Hanauer is now at the center of a lawsuit filed by the International Franchise Association.
Radical venture capitalist Nick Hanauer served on a city advisory committee that eventually produced the legislation boosting minimum wages to $15 per hour. The legislation takes special aim at franchisees, forcing them to adopt higher wages than other small businesses under a shorter timeframe.
“The truth is that franchises like Subway and McDonald’s really are not very good for our local economy. They are economically extractive, civically corrosive and culturally dilutive.”
— Hanauer, in an email obtained by the association
Hanauer, a private-jet-owning multi-millionaire who once had a speech scrubbed from the TED conference website for being “too political,” is a member of the Democracy Alliance, a shadowy collection of liberal millionaires and billionaires that funnels money into Democratic causes.
The group has pumped hundreds of millions of dollars into various liberal foundations, Media Matters, and Democratic super PAC Priorities USA. The group is secretive and does not divulge membership rolls, fundraising goals, or allow reporters at its annual meetings.
“Franchising has been under intense scrutiny by union activists and hostile labor regulators in recent weeks.”
Hanauer is now at the center of a lawsuit filed by the International Franchise Association to overturn the law, according to the Seattle Times.
Wealth Destruction: Target Franchises.
“The truth is that franchises like Subway and McDonald’s really are not very good for our local economy. They are economically extractive, civically corrosive and culturally dilutive,” Hanauer wrote in an email obtained by the association.
The business group claims that the law is discriminatory because many franchisees are themselves small business owners akin to mom and pop shops. Franchisees pay licensing and other fees to large corporations to operate under the company umbrella, but the vast majority are independently owned and manage their own affairs. Read the rest of this entry »
Minimum Wage Effect? January to June Job Losses for Seattle Area Restaurants (-1,300) Largest Since Great RecessionPosted: August 10, 2015
Seattle minimum wage hike is getting off to a pretty bad start.
In June of last year, the Seattle city council passed a $15 minimum wage law to be phased in over time, with the first increase to $11 an hour starting on April 1, 2015. What effect will the eventual 58% increase in labor costs have on small businesses, including area restaurants? It’s too soon to tell for sure, but there is already some evidence that the recent minimum wage hike to $11 an hour, along with the pending increase of an additional $4 an hour by 2017 for some businesses, has started having a negative effect on restaurant jobs in the Seattle area. The chart above shows that the Emerald City MSA started experiencing a decline in restaurant employment around the first of the year (when the state minimum wage increased to $9.47 per hour, the highest state minimum wage in the country), and the 1,300 job loss between January and June is the largest decline over that period since 2009 during the Great Recession (data here). The loss of 1,000 restaurant jobs in May following the minimum wage increase in April was the largest one month job decline since a 1,300 drop in January 2009, again during the Great Recession. In contrast to the January-June loss of restaurant jobs in the Seattle area: a) restaurant employment nationally increased by 130,700 jobs (and by 1.2%) during that same period (data here), b) overall employment in the Seattle MSA increased 1.2% and by 21,800 jobs (data here) and c) non-Seattle MSA restaurant employment in Washington increased 3.2% and by 2,800 jobs (data here). Read the rest of this entry »
Reid Mene reports: A recent poll conducted by The National Low Income Housing Coalition compared the average renter’s wage in each U.S. state to the wage needed to afford an average two-bedroom apartment.
The Out of Reach study, which came out in May, found that there are a considerable number of states where average workers simply cannot afford to rent two-bedrooms.
City Lab notes:
- The average American needs to earn $19.35/hour to afford a two-bedroom rental unit.
- The average hourly wage earned by American renters is $15.16. That’s 2.5 times the federal minimum wage.
- The median hourly wage of the average American worker is $17.09.
This graph shows the states with the largest gaps between average hourly wages and wages needed to rent two-bedrooms. Read the rest of this entry »
During the last part of the previous decade, the average effective minimum wage rose by nearly 30 percent across the United States.
New research from Jeffrey Clemens and Michael Wither analyzes the effects on the employment and income trajectories of low-skilled workers during the Great Recession and subsequent recovery. The authors estimate that the minimum wage increases reduced the employment-to-population ratio of working age adults by 0.7 percentage points, accounting for 14 percent of the total decline. Low-skilled workers in particular were hurt by minimum wage policies, despite being the purported beneficiaries.
