VIDEO: Bernie And Bezos on Amazon’s $15 Wage Folly

Amazon’s recent decision to raise its starting pay rate to $15 an hour–responsive, in part, to pressure from Vermont Senator Bernie Sanders–generated controversy from an unlikely group of protesters: The company’s employees.

“Why Some Amazon Workers Are Fuming About Their Raise,” wrote the New York Times. “The company says everyone wins under the new system” but “not every worker sees it that way,” reported the Huffington Post.

The angry employees pointed to two policy changes that left them in a less-than-prime mood: First, the new $15 wage was paired with the elimination of a coveted monthly performance bonus, as well as the loss of a company stock perk; second, some viewed the raise as unfair to more-experienced employees who weren’t receiving the same relative pay increase as new hires. The employee anger was so intense that Amazon was forced to subsequently modify its proposed raise to mollify these concerns.

In a new video, we dramatize the Bezos and Bernie exchange about the Fight for $15–and speculate on the future consequences of Amazon’s decision to devalue productivity and its more-senior employees..

In truth, we hold no ill will against Amazon for bumping its starting pay scale. The company is free to pay what it wants; indeed, the company’s decision to raise wages independent of a government mandate is more proof that such a mandate isn’t needed to boost pay. Many other companies have preceded Amazon in raising their own pay scales, and Bureau of Labor Statistics data shows that the percentage of people earning the minimum wage is near a historic low. 

But Amazon got it wrong by pairing its announcement with a pledge to lobby for a new wage mandate on its competitors. That might get the retail giant some back-pats from Senator Sanders and his allies, but it makes it that much harder for the next Jeff Bezos to get started. Next time, the company should spend less time looking for plaudits from the left–who will never be satisfied, anyway–and more time crafting a wage and benefits policy that doesn’t upset its workforce.

EEOC Data Debunks Claimed Link Between Tip Credits And Sexual Harassment

Perhaps the most-popular argument for eliminating the tip credit is the claim that states without one have half the rate of restaurant sexual harassment as those states that do. Earlier this year, the Employment Policies Institute released a report-length examination of the problems with this claim, which was based on a deeply-flawed survey conducted by the Restaurant Opportunities Center (ROC).

Based on a review of ROC’s methodology and Equal Employment Opportunity Commission data collected during the time period studied by ROC, EPI concluded that “claims about a tip credit and its link to sexual harassment are…baseless.” New data obtained from the Commission via a public records request, which cover all federal- and state-level sexual harassment charges from the restaurant industry filed between 2007 and 2017–from customers, coworkers, and management–cast further doubt on ROC’s claim.

Contrary to ROC’s claim, the data show that the seven states without a tip credit (plus Hawaii, which has a very small tip credit) all have a higher percentage of restaurant sexual harassment charges than does New York–a state where ROC is trying to eliminate the tip credit. In fact, the restaurant sexual harassment rate in all states with a cash wage below $3 an hour (3.7%) is almost-identical to the rate in those states that have eliminated the tip credit (3.8%).

EPI provided the EEOC data to economists at Miami and Trinity University, who used regression analysis to compare changes in states’ restaurant sexual harassment charges to changes in the tipped wage. (They controlled for state- and time-related trends. The regression output can be viewed here.) The economists find conclusive evidence that there’s no negative relationship between a state’s tipped wage and restaurant sexual harassment charges; if anything, their analysis shows a mild positive relationship between the two. To put this result in context, the EEOC data suggest a state like New York that raised its tipped wage by $5-an-hour could expect the share of sexual harassment charges from restaurants to increase by 3.5-percentage points.

There are few if any strong arguments for eliminating the tip credit. But the data make clear the worst argument for doing so is the claim that it’s in any way linked to sexual harassment.

ROC Wants To Destroy New York’s “System of Tipping”

A full-page ad in today’s New York Post exposes the true motives behind the Restaurant Opportunities Center (ROC) and its push to eliminate the tip credit.

(For those not acquainted with the tip credit debate, a primer is available here.)

ROC’s founder, Saru Jayaraman, has been a long-time critic of the popular tipping system in restaurants. She’s variously said that “this system of tipping needs to go,” and even penned a New York Times op-ed titled, “Why Tipping is Wrong.” 

