Missouri's New Minimum Wage Law Will Be... Complicated

Authored by Jazz Shaw via HotAir.com,

Generally when we see news of a new minimum wage law it relates to a city or state raising it. Missouri went in the opposite direction recently, instituting a rule which forbids any local government entities from instituting a minimum wage which is higher than that state minimum. (Currently sitting at $7.70 per hour.)

That’s going to cause considerable consternation for people in St. Louis who only recently received a raise to $10.00 per hour because of a municipal law. (Associated Press)

Thousands of workers in St. Louis will likely see smaller paychecks starting Monday, when a new Missouri law takes effect barring local government from enacting minimum wages different than the state minimum.

The law is drawing protests in St. Louis and in Kansas City, where a recent vote approving a higher minimum wage is essentially nullified without ever really taking effect.

The impact is direct in St. Louis, where the minimum wage had increased to $10 after the Missouri Supreme Court sided with the city in a two-year legal battle. Days after the Supreme Court ruling, Missouri’s Republican-led Legislature passed a statewide uniform minimum wage requirement. The state minimum wage is $7.70 per hour. Republican Gov. Eric Greitens declined to veto the bill, allowing it to become law.

This new law seems to be somewhat unique in that it effectively also sets a maximum minimum wage rather than just a minimum. I was glancing through the summaries of minimum wage laws around the country and couldn’t find anyplace else which has tried this. So is it a good idea? Keep in mind that the law obviously doesn’t forbid anyone from paying a higher rate if they wish, and in fact a number of businesses (mostly smaller ones) have signed on to a pledge to stick to the new, higher rate of ten dollars.

I suppose one could approach this from the supremacy angle and say that the state has the right to determine such rules for all the counties and municipalities if they wish. After all, the federal minimum wage overrides any states which attempt to have a lower rate as the minimum, so the supremacy aspect should flow downhill from there.

But the idea seems problematic. It might be a way for a more conservative state government to stick a thumb in the eye of more liberal cities who are in line with the Fight for 15 crowd, but the net effect seems negative. One of the major hurdles to a national minimum wage hike is the fact that the cost of living can vary so wildly between large, urban areas and more rural districts. New York has had to look at such accommodations because the average rent in the Big Apple can literally be ten times higher than in some rural, upstate regions.

A city can get carried away (see Seattle for an example) and jack up their minimum wage to the point where it shuts down businesses and costs jobs, but it’s understandable if some of them want to take the average cost of living into account. Will this be challenged in court by the City of St. Louis? Can it even be challenged? Interesting questions and I’m sure the rest of the country will be watching how this one plays out because the minimum wage is a hot topic pretty much everywhere these days.

UPDATE: I almost immediately received feedback on this subject. Turns out it has been done before in at least a few states. Alabama already passed such a law and it stood up to at least one challenge.

Pelosi Vows To Get A Bunch Of Teenagers Fired If Democrats Win Congress

Top congressional Democrats, including Senate Minority Leader Chuck Schumer, House Minority Leader Nancy Pelosi, House Minority Whip Steny Hoyer and Bernie Sanders, held a press conference earlier today to officially introduce their "Fight For $15" minimum wage legislation, dubbed the Raise the Wage Act.  Among other things, the bill primarily serves to more than double the federal minimum wage from it"s current level of $7.25 to $15 by 2024. 

The Raise the Wage Act would raise the minimum wage to $15 per hour by 2024 and would be indexed to the median wage growth thereafter. These increases would restore the minimum wage to 1968 levels, when the value was at its peak. The bill would also gradually increase the tipped minimum wage, which has been fixed at $2.13 per hour since 1991, bringing it to parity with the regular minimum wage. Moreover, it would also phase out the youth minimum wage, that allows employers to pay workers under 20 years old a lower wage for the first 90 calendar days of work. This legislation would give more than 41 million low-wage workers a raise, increasing the wages of almost 30 percent of the wage-earning workforce in the United States.