From the Foundation for Economic Education: People don’t like to think that anyone’s labor is worth less than the minimum wage. Someone might end up flipping burgers for $5.00 an hour. You might think the minimum wage is a way of paying some sort of dignity premium–hence language like “living wage.” People with such good intentions look at the direct beneficiaries of these policies, say, burger flippers now making $7.50 an hour. They pat themselves on the back. But they rarely count the invisible costs: willing human beings who never get hired in the first place.
“But $5.00 an hour is not enough to live on!,” they’ll say. For whom? A teenager living at home with his parents? An elderly person who wants simply to stay active? A single mom with three kids? A single woman sharing an apartment with 2 roommates? Of course, not all of these people could live off of $5.00 an hour. But some of them could given the opportunity. Concerns about those who couldn’t don’t justify minimum wages even if we ignored the invisible costs of the policy, which include reduced margins to businesses that might otherwise grow (and hire more people).
In other words, if you take off the bottom two rungs of the income ladder, many will never climb it. That’s the effect of the minimum wage. The more cynical side of me says that’s how many politicians and the overpaid teamsters want it.
Enjoy this great video and some timeless pieces on the minimum wage by some of FEE’s excellent scholars.
The Truth About the Minimum Wage
“While there is a debate over the magnitude of the effects, the weight of research by academic scholars points to the conclusion that unemployment for some population groups is directly related to legal minimum wages. The unemployment effects of the minimum-wage law are felt disproportionately by nonwhites. A 1976 survey by the American Economic Association found that 90 percent of its members agreed that increasing the minimum wage raises unemployment among young and unskilled workers. It was followed by another survey, in 1990, which found that 80 percent of economists agreed with the statement that increases in the minimum wage cause unemployment among the youth and low-skilled. Furthermore, whenever one wants to find a broad consensus in almost any science, one should investigate what is said in its introductory and intermediate college textbooks. By this standard, in economics there is broad agreement that the minimum wage causes unemployment among low-skilled workers.”
“With the money-wage hike and the reduced benefits, workers can be left worse off since the fringes and slack work demands taken away were provided in the first place because workers valued them more highly than the wages forgone for those benefits. Given the findings of his own as well as other researchers’ studies, Wessels deduces that every 10 percent increase in the hourly minimum wage will make workers 2 percent worse off.” Read the rest of this entry »
“The Affordable Care Act demonstrates the phenomenon. This landmark piece of social legislation extended free or highly subsidized health insurance to millions of additional Americans. But it also, therefore, increases the loss of benefits to low-income workers after a raise.“
Will you actually be richer when your pay is raised to $15 per hour?
Perhaps the question seems ludicrous. Of course you’re better off making $15 an hour than you were at $9 per hour, right? But the answer is, unfortunately, not as obvious as you might think. And the question itself—will workers getting a raise be better off?—has been missing from debates in cities from New York to Los Angeles over whether to establish $15 per hour minimum wages for some workers.
Instead, we’re seeing the same old arguments — from San Francisco, where voters must decide on a November ballot measure proposing a new $15 per hour wage floor, to Seattle, which will begin phasing in $15 per hour next year — over whether the minimum wage hurts business and jobs, or whether it boosts local economies by giving workers more money to spend. For the record, I…
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— Robert Holguin (@ABC7Robert) October 7, 2014
For National Review Online, Celina Durgin writes: Seattle’s plan to dramatically increase the minimum wage is going to be unsustainable in the long term and is already costing jobs and raising prices, business owners say.
“I am concerned about my business and others in the community, but it isn’t just about any one business. It’s about how the entire economic community will be affected.”
Seattle businessmen lead by Forward Seattle, a non-partisan organization representing independent businesses, collected about 19,500 signatures to put a referendum on the city’s minimum wage ordinance on this November’s ballot. Several of the petitioners have said their businesses cannot withstand the ordinance’s schedule for increasing the minimum hourly wage, which will boost it from $9.25 to $15 in as few as three years for the largest employers.
Some petitioners had tried unsuccessfully to oppose the ordinance when it was passed June 3. They attended meetings, lobbied, and tried to file an amendment to the city’s charter, which they discovered wasn’t possible this year. “We hit a brick wall every single time,” Kathrina Tugadi, co-chair of Forward Seattle and owner of El Norte Lounge, told National Review Online.
“We thought it was interesting that everyone wanted to push this through so quickly.”
For Reason.com, Scott Shackford writes: Our labor participation rate is terrible and our economy shrank by 1 percent in the first quarter of the year. So it’s the perfect time to raise the minimum wage to a degree unseen in America before, right?