ROC has denied that its true motive in pushing for tip credit elimination is to eliminate tipping entirely,  but the evidence shows otherwise. ROC has praised the “no-tipping” model pioneered by New York restaurateur Danny Meyer–a model that caused Meyer to lose up to 40 percent of his staff. Even more telling, a ROC group described eliminating the tip credit as the first step in moving to “no tips.” 

ROC insultingly suggests that such a move will help “professionalize” the industry–as though servers aren’t already professionals working in the industry by choice. Survey data shows overwhelmingly that servers want to keep the tipping system; 97 percent say they’d take a base wage and tipping over a flat salary. Last year, ROC’s agenda was roundly rejected by thousands of servers in Maine who successfully fought back against a ROC-funded initiative to eliminate the tip credit. 

ROC has used any number of bad arguments in its push to eliminate the tip credit. Its most popular argument is that restaurant sexual harassment in states without a tip credit is half of those with a tip credit. This argument doesn’t pass basic scrutiny; government data shows that California, which doesn’t allow a tip credit, has double the rate of restaurant sexual harassment as New York. ROC has also claimed that eliminating the tip credit is good for restaurant employment–a claim contradicted by numerous empirical studies.


The Pitfalls Of Fighting For $15 in Florida

Across the nation, lawmakers continue to grapple with the viability and impact of increasing the minimum wage to $15 an hour. Last year, the Florida state legislature took up the measure in Senate Bill 6 and House Bill 109, that would begin raising the $8.10 rate, beginning in January 2017. A ballot measure for 2020 has also been discussed.

What is the potential impact of raising the minimum wage to $15 in Florida? To better understand how this change would impact companies who have hourly staff, a state-wide telephone survey was conducted with 306 business owners and managers in July and August 2017.

The results of this survey reveal that many of these businesses would be adversely impacted by such an increase:

  • Alarmingly, nearly one-third (30%) say they may be forced to go out of business, with 18% very likely to close. They do not think they could absorb the increase or pass it along to their customers.
  • Many business owners and managers anticipate that increases will also hurt workers. Half or more will see operations scaled back and expect to cut employee hours (56%). About as many say they will have staff layoffs (50%). About one-third will likely look for technological alternatives to replace workers (33%) or hire more experienced workers (33%).
  • Consumers will feel the pinch too. Most businesses will likely increase prices (59%), especially those with tipped employees (75%), ones who operate in the hospitality industry (73%) or ones that are part of a franchise (64%).
  • The argument that it will be easier on businesses if the increases are phased in over time does not seem to hold up. Nearly half (49%) say they will be forced to make changes (price increases, layoffs, etc.) once the rates reach $11. When the rate reaches $15, two-thirds (68%) expect that they will be forced to respond.

Read the full study here.

In summary, while an increase in the minimum wage may appear to benefit workers, it will not be easily absorbed by businesses. This, coupled with the expected response from businesses who employ hourly and part-time staff, suggests that Florida should brace for a significant, negative economic impact if minimum wage laws are enacted.

‘Fake News’ About Andy Puzder’s Popularity

As part of its smear campaign against Labor Secretary-designate Andy Puzder, the National Employment Law Project (NELP) this afternoon will release a “poll” from Hart Research Associates, the pollster for unions and liberal advocacy groups.

NELP has a recent history of promoting inaccurate polls to advance its agenda. In 2014 and 2016, the organization suggested that opposition to raising the minimum wage could be the key “decisive issue” in tight Senate races. “Opposing A Minimum Wage Hike Could Cost The GOP The Senate,” one of their staffers predicted. The poll was flawed and the prediction was very wrong, in both 2014 and in 2016. We described this further in a September 2016 piece in The Hill. 

A national tracking poll of 40,000 voters, conducted by Morning Consultfinds that, among voters who are familiar with Mr. Puzder, favorable views outweigh unfavorable ones. However, half of those surveyed had no opinion on Mr. Puzder–either because they hadn’t heard of him, or didn’t know enough about him. State-specific results for Maine and Alaska show similar results.

