For many Americans, July marks the hottest part of the summer season. It’s the time of year for shorts, swimming pools, backyard barbecues and fireworks. However, employees and small business owners across the country will be feeling the heat this July 1st due to 15 separate minimum wage hikes go into effect at the state and local level.
The economic effects of such wage hikes are well documented, and hit less-skilled job-seekers the hardest. In Oakland, California, a wage hike to $12.25 last year played a role in the closure of 10 grocery stores and restaurants in the city’s Chinatown neighborhood, while childcare provider were forced to reduce hours and limit the number of children they could serve.
In nearby Berkeley, whose minimum wage is currently $12.53, the coffee shop Mokka closed this summer primarily because of the minimum wage increase. Across the Bay in San Francisco, whose minimum wage is rising to $15 an hour, numerous restaurants—including Abbot’s Cellar, Source, Luna Park, and Roosevelt Tamale Parlor—have closed citing the minimum wage increase as a factor. (Many other stories can be found on Facesof15.com.)
Who’s responsible for this? It starts with the SEIU and its $70 million+ campaign for a $15 minimum wage. In a full-page ad in the New York Times, we point out that SEIU boss Mary Kay Henry is chopping off the bottom rungs of the career ladder:
EPI placed a full-page ad in the Kansas City Edition of USA Today warning residents about the potential ramifications of raising the city’s minimum wage by 96% to $15 an hour.
The ad implies that a $15 minimum wage would lead Kansas City to be known as much for its lost jobs as it is for its famous barbecue and fountains.
While Kansas City isn’t the first city to consider a wage hike to $15 an hour, its City Council should take note of the consequences that small businesses in Oakland, San Francisco, and Seattle are enduring from similar mandates. These include layoffs, reduced hours, and even closure.
Our recently launched site, Facesof15.com, has been tracking these and other stories of how dramatic wage increases are negatively impacting small businesses. It’s a club that Kansas City should not want to join.
It’s been a difficult couple of weeks for proponents of a higher minimum wage, as we’ve documented in earlier posts. Faced with a Congressional Budget Office (CBO) estimate projecting as many as one million lost jobs from a $10.10 minimum wage, even some Democrats are getting nervous. Now, in a desperate grab to regain momentum, a coalition of labor unions has launched a multi-state tour featuring a giant bus that says “$10.10: Give America a Raise.”
As a reminder to the tour organizers of the documented consequences of that policy, the Employment Policies Institute is launching a “tour” of its own. In Cleveland and Columbus this Friday, a 9 foot x 20 foot mobile billboard will follow the unions’ bus with a stark warning about $10.10: Caution, Lost Jobs Ahead.
The billboard’s text explains: “Nonpartisan government economists estimate up to 1 million jobs will be lost if the minimum wage is hiked to $10.10. Tell Big Labor to hit the road.”
To see the original image used for the mobile billboard, click here.
Recently, the AFL-CIO and its president Richard Trumka publicly challenged Heritage Foundation President Jim DeMint to a debate about raising the minimum wage. DeMint passed, offering up the Foundation’s labor policy specialist instead, but Trumka and his union said no deal and pushed out the message that “DeMint Won’t Debate.”
But were Trumka’s tactics just a bluff? It now appears so. The Employment Policies Institute responded to Trumka’s invitation with a letter of its own, accepting the invitation to debate and offering either the Institute’s research director or executive director for the occasion. So far, the response from the AFL-CIO has been crickets.
We’ve started a clock to track the number of days that have elapsed since we first accepted Trumka’s invitation to debate.
We’ve also created a mobile billboard that asks whether Trumka is too chicken to debate us.
We’ll see if the AFL CIO is willing to publicly defend its position on wage hikes—or whether the original debate challenge was just bluster.
In a recent speech on income inequality, President Obama claimed “there’s no solid evidence that a higher minimum wage costs jobs.” However, the president’s statement is plainly contradicted by the evidence. Even the Washington Post – itself no opponent of a higher minimum wage – gave his statement “Two Pinocchios” for its inaccuracy.
To make this point, the Employment Policies Institute (EPI) ran a full-page ad in Politico depicting four (in)famous lies told by Washington politicians – from President Bill Clinton’s initial denial of “sexual relations,” to reading George H.W. Bush’s lips about new taxes, to the President’s recent health care and minimum wage claims.
Given that 85 percent of the most credible studies on the subject point to job loss following a wage hike, the next question is will President Obama continue to stand by his false statement? Or will he eventually turn to the truth as did Clinton before him?
This week, the Employment Policies Institute released a new study authored by Miami University economist Dr. William Even and Trinity University economist Dr. David Macpherson that examines the cost to the New Jersey public sector if the state raises its minimum wage by $1. The economists predict that New Jersey state and local governments will face $21.6 million per year in additional wage costs for public employees earning at or near the minimum wage.
Click here to view the economists’ study.
Previously, EPI projected entry-level job losses of as many as 4,700 positions if the ballot measure is successful.
Visit MinimumWage.com/NewJersey for more information on the unintended consequences of the proposed wage hike, or click here to watch Governor Chris Chistie’s stance on the issue.
