans have less than $800 in savings
  • The conversion of America into a part-time working society and the country’s second largest employer – a temp agency.
  • The college trap and the student loan bubble
  • And of course, foodstamps, foodstamps, foodstamps and the nearly 50 million poverty-level Americans who need them to survive

Here’s a brief 7 minute refresher course. Seven minutes doesn’t begin to cover the decline of the middle class, the failure of an administration that doesn’t know what it’s doing, and the wrongheaded policies that are directing that failure.



Brave New World — Redux by The Elephant's Child

This slideshow requires JavaScript.

This is an experiment. WordPress lets me make a slideshow. If it keeps cycling over and over, hit the pause button. That seems to allow you to click your way through, without starting the endless cycle. As I said, it’s an experiment.  Sad, though.



Here’s Why There are No Jobs and No Recovery. by The Elephant's Child

Two stories:

Kennewick, Washington —  It took Bob Bertsch 25 years to build his construction business and just one day for it all to go away.  Mr. Bertsch’s Kennewick -based Ashley-Bertsch Group went on the auction block last Friday. By 4 p.m. they had sold off two dozen vehicles and trailers, tons of power tools and supplies, and even the gas-fired fireplace in the office.

Mr. Bertsch, 65, said he is down-sizing because the tax burden got too expensive to stay in business.  “I am tired of carrying all the tax load,” Bertsch said.  “I renew 13 licenses here every year just so I can spend money in this city.”  He makes no attempt to conceal his frustration with the costs government imposes on small businesses like his.  Government is killing small business.  We used to have 24 employees, now all those people are in the unemployment line. He told a friend at the auction that he is selling out because the government was taking more out of his business than he was.

Los Angeles, California — George Will tells this story:  In 1941, Carl Karcher was a 24-year-old truck driver for a bakery. He was delivering huge numbers of buns, so he scrounged up $326 to buy a hot dog cart across from a Goodyear plant, and then the war came. As did millions of defense industry workers. Southern California’s contribution to American cuisine was fast food, which eventually included hundreds of Carl’s Jr. restaurants.  Carl died in 2008, but CKE Restaurants survives. It would thrive, says CEO Andy Puzder, except for the government’s comprehensive campaign against job creation

CKE has more than 3,200 restaurants (Carl’s Jr. and Hardee’s) with some 70,000 jobs, 21,000 directly and 49,000 with franchises. CKE’s health care advisers said that ObamaCare would add between $7.3 million and $35.1 million to the company’s $12 million 2010 health care costs.  They guess $18 million — twice what CKE spent last year building new restaurants. ObamaCare means fewer restaurants, fewer jobs at about 25 jobs per restaurant., and about 3,5 times that much in the community.

That’s not all — government policies are raising fuel costs which affect everything from air conditioning to the cost of supplies, and the threat that the NLRB will impose something like “card check” in place of secret-ballot union elections.  CKE has stopped building restaurants in California because approvals and permits can take up to two years, compared to six weeks in Texas, and the cost to build is $100,000 more than in Texas — where CKE is planning to open 300 new restaurants.

CKE has 95 percent employee turnover in a year, not bad for this industry. Health-care benefits under their “mini-med” policies will be illegal  under ObamaCare. All sorts of employers will be looking for ways to reduce numbers of employees.  CKE is governed by 57 categories  of regulations.  The administration is quite certain that regulation has nothing to do with the dearth of jobs.  In their world, that’s just what government does — set the rules to control business and the people who engage in it. That’s why they were elected, isn’t it?  To tell employers how to operate their businesses so everything is fair and good.

These are not unusual stories. They are being repeated across America in multitudes of businesses, and have been for the last three years. When you have an administration where no one has ever worked in the private sector, let alone managed anything in the private sector, you have a lot of regulators who have no idea what the consequences of their regulations are.  A job is a cost to an employer.  When you make it cost more, there are fewer jobs.




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