Guaranteed Income And Living Wage Schemes Cannot Possibly Work

Authored by Mike Shedlock via MishTalk.com,

Facebook founder Mark Zuckerberg Supports Universal Basic Income.

In its basic form, universal basic income means “everyone gets a paycheck, whether they have a job or not.”

Many expect even more. They want a guaranteed “living wage”.

Useless Trials

Such schemes cannot possibly work. But that does not stop fools from trying.

For example, Finland is giving out a guaranteed monthly income of nearly $600 to 2,000 citizens.

Canada’s province of Ontario, which includes Toronto, started a pilot program in April that provides 4,000 citizens with an unconditional income of about $12,600 a year. Applicants must be between ages 18 and 64 and living on a limited income.

Those studies cannot prove anything, no matter what the results.

Free Money Proposals Do Not Scale

Sure, one can do a trial and show that 20,000 or whatever sample size is better off.

However, any benefit to the trial participants must at the expense of a bigger deficit or higher taxes on everyone else.

Imagine giving 200 million people a guaranteed living wage. Who is going to pay for it?

Next, imagine all of Europe doing this coupled with freedom of movement.

Why stop there? Imagine the same program for the entire world? Free money for everyone!

Missouri Legislature Reverses St. Louis Minimum-Wage Hike

A week ago, we reported on a study from the University of Washington that exposed how the city of Seattle’s progressive minimum wage increases, which began in 2015, are – contrary to the hopes of misguided liberals – actually crushing the city’s poor.

Specifically, the study found that higher minimum wages caused a 9.4% reduction to total hours worked by low-skilled workers, or roughly 14 million hours per year.  Given that a full-time employee works 2,080 hours per year, that"s equivalent to just over 6,700 full-time equivalents who have lost their jobs, just in the city of Seattle.

While the higher minimum wage law remains intact in liberal Washington State - despite the research suggesting that it’s harming Seattle"s most vulnerable workers - the Missouri legislature recently acted to prevent a similar catastrophe from playing out in St. Louis by passing what’s known as a preemption law to invalidate a city-approved minimum wage hike that was slated to take effect in late August. The hike would’ve raised the city’s minimum wage to $10 an hour, from the state-approved $7.70.

Preemption laws are becoming increasingly popular in GOP-controlled states as cities – typically bastions of liberal sentiment – try to raise minimum wages above statewide minimum levels. As the Huffington Post reports, it’s impossible to say how many St. Louis employers will take the GOP up on the offer to slash pay, given the effect such a move could have on competitiveness and morale.

But if businesses agree that the wage hike was too aggressive, then at least some of them will likely revert to lower pay rates, particularly in low-wage industries like fast food.

“If St. Louis’ existing measure were to stay in effect, the city’s minimum wage would be $10 this year and would then climb to $11 in 2018. The statewide rate of $7.70 typically goes up just a few cents a year, since it’s tied to an inflation index.

St. Louis originally passed a minimum wage hike two years ago, prompting business groups to sue to stop it in court. The Missouri Supreme Court recently ruled that the St. Louis measure was lawful, but the new state preemption law renders it irrelevant.”

However, St. Louis is one of the more interesting preemption-law case studies because it undoes a hike that was already approved – even if it hadn’t yet gone into effect. But at least 17 states have preemption laws that stand in the way of local minimum wage legislation, according to a recent study by the National League of Cities.

Though Missouri is hardly alone. Just days after the Birmingham, Ala. City Council passed a wage hike in February 2016, GOP state legislators in Alabama passed a preemption law taking aim at the new $10.10 minimum wage. The Alabama chapter of the NAACP ended up filing a civil rights lawsuit against the state, claiming that the majority-white legislature was disenfranchising Birmingham residents, who are 73 percent African-American.

Fearing the political backlash associated with potentially cutting people’s pay, Missouri Gov. Eric Greitens wouldn’t affix his signature to the bill; Missouri’s constitution stipulates that bills that go unsigned by the governor automatically become law.

Bernie To Introduce $15 Federal Minimum Wage Legislation On Wednesday

We all knew it was coming and now it has finally been confirmed that the Senate"s favorite Socialist will introduce legislation later this week calling for a $15 federal minimum wage.  The pending release of the bill was confirmed earlier today by Bloomberg"s Josh Eidelson.  Apparently co-sponsored by fellow liberals, Senator Murray, Keith Ellison, Bobby Scott and Raul Grijalva, the bill will call for a $15 federal minimum wage to be fully implemented by 2024.

Bernie Sanders, Sen. Murray, Keith Ellison, Bobby Scott, Raul Grijalva et al will unveil bill Wednesday to raise minimum wage to $15 by 2024

— Josh Eidelson (@josheidelson) April 24, 2017

For those silly "math" people out there, that"s a mere 107% increase in minimum wage over just a few short years, which we suspect will at least slightly outpace inflation over the same period.