This week, the SEIU-backed National Employment Law Project (NELP) released a new report arguing that the ten largest fast-food companies cost taxpayers $3.8 billion per year. Though NELP’s number was widely reported, few people bothered to check the fine print. Buried in a footnote in the back of the report, NELP acknowledged that it only obtained this dollar amount by assuming every “front line” fast-food worker at these companies obtains public assistance.
It’s a plainly ridiculous assumption that’s even refuted by the companion report released with NELP’s study yesterday. Nearly one-third of the fast-food workers in question are either teenagers or young adults living with their parents and attending school. NELP’s bogus report assumes that all of these fast-food employees are costing taxpayers nearly $4,000 a year in public benefits like SNAP and Children’s Health Insurance—benefits they may not even qualify for.
If even 25% of the affected employees in NELP’s report aren’t costing taxpayers a dime, that would mean NELP’s estimates are off by roughly $1 billion per year. This sort of shoddy research clearly demonstrates that this study is a public relations stunt by unions and the advocacy groups and worker centers they fund, rather than a serious look at the data.
In recent weeks, so-called “worker centers” have caught the public’s eye with widespread walkouts at national restaurant chains. These groups – which are union-founded and funded – have demanded a minimum wage of at least $15, arguing that large corporations with highly-paid CEOs can afford to pay employees more.
We’ve previously debunked the idea that the level of CEO pay helps explain the level of entry-level wages. And the economics faced by service industry businesses are similar no matter the size of their workforce.
Still, given the high failure rate of small businesses, there’s a unique sensitivity to wage mandates that will hurt a small employer’s bottom line. And unfortunately for wage hike advocates, Census Bureau data show that the majority of minimum wage employees do not work at large corporations with 1000+ employees. In fact, nearly half of minimum wage earners work at small businesses with fewer than 100 employees.
Economic research has shown that wage mandates are particularly hard on small business employees. For instance, each 10 percent wage hike is associated with anywhere from a 4.6 percent to 9.0 percent drop in teen employment at small businesses. With an unemployment rate for young adults that’s been above 20 percent for five years, policymakers should be particularly cautious about foisting a new mandate on the country’s small employers.
It’s become fashionable to lament “Congressional inaction” in Washington, DC. But as demonstrated by a minimum wage-focused ad campaign this month in the DC Metro’s “Capitol South” station, there are times that the economy is better off when Congress fails to act.
The first two ads point to Congressional leaders Nancy Pelosi and George Miller who support legislation to increase the base wage, despite the fact that the overwhelming economic consensus points to job loss following a wage hike. The final two ads warn of lesser-known consequences of wage hikes: soaring teen unemployment rates and a faster shift to automation – in which minimum wage and other entry-level jobs are replaced by technology.
With Congressional approval ratings at all-time lows, let’s hope our elected members of Congress don’t pursue a “feel good” policy that will only end up hurting the same employees they’re trying to help.
On Monday, July 29th, the internet was buzzing over a Huffington Post story about a new report from a “University of Kansas researcher” that claimed McDonald’s could double its employees’ wages and only raise the price of a Big Mac by 68 cents. Two days later — when it was revealed by the Employment Policies Institute and others that the “researcher” was actually a student, and that his calculations were off by half — HuffPo quietly replaced the original article with a nearly 500-word retraction.
One month later, the sensationalists at HuffPo are at it once again. In an article headlined “Minimum Wage Jobs Won’t Be Replaced With This Robot Anytime Soon,” business reporter Eleazar Melendez described a recent EPI newspaper ad focused on labor cost-related automation in the restaurant industry as a “burger-flipping fraud.” (He also described it as a “total fraud” on his Twitter account, and tweeted his article at reporters who had written about the original ad.)
Strong words. Unfortunately for Melendez, his claims aren’t worth the (digital) paper they’re written on.
The technology to replace both customer service staff and kitchen staff at fast food restaurants already exists. The former is already in wide use in European countries where the minimum wage tends to be higher; the latter is available via companies like Momentum Machines in San Francisco. EPI’s ad pointed out the obvious: If fast food strikers get their way on a $15 minimum wage, technology that accomplishes the same task as an employee at a lower cost will be the way of the future.
To provide a simple illustration of this concept, EPI used a photo of a Motoman robot designed with the ability to prepare a pancake. (The Momentum Machines robot, which is intended for industrial use, looks more like a conveyor belt and would have been confusing for viewers.) Melendez took EPI’s illustration as a jumping-off point for his exercise in bad faith journalism, describing in detail why the Motoman robot could cook but wouldn’t be able to hack it in an industrial kitchen.
Melendez took this as his “gotcha” moment, but a better response would have been “duh.” Other reporters who covered the EPI ad — as well as the KIRO reporter who initially used the Motoman image — had no problem with the illustration, since the technology referenced in EPI’s ad actually exists. Even a fact check by Silicon Valley’s newspaper of record acknowledged the ad’s accuracy.
EPI explained this to Melendez, but he was apparently more interested in ginning up controversy about a phony fraud than in the facts. Tactics like this might fly at Media Matters, but readers deserve better from outlets like HuffPo that supposedly take journalism seriously.