The Raise the Wage Act is front loaded to provide the biggest impact to workers. Upon enactment, the federal minimum wage would be increased from $7.25 to $9.25.  The following increases are: $10.10 (2018); $11 (2019); $12 (2020); $13 (2012); $13.50 (2013); $14.20 (2023); $15.00 (2024).

Meanwhile, foreshadowing the Democrats" key campaign promise in 2018, undoubtedly designed to win back working class voters of the Midwest who abandoned them "yugely" in 2016, Nancy Pelosi vowed her party would pass a $15 per hour minimum wage within the first 100 hours if they manage to recapture Congress during the next election cycle.

"We"re willing to fight for $15, and I"ll tell you one thing for sure, we win the election and in the first 100 hours we will pass a $15 per hour minimum wage."

"We"d rather have it now.  We"d rather win on the issue than worry about the election."

Of course, seemingly no amount of empirical evidence will ever convince progressives that raising minimum wages to artificially elevated levels is a bad idea.  Somehow the basic idea that raising the cost of a good ultimately results in lower consumption of that good just doesn"t compute. 

So while it will undoubtedly fall on deaf ears, we would once again point Ms. Pelosi to a recent study from the American Action Forum (AAF) which estimated 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 (see "State Minimum Wage Hikes Already Passed Into Law Expected To Cost 2.6 Million Jobs, New Study Finds").  Shockingly, and only after running a lot of really complicated math using complex equations that most of us stupid people just wouldn"t understand, AAF ultimately concluded the whole elasticity of demand thing actually works (a.k.a. "the higher shit is priced the less people will buy of it").

Moreover, as Dunkin" Donuts" CEO recently pointed out, a significant number of Americans working for minimum wage are teenagers and not the "older, blue-collar workers" that Bernie and Nancy say they want to help.  Which, of course, means that to the extent they get to keep their jobs a fair portion of the minimum wage increases will simply flow to teenagers who may already be a part of affluent families.

But goodluck with the crusade, Nancy and 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 prepare.

New Study In D.C. Finds That New $15 Minimum Wage Could Cost 1,200 Jobs

Authored by Ted Goodman via The Daily Caller

A new study that analyzes the potential effects of a $15 minimum wage in the District of Columbia (Washington, D.C.), found that an increase to $15 could cost 1,200 jobs.

The District of Columbia’s Office of Revenue Analysis released a report Thursday, asserting that 150,000 workers in the District would be affected by the higher minimum wage and as many as 1,200 jobs could be lost by 2020 due to the new policy.  Of course, nearly one-third of those jobs are in the food service industry where young people, already suffering from massive unemployment rates, represent a disproportionate percentage of the labor force. 

The study further states that as many as 2,000 jobs could succumb to the increased minimum wage by 2026.

The mayor’s “Fair Shot Minimum Wage Amendment Act,” stipulates that the minimum wage increases to $15 an hour by 2020, with incremental increases each year. The minimum wage is currently $11.50.

The findings revealed that nearly two-thirds of the pay increases will benefit non-D.C. residents who work in the District, but live elsewhere (likely Virginia or Maryland, which borders D.C.). While nearly two-thirds of the pay increases go to non-residents, D.C. residents will absorb 80 percent of the job losses.

“This study proves what we’ve known all along: this dramatic D.C. wage hike will hurt the most vulnerable in the District, costing them jobs and important economic opportunities,” Jeremy Adler, Communications Director for America Rising Squared, a conservative policy organization, told the Daily Caller News Foundation (TheDCNF).

“D.C. must focus on creating more good-paying jobs for workers that need them the most and it’s clear an artificial minimum wage increase is the wrong approach to achieving this goal,” Adler continued.

The Obama administration proposed an increase to the federal minimum wage from $7.25 to $9.00 an hour in 2013. The former president continued to call for an increase in the federal minimum wage throughout his presidency.

Seattle, Washington raised its minimum wage to $15 in 2014, followed by San Francisco and Los Angeles. New York Gov. Andrew Cuomo signed into law a new $15 minimum wage for his state in 2016, and the University of California proposes to pay its low-wage employees $15.