Those who are familiar with Andy Puzder, and who work for the CKE franchisees, have an overwhelmingly-positive view of their workforce experience. A recent national survey of Hardee’s and Carl’s Jr. employees found that 90 percent agreed they admire store and company management, and 92 percent agree Carl’s Jr. and Hardee’s are great places to work. In a television commercial released yesterday, four of these employees describe their experiences in additional detail.



Local Voices in Maine Speak Out Against Extreme Wage Hike

The debate over whether to raise Maine’s minimum wage by 60 percent (and raise its tipped minimum wage by over 200 percent) is a study in contrasts.

On the one side, advocates for the extreme wage increase have been powered by five- and six-figure checks flooding in from out-of-state donors. We previously reported that at least three-quarters of the monetary contributions for Mainers for Fair Wages come from out of state, and the Bangor Daily News confirmed that at least two-thirds of all donations (including in-kind contributions) are also coming from out of state.

On the other side of the debate are local Maine business owners, who have provided nearly 90 percent of the modest budget for the campaign against an extreme increase in the state’s minimum wage. (The coalition website is available here.) One of these local business owners is Randy Wadleigh, who offered the following warning in a recent Daily News submission:

Many restaurant owners believe they will need to raise menu prices to make ends meet, with some owners estimating an increase between 25 percent to 50 percent. So if you have breakfast and your bill currently comes to $8, you can expect to pay as much as $12 in the future for that same meal. This is not some scare tactic, this is math. …

Mainers on a fixed income have no ability to make up for the increases if Question 4 passes. For a restaurant like mine, the impact will be significant as seniors citizens are our bread and butter. Losing their business on top of higher wages will create the perfect storm for layoffs and other cut backs as we struggle to make ends meet.

Another local business owner who’s concerned about the extreme wage measure is Steve DiMillo. His family’s restaurant, a Portland institution, was founded by his father long before Commercial Street was the popular destination it is today. The proposed wage increase would force DiMillo to give his best-paid employees (tipped servers), who already earn as much as $35 an hour, a pay boost–costing the company over $600k a year that it doesn’t have, and that its customers can’t pay for.

As DiMillo explains in this video, the measure would have a significant negative impact on his business and the people he employs–which is why he, and his employees, are opposed to it.

Earlier this year, EPI released an analysis by Drs. David Macpherson of Trinity University and William Even of Miami University which found that roughly 3,800 jobs would be lost in the state at $12, the majority of which would come from smaller businesses rather than large corporations.



How a $15 Minimum Wage Will Change New Jersey

New Jersey Governor Chris Christie is currently deciding whether or not to sign a $15 minimum wage into law, and the Employment Policies Institute today released a new commercial that should help him make his decision.

Earlier this year, EPI released an analysis by Drs. David Macpherson of Trinity University and William Even of Miami University that examined the impact of a $15 starter wage in New Jersey. It found that the policy would cost the state 33,500 jobs, 92 percent of which would come from employees without a college degree. The analysis also found that a $15 starter wage would have little effect on poverty rates in New Jersey poverty rate because two-thirds of the state’s working age poor are unemployed.

The commercial concludes by stating that a minimum wage hike in New Jersey “won’t change the lives of people who need a job, not a raise.” Governor Christie should reject a hike in the starting wage hike in the interest of increasing New Jersey’s entry-level employment opportunities.

Cherry-Picking Arguments for $12 in Maine

A $12 minimum wage will cost the state of Maine at least 4,000 jobs, but that hasn’t kept proponents in the state from advancing bad arguments to support it.

Consider a recent release by the labor union-backed National Employment Law Project (NELP), which argues that large businesses rather than small mom-and-pops will have to pay the cost for a $12 minimum wage.

In Maine, it is large retailers—not mom-and-pop businesses—that employ the majority of workers earning less than $12. According to analysis of the latest available data from the Survey of Business Owners, large businesses (defined here as those with 500 or more workers) employ 52.4 percent of all retail workers in the state…

NELP’s decision to ignore food service is a curious one, given that it has previously dedicated entire reports to criticizing restaurants. A closer look at the data reveals why the organization cherry-picked its numbers.