That’s what Seattle has done. Yesterday the Seattle City Council unanimously voted to raise the city’s minimum wage to $15 over the next seven years. Labor activists are actually considering forcing a public vote to speed up the process so that it hits the new minimum in three years. The city recently elected its first Socialist council member, Kshama Sawant, so perhaps the move shouldn’t have come as a surprise. The City Council dulled the edge of the new minimum a bit by allowing for a lower training wage for teenagers and disabled workers. This prompted outrage from Sawant and labor supporters, who I guess want to drive teens and the disabled out of the job market entirely.
Franchise owners are planning a lawsuit because the law counts them as big businesses and only gives them three years to phase in the increase. From The Seattle Times:
Local franchisee David Jones, who owns two Subway stores in Seattle, puts his cost of a $15 minimum at $125,000 annually. He pays the stores’ 18 employees $10.50 an hour, on average; he figures he’ll have to raise sandwich prices by a dollar or more to maintain profits… Read the rest of this entry »
Geneva (AFP) – Swiss voters on Sunday rejected a proposal to introduce the world’s highest minimum wage, which would have guaranteed every worker in one of the world’s priciest nations at least $25 an hour.
…the initiative flopped as voters heeded warnings from government and other opponents that it would deal a death blow to many businesses and would weaken Switzerland’s healthy economy…
A proposal to introduce a minimum wage so high it could pass for mid-management pay elsewhere, was rejected by 76,3 percent of Swiss voters.
…Swiss voters also overwhelmingly voted in favour of harsh laws against convicted paedophiles, with 63.5 percent supporting a lifelong ban on them working with children, regardless of the gravity or nature of their crime.
A series of referendums in Switzerland also saw voters nix a multi-billion-dollar deal to buy fighter jets from Sweden and massively support a lifelong ban on convicted paedophiles working with children.
The massive rejection of the “Decent Salary” initiative was widely seen as a slap in the face to its union backers, who insist at least 22 Swiss francs ($25, 18 euros) an hour, or 4,000 francs ($4,515, 3,280 euros) a month, is needed to get by in Switzerland. Read the rest of this entry »
[AUDIO] Mad Dogs & Englishmen: Charles Cooke & Kevin Williamson Discuss the Over-Importance of the Presidency, Minimum Wage, and the 2016 Mid-Term ElectionsPosted: February 20, 2014
Charlie Cooke and Kevin Williamson discuss the 2016 midterm elections, the presidency being too important, and the minimum wage.
“In baseball you play what’s called small ball — stealing bases, bunting — when you can’t do anything else,” Will said. “This is the miniaturization of the president’s agenda…”
Costanza Will previewed Tuesday’s State of the Union address on Sunday, arguing that the president will focus on initiatives like universal pre-K and increasing the minimum wage because his major policy initiatives have been hamstrung.
“I was in the pool! I WAS IN THE POOL!”
— George Costanza
“In baseball you play what’s called small ball — stealing bases, bunting — when you can’t do anything else,” Will said. “This is the miniaturization of the president’s agenda.
Neil Munro writes: A nationwide minimum wage of $12 per hour would shrink government, aid families, curb illegal immigration, spur high-tech investment, and boost GOP support among working-class voters, says Ron Unz, the California libertarian entrepreneur who wiped out his state’s Spanish-only K-12 classes.
The $12 wage would slash the huge taxpayer subsidies now given to companies that hire low-wage immigrants, and move tens of millions of Americans into the middle class and sharply reduce the 47 percent of the population who are now completely or partly dependent on federal handouts, Unz told The Daily Caller.
“Politics would be completely different… what you’re doing is reducing the 47 percent by 10 to 15 points and giving Republicans a chance to make their case about cutting government spending and reducing taxes,” he said.
Unz’s unorthodox proposal is likely to catch fire, partly because he’s working to put it on California’s ballot this year and force Democratic and Republican politicians to take sides by November.
Big Labor wins court battle in Washington State, and now employers in SeaTac, Washington wil have to pay transportation and hotel workers $15 an hour.
The minimum wage was $9.32, but with the new ruling, employers will look to cut jobs, and some are even saying that they will close up shop, because they won’t be able to pay the 60 percent increase in worker pay.
Backers of the $15 minimum wage vow to appeal the ruling up the state Supreme Court. One of the biggest supporters is Kshama Sawant, a socialist who also won her election to the Seattle City Council. She plans on making Seattle the next city to have a $15 minimum wage.
Less than 0.1 percent of the industry’s workforce participated
Jim Epstein writes: Yesterday, Naomi Brockwell and I attended a demonstration demanding that fast-food restaurants boost their minimum wage to $15 per hour, or a little more than double the current federal minimum wage. The strike, which was led by a group called Fast Food Forward that’s affiliated with the Service Employees International Union (SEIU), was one of more than a 100 similar demonstrations held in cities across the country.
