Seattle Approves $15/Hour Min Wage

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If this makes it past the courts let the experiment begin!

It is not just that this is the now the highest MIN WAGE in the world and while Seattle might make a top 100 list of best cities in the world it would just barely so how do you as a business justify this cost structure, but also the automatic changes based upon inflation that likely will be a problem. Another huge problem is that the city was not able to convince the rest of the county to go in on this, so loads of businesses will probably move a few miles to get out of the city, which will be relatively painless.

Starbucks, one of the most progressive companies out there on treating employees well, was not in favor of this wage and has announced that they will cut benefits to compensate.

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http://cdn.theatlantic.com/newsroom/img/posts/OECD_Global_Minimum_Wage.png

Setting a min wag at 50% higher than the next highest PPP min wage (Purchasing power parity) is a very risky move. In order to support it there has to be some combination of Seattle being better workers and Seattle being a more desired place to live. I dont see how anything over $12 makes any sense. If I am correct then this will not work. The way it will not work is that jobs vanish. There will be more black market jobs for sure now but since they dont generate tax rev they will not help much.

I have a feeling that this lasts two years, and the way it ends is a law passed in Olympia outlawing any municipality from variance from the state min wage. If this goes bad it is the States books which will get hard and fast, both will less money coming in because jobs disappear, and more money going out as the jobless line up for aid. Eventually property values will fall hitting the county and city books, but the state will have ended this experiment before they go down a lot.

Then the city and the state get to try to rebuild.

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@hawkeye10,

DOD is backtracking from Obama's government contract min wage as much as possible because guess what, the politically motivated promise does not work economically.

Quote:

Military fast food fans will benefit from the easing of new Labor Department wage rules that threatened to cause the closure of many such eateries on installations.

“We are optimistic that many of our industry partners will be willing to continue providing services under these new terms,” said Kathleen Martin, spokeswoman for the Navy Exchange Service Command, which negotiates and oversees contracts for fast food concessionaires on Navy installations.

The Labor Department’s new minimum wage rules instituted last year led several fast-food restaurants to end their contracts on military installations. In March, McDonald’s restaurants closed on three Navy bases and another eatery, “I Love Country,” has closed at Naval Station Pearl Harbor, Hawaii. Military officials had feared that more fast food outlets on bases would follow suit.

Full details of the new wages are expected to be released sometime this week, but Labor officials have already pulled back on one aspect of the wage hike. They initially required payment of a new, additional “health and welfare benefit” at a rate of $3.81 per hour. That has been reduced to 92 cents per hour.

http://www.armytimes.com/article/20140602/NEWS/306020050/On-base-fast-food-outlets-get-wage-reprieve

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$15/hr isn't enough, no matter where you live in the USA, especially in the Boston area and surrounding suburbs.

At $15/hr and 40 hr /week that's $600/week or $2400/month, before taxes , health insurance ...etc. Rent for a one bedroom apt is now about $1250/month and about $2000/month for an unfurnished apt.

The minimum wage should be raised to at least $25/hour.

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@hawkeye10,

hawkeye10 wrote:

If this makes it past the courts let the experiment begin!

Sounds like a winner if they also include mandatory employment for everyone.

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@Miller,

Interesting theory of yours that everything economic should revolve around what would be convenient for our household budget. That works for you till we use that same theory to decide how much to pay our doctors, correct?

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@roger,

roger wrote:

hawkeye10 wrote:

If this makes it past the courts let the experiment begin!

Sounds like a winner if they also include mandatory employment for everyone.

Isn't this sounding uncomfortably close to what we do with language, this theory that if we change the words we speak then we change reality? Now we have this idea that we can pass a law and then everyone will have more money. Sounds like the idea that if we pass a law to make all kids get served crappy whole wheat pasta and tortillas and lots of fruity carbs then we will have no fat kids (OK that one is true, they throw the food into the garbage) .

GEEZ, we have become a militaristic authoritative government managed society full of simpletons.

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@hawkeye10,

hawkeye10 wrote:

Interesting theory of yours that everything economic should revolve around what would be convenient for our household budget. That works for you till we use that same theory to decide how much to pay our doctors, correct?

That's how we ended up with Obamacare. Of course, the law doesn't state that any Doctor has to take anyone as a patient. Consider both medicare and medicaid. Many physicians will not take as patients, those on medicaid or those on medicare.

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There is so much confusion around whether raising the minimum wage is a good thing or not. On the surface politicians like to do this because it appears they are fighting for those struggling to feed their families. Min wage is so low that a family cannot survive off a min wage salary so the solution seems to be to raise.

Surprise though - a min wage salary is just that - the min amount of pay per hour. When you first start out at a job you have no experience, typically you are very young - you have no family to support and often times you are a teen going for your first job. You are not supposed to be supporting a family when you first enter the work force.

Then as you gain experience and education you get raises/promotions, etc. And min wage salary isn't even a thought any more. Anyone who has work experience and a good work ethic whether formally educated or not is more than capable of getting promoted and earning a living salary whether there is a min wage in place or not. Go to McD. Start frying french fries, learn the process and move to cashier, then move to asst manager and manager.

Min wage is not supposed to be a living wage - it is supposed to be a start so the thought of moving min wage up to be a living wage should not be the objective. I wouldn't want to pay a teen a living wage - a teen that has no work experience that I need to teach. Doesn't make sense.