Using the same data as NELP to examine employees of restaurants and hotels in Maine, a very different picture emerges. Fewer than one in five employees in this industry works for a large business with 500 or more employees; by contrast, two-thirds work for very small businesses with fewer than 100 employees. (Even this analysis is incomplete, as it focuses on the entire industry rather than just those employees affected by a $12 minimum wage.)

Maine restaurant

It appears NELP left this data out of its analysis because it didn’t support the “big business” narrative. It’s an unacceptable omission, because small businesses in the accommodations and food service industry stand to be most-impacted by the proposed $12 ballot measure, which takes the radical step of raising by 220 percent the base wage for employees who earn tip income.

Michelle Cory, owner of restaurant Five Fifty-Five in Portland, had a stark warning for voters: “To eliminate this long-standing statute will not only stop investors from opening new table-service restaurants in Maine, but also make the survival of many of Maine’s small, iconic restaurants difficult at best.”

SEIU vs. Cleveland Grocery Stores

With a revitalized downtown and a commitment to reducing pollution and crime, Cleveland will be hosting the Republican National Convention in July and plans to become a destination city. All of this could come crashing down, however, with the passage of a $15 minimum wage.

The Service Employees union has selected Cleveland as its next target for $15, but has run into opposition from unexpected quarters: The city’s Democratic Mayor, Democratic Council President, and some of its most powerful union leaders have all come out against the proposal. They’re concerned that labor’s fight for a Cleveland-specific $15 wage, if successful, would drive small businesses out of existence and take the heart out of the city’s revival.

Recent testimony before the City Council suggests that nearly doubling the state minimum wage would have a uniquely harmful impact on the city’s grocery stores—in particular, those stores that serve low-income neighborhoods. Joel Ratner, president and CEO of the community development nonprofit agency Cleveland Neighborhood Progress, explained:

[Ratner] said his organization has played a role in the development of nearly every grocery store in the city, and he knows of two grocery chains that continue to operate some stores at a financial loss because they are committed to meeting the needs of the neighborhoods.

“If this were to pass, there would be a wholesale closing of grocery stores in Cleveland,” Ratner said. “In fact, we think most grocery stores in the city would close, because their margins are already so narrow. … And I would expect that it would create a huge spike in hunger and demand on emergency food systems.”

One of those grocery chains operating locations at a loss appears to be Dave’s Markets, a local favorite that has made an investment in low-income neighborhoods in the city.

At a Cleveland City Council committee meeting Thursday morning, the Saltzmans of Dave’s Markets (Steve, Dan and their papa, Burt) testified that the proposed city minimum wage increase, to $15 from the state’s current $8.10, would cripple their grocery store business. … [A] precipitous wage increase in the city of Cleveland alone might necessitate closing a location or two, Steve Saltzman said.

The Plain Dealer’s retired editorial director Brent Larkin succinctly characterized the SEIU and its effort to impose $15 on Cleveland: “[The SEIU’s] great weakness is it doesn’t give a damn about collateral damage. In this case, the collateral damage would be right here.”

The Impact of a $12 Federal Minimum Wage

The “Raise the Wage Act,” introduced by Sen. Patty Murray (D-CA) and Rep. Bobby Scott (D-VA) in March 2015 would raise the federal minimum wage by 66 percent to $12 an hour. The legislation received a high-profile backer this fall in Democratic presidential candidate Hillary Clinton.

Proponents say that such a boost will reduce poverty without reducing jobs. But the academic evidence suggests otherwise. Economists from American and Cornell University studied the 28 states that raised their minimum wages between 2003 and 2007 and found no associated reduction in poverty. And, last year, the nonpartisan Congressional Budget Office (CBO) drew on the best available minimum wage research to analyze the impact of a $10.10 federal minimum wage and concluded that 500,000 employees would lose their jobs if the legislation came into effect.

In this new analysis, Drs. William E. Even and David Macpherson, economists from Miami University and Trinity University, respectively, use the same methodology as the CBO and conclude that 770,000 jobs would be lost if this legislation mandating a $12 minimum wage were enacted.

The analysis also explores the reasons why minimum wage increases have historically had such little success in decreasing poverty. The analysis finds that the average household income of those affected by the $12 legislation is $55,800. That’s largely because, as the analysis reveals, 60 percent of those affected by the hike are secondary or tertiary earners in their household.