There's A Massive Restaurant Bubble, And It's About To Burst

In January 2009, just three days after his inauguration, an arrogant President Obama, a "community organizer" and one-term senator from Illinois, proclaimed to then Republican Whip Eric Cantor that "elections have consequences, and at the end of the day, I won."  Unfortunately, he was absolutely right and the consequences of Obama"s election, having already crushed the coal industry, are about to bring the restaurant industry crashing down as well.

To be fair, Obama hasn"t crushed the restaurant industry single-handedly.  While Obamacare went a long way toward destroying the industry, it"s demise would not have been certain without a little help from leftist state legislators that have passed a slew of egregious minimum wage hikes in recent years (not that Obama didn"t try and fail twice to accomplish the same thing at the federal level).  Add to that a multi-year run of near 0% interest rates that have driven commercial real estate soaring and a dash of "hope" from culinary grads looking to become America"s next  famous celebrity chef and it"s easy to see that you"ve had a recipe for disaster simmering on low heat for years.

And while he avoided the political attributions we note above, a recent Thrillist article by Keven Alexander highlights the demise of one independently owned restaurant in San Francisco, AQ, that will be shutting down later this month for all the same reasons. 

When it comes to minimum wage, Alexander highlights that just a $1 per hour minimum wage increase can reduce an independent restaurant"s already thin profit margins by $20,000, or 10%.  So we imagine the $5 minimum wage hike that California just passed is probably slightly less than optimal for companies like AQ in San Francisco.

I should say before I go any further that all of the restaurant owners and chefs I"ve talked to are compassionate humans who support better coverage and livable wages, and seem on the whole progressive by nature, but restaurant margins are already slim as hell. There are no political agendas here -- they"re just genuinely worried about how to afford to pay extra without radically changing the way they do business.

Let"s start with the minimum wage. According to the Bureau of Labor Statistics, of the 2.6 million people earning around the minimum wage in 2015, the highest percentage came from service jobs in the food industry. Though the Obama administration"s attempt to increase the federal minimum wage above $7.25 failed, 21 states and 22 cities have raised the minimum wage starting this year, including Washington, DC ($12.50 an hour), Massachusetts ($11), New York ($9.70), and Arkansas ($8.50).

Considering that hour-wage workers are usually the lowest earners and the increase is essential to ensure they earn an actual living, this is the least controversial of the newer expenses and something almost everyone in the industry supports, in theory, but it doesn"t change the fact that it"s an additional cost that must be factored in. If you have 10 hourly employees working eight-hour shifts, five days a week and you raise the wages a dollar an hour, that comes out to a nearly $20K increase on the year. In AQ"s best year -- a phenomenal year by restaurant standards -- that would have been nearly 10% of profits.

And while California is certainly the poster child for misinformed liberal policies, as the Wall Street Journal recently pointed out, they"re hardly alone in their implementation of a massive minimum wage hike in 2017.

Meanwhile, when it comes to Obamacare, Alexander notes that AQ was hit with an incremental $72,000 of annual expenses in 2015 that didn"t exist in 2012, which eroded another ~30% of the company"s peak net income.

Then there"s health care. For the better part of its history, the restaurant business was a health care-free zone, which is ironic, given this Bureau of Labor Statistics" description of the back-of-house work environment: "Kitchens are usually crowded and filled with potential dangers." With the introduction of Obamacare, most restaurant workers finally got the coverage they"ve needed for years through the employer mandate, but critics often talk about the strain it puts on small-business owners due to a puzzling and controversial element that defines "full time" as 30 hours per week, and not the 40-hour workweek used almost everywhere else (the Save American Workers Act proposes to move this back to 40 hours).

Though this mainly affects bigger restaurants with staffs of 50 or more full-time workers, independent sit-down restaurants still need to provide suitable coverage (meaning it has to be affordable, less than 9.5% of the employee"s income) or face fees of $2K per employee. Consider AQ. Semmelhack told me that in 2012 they paid $14,400 for health care costs. In 2015, they paid $86,400. That"s an increase of $72K MORE per year than 2012, or 29% of their best year"s profit.