In the end, pushing costs up for operating a business simply causes their prices to rise or as someone mentioned here, they will look for ways to cut costs, which could be employee benefits or employee jobs. Either way it doesn't help the individual getting the paycheck in the long run as their costs for goods and service increase and likely their benefits go down causing more out of pocket for medical, bonuses, etc.

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It will be interesting to see how food stamp, free school lunches, and medicaid eligibility guidelines will be adjusted.

My friend owns a pizzaria and restaurant. He will have to let people go and those remaining will have to pick up the work slack. He employs some kids and special needs persons who will not be able to do that.

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@hawkeye10,

hawkeye10 wrote:

Starbucks, one of the most progressive companies out there on treating employees well, was not in favor of this wage and has announced that they will cut benefits to compensate.

hahahahaha - Starbucks cutting benefits.

Starbucks is one of the places I will not set foot in because of their terrible employment practices. They've long been in/famous for finding ways to prevent employees from receiving anything other than the most basic government-mandated benefits. Moving people from location to location weeks before they'd become entitled to benefits, keeping their hours below the level that would entitle them to benefits. They've got some nasty corporate habits.

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@PUNKEY,

One of the problems is this sort of thing hits small businesses more than larger companies -- say a Starbucks. Raising any sort of costs to small businesses have much larger impacts. Anyone who has a family member or close friend that has a small business will know how devasting increasing costs can be to them.

I've seen it - I know a family member who ended up selling his business to a larger corporation after having this business for over 30 years - it wasn't even worth it for him to leave for his son because of the recent increase in costs due to medical insurance requirements, min wage increases, taxes and other increases in costs due to government regulations. Fortunately he retired when he sold and was able to negotiate a good position for his son in the business whereas ideally he wanted to have his son run it while he came and provided some guidance.

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@hawkeye10,

hawkeye10 wrote:

If this makes it past the courts let the experiment begin!

That was my reaction to it as well. Every niche of the political and economic landscape has its theory about the minimum wage. Should we have one in the first place? If we do, where should we set it? Enough of that already! Economics is supposed to be a science, and scientific theories exist to be tested. So let the testing begin! I'm all for it.

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@hawkeye10,

Although my income has been far above minimum wage over the last 20 years, I am definitely in favor of a significant increase in the minimum wage for workers who have not been as fortunate. We can debate how much and how fast the minimum wage should be increase. I believe anyone who is working a 40 hour week earning minimum wage, morally should have a minimum standard of living. I'm not saying they should have the same standard of living of a middle class income. In fact far from it. If you are making minimum wage your standard of living should be somewhat difficult with some struggles. With that in mind, anyone working a 40 hour week should be paid a high enough wage to provide for themselves and their family. Anyone who is working a 40 hour week should be paid enough to house, feed, and clothe their family as well as take care of their healthcare needs without having to have to get a 2nd job. We all know that corporations have been making record breaking profits. So, clearly they can afford to pay workers more. Let's not forget that workers are producing more than ever in modern day history while receiving less than ever based on the percentage of corporations profit.

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The Douglas restaurant group does not have a lot of benefits to cut, they are predicting a 20% increase in prices, and I have no doubt that they will compensate by outlawing tipping. Starbucks at the moment thinks that they can swap out benefits for pay but I expect that they will raise prices about 5%. The places that will really get reamed are fast food places, they dont have either tips or benefits to take, so they have no choice but to raise prices 20-30%, which is going to kill them. Already fast food is losing sales to grab and go precooked sold at convenience stores and also grocery stores. Some are predicting that we will go bigtime back to the automat idea, picture a McD's were you never deal with a person, you slide an atm card or hold up your phone to a machine to pay, then go to a wall of vending machine doors and get what you want. They are big in Japan, and can run with less than half the employees of a traditional fast food place. Special orders go bye-Bye of course, and while some things are nuked when you want it a lot of stuff stays hot held, to quality gets tricky.

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@Real Music,

But what about small businesses? Mom and pop shops -- they are the ones hit hardest with this.

Most large corporations hiring full time employees pay above the minimum wage any way. The ones that do not tend to hire more part time, teen workers, those just starting in the work force and second income workers- ie McD's, retail, etc.

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@Real Music,

Where's the skill in the labor? What makes their work so special that they should get more money? Flipping burgers and dunking fries is not any sort of skill.

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@Linkat,

Linkat wrote:

But what about small businesses? Mom and pop shops -- they are the ones hit hardest with this.

Most large corporations hiring full time employees pay above the minimum wage any way. The ones that do not tend to hire more part time, teen workers, those just starting in the work force and second income workers- ie McD's, retail, etc.

Yes and no. For me yes as I have a busy place and only have one of my kids summers, but the min wage law is
Written to say that all family members of the owner can get paid whatever. So what you get is smallish places with only family members inside ( and in my experience these are almost always asians), and they ignore the min wage laws. The place next to mine is one of these, they only pay people when they go on vacation, though last year they just closed for vacation.

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@hawkeye10,

Some minimum workers working in a hospital, often increase their income by working on the weekend (time=1.5) and also working a double shift, 3-11PM. 11 PM-7 AM. Working 2 shifts in the hospital also increases their salary, because of the shift differential.

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@hawkeye10,

Those would need to be extremely small places or people with very large families. My extended family that had a small business was larger than that - he had both his sons working there and his wife on occassion, but required much more bodies than that. Now they are corporate owned as it was not worth the expense of taxes, and health care costs to run the operation.

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Seattle Approves $15/Hour Min Wage

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