Presidential primary candidate Hillary Clinton has argued for a minimum wage increase as part of her policy platform to boost the middle class. But this analysis shows that those with household incomes between $35,000 and up to $100,000 would bear a large portion (43%) of the job loss from this higher minimum wage.


Job Loss


In the table below, the economists use Current Population Survey (CPS) data to identify the number of employees in each state who would be affected by a $12 minimum wage. Using the CBO methodology, they estimate the amount of job loss that would occur if the minimum wage increase were enacted. In total, they conclude that approximately 770,000 jobs would be lost nationwide at a $12 minimum wage.


Number Affected and Employment Loss by State

State Employment Loss Number Affected
ALABAMA 12,672 436,264
ALASKA 896 36,663
ARIZONA 15,085 560,480
ARKANSAS 9,792 288,450
CALIFORNIA 36,868 2,745,977
COLORADO 9,665 351,603
CONNECTICUT 3,260 203,048
DELAWARE 2,503 71,367
FLORIDA 46,357 1,669,425
GEORGIA 32,675 972,185
HAWAII 854 81,875
IDAHO 6,606 162,522
ILLINOIS 28,462 909,686
INDIANA 25,488 655,922
IOWA 12,964 296,424
KANSAS 12,307 277,724
KENTUCKY 14,504 385,656
LOUISIANA 14,937 415,619
MAINE 3,707 115,096
MARYLAND 2,981 308,409
MICHIGAN 30,266 851,156
MINNESOTA 10,525 389,068
MISSISSIPPI 10,406 264,235
MISSOURI 21,909 527,664
MONTANA 2,674 90,815
NEBRASKA 4,657 165,500
NEVADA 6,745 250,388
NEW HAMPSHIRE 4,102 103,620
NEW JERSEY 15,605 619,732
NEW MEXICO 4,035 150,605
NEW YORK 33,409 1,310,273
NORTH CAROLINA 36,922 1,037,398
NORTH DAKOTA 2,050 55,431
OHIO 32,029 946,626
OKLAHOMA 10,812 298,454
OREGON 3,086 231,217
PENNSYLVANIA 40,430 1,055,487
RHODE ISLAND 2,560 77,950
SOUTH CAROLINA 14,824 455,845
SOUTH DAKOTA 1,769 69,287
TENNESSEE 26,275 628,054
TEXAS 91,645 2,673,048
UTAH 10,171 248,033
VERMONT 558 32,134
VIRGINIA 24,223 661,336
WASHINGTON 3,561 314,605
WEST VIRGINIA 5,188 168,778
WISCONSIN 24,547 496,486
WYOMING 1,616 44,333

Other minimum wage proponents, most notably presidential candidate Hillary Clinton, have backed the proposal as part of a policy package to help middle class. However, in the table below, the economists show that those households with incomes between roughly $35,000 and $100,000 would bear a large proportion of the job loss, losing approximately 43 percent of the 770,000 lost jobs.


Employment Loss by Household Income

Family  Income Employment Loss # Affected % of Employment Loss
Up to $34,999 316,801 11,347,257 41%
$35,000 – $99,999 329,122 10,583,633 43%
$100,000 or More 124,082 3,410,980 16%


Using CPS data, the economists also identify which demographics would be hardest hit by this job loss. They find that it would disproportionately impact black Americans, who would suffer 18 percent of the lost jobs despite being 13 percent of the U.S. population.


Employment Loss by Race

Race Employment Loss # Affected
White                               584,403     19,026,468
Black                               129,212        4,232,848
Other Race                                  56,390        2,082,554


Family Income and Family Status


The CPS also allows the economists to identify the income and family characteristics of those who would be affected by the wage hike. Contrary to the claims of minimum wage proponents, who argue that the minimum wage needs to be raised to help those in poverty, the analysis finds that the average family income of those affected by the proposed wage hike is $55,800 – around three times the federal poverty line.