Then there are those pesky rental rates which have been driven ever higher by nearly a decade of 0% interest rates that have resulted in artificially high demand for "yieldy" commercial real estate.

In the restaurant world, rent always sucks. Unless you manage to play it perfectly, as a restaurant owner you"re either moving into a sketchy or "emerging" neighborhood where the rent is cheap but few want to go there, or you"re overpaying for an established "hood and need to be a runaway success from day one. And even if you do manage to make it in the former type of neighborhood, your success often ends up pricing you out of the "hood you helped revitalize.

In Miami, Michelle Bernstein"s Cena by Michy helped rebirth the MiMo historic district but was forced to close this year, after the landlord attempted to triple the rent. And even Danny Meyer had to close and move Union Square Cafe in New York, which, since 1985, had served as one of America"s culinary landmarks, when he couldn"t rationalize paying the huge rent hike the landlord proposed.

For all the reasons above, Alexander notes that "AQ will serve its last meal sometime in January, 2017"...an inconvenient fact that we"re sure the liberal politicians in Sacramento will promptly ignore. 

And while the publicly-traded restaurant companies have potentially started to take note of some of the risks above...

...the broader markets, which are also exposed to the same risks albeit to varying degrees, couldn"t seem to care less.

Minimum Wage Protesters Call For "Day Of Disruption" In 340 US Cities

In what may be an early crisis test for the president-elect, on November 29, the nationwide campaign to increase the federal minimum wage in the United States has calling for a "Day of Disruption", namely strikes and civil disobedience, on November 29 in the latest push to raise the minimum wage in the US to $15.

The Fight for 15 group is preparing to protest in 340 cities across the United States, and is calling for airport and fast-food workers to strike.

Group representatives have stated that they expect subcontracted service staff at roughly 20 airports to participate. It is anticipated to be the largest day of protest in the organization’s four year history, coinciding with the anniversary of the launch of the movement.

“Tuesday, November 29, the #FightFor15 is staging a national day of disruption. We won’t back down,” the Fight for 15 Twitter account posted on Monday morning.

BREAKING: Tuesday, November 29, the #FightFor15 is staging a national day of disruption. We won"t back down.
RSVP: https://t.co/4pJIXGkLjq pic.twitter.com/eJcUdCQJIE

— Fight For 15 (@fightfor15) November 21, 2016

On its website, the campaign writes the following statement: “For too long, McDonald’s and low-wage employers have made billions of
dollars in profit and pushed off costs onto taxpayers, while leaving
people like us – the people who do the real work – to struggle to
survive. That’s why we strike.”

Fight for 15 began in New York City, as fast-food workers went on strike demanding $15-an-hour pay, as well as union rights. The movement was successful, and in April of this year NY Governor Andrew Cuomo signed a law to increase wages to a $15 minimum by the end of 2018 in New York City, and by 2021 in other counties, including Nassau, Suffolk and Westchester.

For the rest of the state, the minimum wage will be raised to $12.50 by the end of 2020.

The movement has since spread to over 300 cities on six different continents, and has seen additional successes, winning $15 an hour in the state of California, and in large cities such as Seattle. Other cities, including Portland and Chicago, have seen significant minimum-wage increases.

While previously the group"s demands have been ignored at the Federal level, in a potential complication this July, then-Republican presidential candidate Donald Trump broke from his party’s platform, promising to increase the federal minimum wage, which may boost the leverage of the protesting organization.

However, Trump acknowledged that states with more expensive urban regions need to have a higher minimum wage than lower-cost rural areas.

Minimum-wage regulations, Trump noted, are most feasible when they are based on the living costs in each particular area, rendering the federal wage level regulations largely irrelevant to the economic reality in different regions of the US.

With a $10/hour federal minimum wage, individual states, he claims, could go above that threshold. “I would leave it and raise it somewhat. You need to help people and I know it’s not very Republican to say but you need to help people,” Trump said in his July interview.