The New York demonstration had about 150 people, but the number of actual fast food employees participating in the strike was small. It was business as usual at every restaurant we dropped by yesterday morning and, at a McDonald’s restaurant on 23rd Street and Madison Avenue in Manhattan, employees behind the counter said they had heard nothing about a strike. Read the rest of this entry »
His solutions for a stagnant economy were tried and found wanting long ago
All of this was clear when he became the Democratic party’s pinup in 2008 (just by way of example, I wrote then that while Obama was “shiny bright and new” his ideas were “suffering from senility”). What’s dumbfounding now is Obama’s detachment from his own presidency. He continues to campaign (well, speak, but it always sounds like a stump speech) as if someone else were sitting in the Oval Office, as if someone else’s policies were responsible for the state of things, as if someone else should shoulder the blame.
The robot future is coming, and helping human laborers will require creative responses
Jonah Goldberg writes: After you heard President Obama’s call for a hike in the minimum wage, you probably wondered the same thing I did: Was Obama sent from the future by Skynet to prepare humanity for its ultimate dominion by robots?
But just in case the question didn’t occur to you, let me explain. On Tuesday, the day before Obama called for an increase in the minimum wage, the restaurant chain Applebee’s announced that it will install iPad-like tablets at every table. Chili’s already made this move earlier this year.
With these consoles customers will be able to order their meals and pay their checks without dealing with a waiter or waitress. Both companies insist that they won’t be changing their staffing levels, but if you’ve read any science fiction, you know that’s what the masterminds of every robot takeover say: “We’re here to help. We’re not a threat.”
But the fact is, the tablets are a threat. In 2011, Annie Lowrey wrote about the burgeoning tablet-as-waiter business. She focused on a startup firm called E La Carte, which makes a table tablet called Presto. “Each console goes for $100 per month. If a restaurant serves meals eight hours a day, seven days a week, it works out to 42 cents per hour per table — making the Presto cheaper than even the very cheapest waiter. Moreover, no manager needs to train it, replace it if it quits, or offer it sick days. And it doesn’t forget to take off the cheese, walk off for 20 minutes, or accidentally offend with small talk, either.”
Applebee’s is using the Presto. Are we really supposed to believe that the chain will keep thousands of redundant human staffers on the payroll forever?
How A Progressive Regresses
Kevin Glass writes: Ever since President Obama endorsed a federal minimum wage hike in his State of the Union speech, progressives have lined up in lockstep support. Economists, bloggers, tv hosts all have come out saying that a minimum wage hike is clearly the right move. You’d be forgiven if you thought that it’s been a very short while since the very existence of a minimum wage was considered controversial.
In the late 1980s, the New York Times advocated for an abolition of the minimum wage. With 25 more years of research, much of it showing that the minimum wage is an inefficient distortion of labor markets, the New York Times reversed position and advocated for a minimum wage hike to historic highs.
For all of their mutual public admiration, Presidents Clinton and Obama react differently to political trouble. Bill moved to the middle, while Barack always moves left. So it’s no surprise that Mr. Obama is responding to his ObamaCarerollout slump by doing his best Elizabeth Warren imitation.
Mr. Obama returned to his favorite theme of rising income inequality on Wednesday, which he called “the defining challenge of our time.” He ought to know since few Presidents have done more to increase inequality than he has. Median household income has fallen since the economic recovery began, while the rich who own capital assets have done very well thanks to the Federal Reserve’s focus on reflating stock and home prices. Mr. Obama is the Chief Economist of Nottingham posing as Robin Hood.
Editorial board member Steve Moore on why Congress shouldn’t hike the federal minimum wage to $10.00 from $7.25.
The President’s political purpose here is what the pros call rallying your base. Many Democrats are as dismayed as Republicans at ObamaCare’s rollout, so the White House wants to change the subject and give MSNBC viewers something else to debate. Mr. Obama didn’t have much new to offer that would help the economy or the middle class, so instead he’s decided to escalate that hardy liberal perennial, the minimum wage.
Since 2009, the Fair Labor Standards Act has dictated that the federal minimum wage is $7.25 an hour. Some people think that’s too low; others think it’s too high. But it turns out that, in 35 states, it’s a better deal not to work—and instead, to take advantage of federal welfare programs—than to take a minimum-wage job. That’s the takeaway from a new study published by Michael Tanner and Charles Hughes of the Cato Institute.