Family Income of Affected Employees

State Average
ALABAMA $48,181
ALASKA $69,365
ARIZONA $51,459
ARKANSAS $42,235
COLORADO $60,571
DELAWARE $57,702
FLORIDA $48,771
GEORGIA $49,526
HAWAII $70,118
IDAHO $46,912
ILLINOIS $69,481
INDIANA $53,124
IOWA $52,585
KANSAS $53,436
KENTUCKY $42,387
MAINE $54,313
MARYLAND $78,635
MICHIGAN $54,773
MISSOURI $57,157
MONTANA $43,828
NEBRASKA $54,477
NEVADA $50,371
NEW JERSEY $75,709
NEW MEXICO $49,589
NEW YORK $62,636
OHIO $55,118
OKLAHOMA $52,235
OREGON $48,953
TEXAS $49,792
UTAH $57,369
VERMONT $62,362
VIRGINIA $65,459
WYOMING $55,504

Further examination of the CPS data helps explain this apparent paradox. The economists find that roughly 60 percent of those affected by the proposed minimum wage hike are secondary or tertiary earners in their families. In other words, most minimum wage earners supplement family incomes rather than drive them. In fact, only 9 percent of those affected by the wage hike are single parents.


Family status of those affected by $12

State Single Adult Single Parent Married Sole Earner Married Dual Earner Living w/ Family or Relative
UNITED STATES 21.37% 9.09% 8.91% 20.14% 40.49%




Drs. Even and Macphersons’ estimates rely on data from the Current Population Survey from January through December 2014.   The Current Population Survey (CPS),  jointly sponsored by the Bureau of Labor Statistics and the  U.S. Census Bureau, contains data obtained  from monthly interviews with approximately 60,000 households from all 50 states and the District of Columbia.     The data provides weights that allow researchers to estimate labor market statistics at the national or state level.   For example, the CPS is the primary data source for estimates of the national and state unemployment rate, as well as hours worked and hourly wages.

When a household is selected for inclusion in the CPS, it is included for four consecutive months, then excluded for 8 months, and then it returns for an additional 4 months.   Earnings data is collected from household members only in their 4th and 8th interview when they are considered part of an “outgoing rotation group” (ORG).   Because earnings data is essential to our analysis of minimum wage effects, they rely on data collected from households who are part of a CPS-ORG between January and December 2014.

To project the distribution of wages in 2020 without passage of the new legislation, they assume that every potentially affected worker has wage growth of 2.9 percent annually until 2020 and that the labor force will grow by 0.86 percent annually.  These assumptions are based on the CBO’s own forecast of wage growth for low skill workers in their study of the employment effects of minimum wage hikes, and their projection of employment growth.   Also, for any state that indexes their minimum wage for inflation, they assume that the minimum wage would grow by 2.1 percent  annually based on the CBO forecast of inflation for 2015 and 2020.    For any worker who earned at or above the minimum in the year of the survey (2014) and whose predicted wage in 2020 was below the projected minimum in their state of residence, they increase their wage to the state’s minimum in 2020.   For workers who earned up to $.25 below the minimum in the year of the survey, they increase by the amount that the state’s minimum wage would increase based on current law.   This means, for example, that a person who earned $.15 less than the minimum wage in 2014 would still earn $.15 below the state’s new minimum in 2020.


Estimating Affected Workers and Employment Loss


After generating the forecast of the 2020 distribution of wages reflecting wage growth and the effects of indexing on the minimum wage, they identify workers who would be affected by the new law mandating a $12.00 minimum as those with wages between the predicted state minimum wage legislated for 2020 and the proposed minimum ($12).  They also include those workers who theyre slightly below (up to $.25) the old and new minimum.


To estimate the number of affected workers, they estimate the number of affected workers for 2020 based on the 2014 data.    They estimate the number of affected workers by summing their earnings weights (adjusted for labor force growth through 2020) and dividing the total by 12  (the number of months of data).


To estimate employment loss, for each affected worker they compute:


L = e *(Proposed Min Wage /Min Wage 2020 – 1)


where e is an assumed elasticity of employment with respect to changes in the minimum wage, Min Wage 2020 is the minimum wage currently legislated for 2020 and Proposed Min Wage is the $12.00 minimum that is being proposed for 2020.   To estimate the aggregate employment loss in the economy, they use adjusted earnings weights to sum L across workers. They also follow the Congressional Budget Office (2014) and use an elasticity of 0.15 for non-teenagers and 0.45 for teenagers.