As our readers are undoubtedly aware, Bernie has long been an advocate of the $15 "living wage." The Daily Caller provided some background on the other sponsors" efforts to meddle in labor markets.

Murray has pushed for a federal minimum wage increase in the past, introducing the “Raise the Wage Act” in April 2015. The legislation called for the federal minimum wage to be increased from $7.25 to $12 an hour by 2020. The bill never made it far in the Republican-controlled Congress, but Murray has remained a leader in efforts to increase the federal minimum wage.

Ellison lost narrowly to Perez in the DNC chairperson race and remains a favorite among liberal activists. The progressive Minnesota-Democrat is a favorite among unions, and has been a strong advocate for the Fight for Fifteen movement.

Grijalva, who co-chairs the Congressional Progressive Caucus (CPC) with Ellison, was a part of efforts by the CPC to raise the minimum wage to $15 per hour in the summer of 2015. Shortly after Murray’s efforts, the CPC introduced the “Pay Workers a Living Wage Act” in July 2015.

Scott joined Murray in sponsoring efforts to get the minimum wage to $12 per hour in 2015, arguing (at the time) that a $12 minimum wage was much more politically feasible at the time.

We"ve written extensively about the unintended consequences of higher minimum wages, namely the pink slips that seem to come shortly after their implementation.  So rather than rehash all of the stats, for those interested, here are a few of our favorite articles on the topic:

Of course, given that Democrats don"t control a single branch of the federal government at the moment, and the socialist party has never controlled a single branch to the best of our recollection, we"re going to go out on a limb and guess that Bernie"s bill won"t get passed anytime in the immediate future.  That said, at least he"s one step closer to getting a bunch of fast food workers fired, and we"re sure they really appreciate all his hard work. 

The Inconvenient Truth About American Wages

Authored by former Ohio State Senator Nina Turner viaThe Hill.com,

My grandmother used to say, “You can put truth in the river five days after a lie; truth is gone catch up.”

Well, here’s the truth: The working men and women of this country are working more jobs and more hours, and they’re still barely hanging on. Beneath those fingertips, they can feel that middle-class dream – the American dream – slipping right away from them. It’s time for President Trump to do something about it.

I come from Ohio. It’s where I was born, and it’s where my roots run deep. We are humble, proud and hard-working people who’ve been battered by the twin storms of globalization and greed.

This past weekend, I was in another state full of humble, proud, and hard-working people; I marched with workers from the Nissan plant in Canton, Miss.

For decades, manufacturing provided millions of Ohioans and Mississippians a solid roadway to the middle class. A family breadwinner could work full time and earn enough money to buy a home, put the kids through college, and enjoy a secure retirement.

But today, 600,000 American manufacturing workers make less than $9.60 per hour – barely more than they could earn at a fast food joint. And their real wages dropped nearly 4.5 percent from 2003 to 2013. They are barely hanging on.

We marched in Canton because Nissan isn’t giving its workers the dignity and respect they earn every single day along that assembly line. They are furloughed for the equivalent of months throughout the year, killing plans for homeownership. They don’t have a predictable schedule, putting college tuition for their kids out of reach. They’ve even had their pensions frozen, making dreams of retirement seem more like a cruel joke than an attainable goal.

And that’s just the full-time workers. Nissan uses a temp company, Kelly Services, to fill almost half the jobs at the plant. Temp workers there receive $12 an hour plus the promise that after a certain time, they’ll become full Nissan employees. But many of them languish for years.

To make matters worse, this poverty-wage business model is paid for by our tax dollars. In fact, Nissan and Kelly Services have scooped up more than $3 billion in federal contracts and loans. That means our government is helping keep American factory workers in poverty jobs while corporate executives get to pocket billions in profits.

This isn’t just happening in Canton. Right now, the U.S. government is America’s No. 1 low-wage job creator, funding more than 2 million poverty jobs across the country through contracts, loans and grants with private corporations. That’s more than McDonald’s and Wal-Mart combined. And when federal contractors like Nissan and Kelly Services illegally violate the rights of their workers to organize, they’re passing poverty from generation to generation.

So you can understand why Ohioans and Mississippians sat up and listened when Donald Trump promised that he would bring manufacturing back; that he would create more jobs and better wages. Everyday Americans took him at his word. And now it’s time to hold him accountable.

It’s time for President Trump to guarantee that the only companies doing business with the federal government are the ones that pay living wages, provide safe work environments and benefits, and don’t fight their workers when they want to form a union.

We know that he can do this, because he’s done it before. Workers at the Trump International Hotel – a federally owned property – were allowed to form a union shortly after President Trump was elected. It’s time to demand that other federal contractors do the same thing.

Grandma was right. The truth always does catch up. And the truth of the matter is this: President Trump made us a promise.

It’s a promise that we all need to ensure that he keeps – for our workers, for our families and for the future we all share.

State Minimum Wage Hikes Already Passed Into Law Expected To Cost 2.6 Million Jobs, New Study Finds

Even though we know that Bernie and his alt-left compatriots will never tire of their endless "Fight for $15" no matter how much data we throw at them, we thought we would go ahead and highlight yet another economic study detailing the devastating job losses that will result from minimum wages hikes that have already been passed in states all around the country.

The latest study comes for the American Action Forum (AAF) and estimates that 2.6 million jobs will be lost around the country over the next several years as states phase-in minimum wage hikes that have already been passed.  Here are the key takeaways:

• In isolation, the minimum wage increases in 2017 will cost 383,000 jobs;


• The entire minimum wage increases currently phasing-in will cost over 2.6 million jobs; and


• Each job lost only leads to an extra $6,900 in total wage earnings across all workers.

Below are the 14 states where the minimum wage is set to increase in 2017 as well as the entire increases anticipated for states where large increases have been passed but will be phased in over several years. 

First, AAF estimates that the minimum wage increases planned for 2017 alone will result in 383,000 job losses.  The analysis assumes that each 10% increase in wages results in a 0.3% - 0.5% decline in the net job growth rate. 

While proposals to raise the minimum wage are well intended, it is important to consider the negative labor market consequences. Meer & West (2015) find that raising the minimum wage reduces job creation. Specifically, they find that a 10 percent increase in the real minimum wage is associated with a 0.3 to 0.5 percentage-point decline in the net job growth rate. As a result, three years later employment becomes 0.7 percent lower than it would have been absent the minimum wage increase.

While the Meer & West (2015) findings may not seem very problematic, when taking into account the magnitude of the minimum wage increases and the number of states implementing new laws, the negative labor market consequences add up. Let’s first examine the minimum wage hikes of 2017 in isolation, without considering previous or future minimum wage increases under the new state laws.

Of course, for most states that have enacted minimum wages increases, 2017 hikes are just one component of multi-year increases.  Below is a look at how much minimum wages are expected to increase overall after they"re fully implemeneted. 

Using the same correlations between minimum wage increases and net job losses noted above, AAF estimates that 1.8 million jobs will be lost once current increases are fully implemented. 

As if that weren"t enough, several states, including California, passed their current minimum wage laws several years ago.  Therefore, adding in jobs that have already been lost from current minimum wage legislation, AAF estimates that a total of 2.6 million jobs will be lost courtesty of misinformed liberal agendas. 

So goodluck with the continued crusade, Bernie!  If you get hungry along the way, we highly recommend you try out a sandwich from this new "Big Mac ATM" which comes with McDonald"s special sauce and all the fixin"s but requires exactly 0 of your minimum wage workers to cook. 

Dear Bernie, Meet the "Big Mac ATM" That Will Replace All Of Your $15 Per Hour Fast Food Workers

Dear Bernie, as you continue in your never-ending "Fight for $15", we thought you might benefit from a simple example of how economics work in a real life, functioning, capitalistic society.  You see, Bernie, labor, much like your daily serving of crunchy granola, is just another "good" that businesses can choose to consume more or less of, depending on price.  And, just to be crystal clear, when the price of labor (i.e. wages) increases, businesses tend to consume less of it.  Finally, our dearest Bernie, when misinformed politicians radically disrupt labor markets by setting artificially high base prices, like your proposed $15 federal minimum wage, then businesses simply stop consuming labor completely and instead replace that labor with this "Big Mac ATM Machine."

Say what?! A Big Mac ATM machine, where you can order real Big Macs, is coming to the Pru/Copley on January 31st. https://t.co/fjMZcrLpr7 pic.twitter.com/MGRxplpsRI

— BostonTweet (@BostonTweet) January 24, 2017

So, you see Bernie, pretty soon all those McDonald"s workers that you promised a "fair living wage" to make Big Macs, will have absolutely no wages at all courtesy of your "Fight for $15."

Of course, as the Daily Caller points out, the "Big Mac ATM" is just the tip of the iceberg when it comes to low-skilled jobs that will be automated as a result of the $15 minimum wage that has already been passed in several states across the country.

Wendy’s, another popular fast-food establishment, announced plans in May to start installing self-serving kiosks at some of its over 6,000 locations later in the year. The chain is replacing cashiers and other low-skilled jobs with computers and automated machines because, as Wendy’s president Todd Penegor told Investor’s Business Daily, it has to compensate for wage hikes.

McDonald’s Europe president Steve Easterbrook announced in 2011 that the fast-food restaurant was planning on “hiring” 7,000 touch-screen cashiers to be installed across the continent, according to CNET and the Financial Times. Easterbrook said it would make transactions more efficient — namely lowering the average interaction three to four seconds each.

So, congrats on getting all those fast food workers fired, we"re sure they really appreciate all your hard work.