Politicians Killing Jobs—Part 145

https://grantcoulson.files.wordpress.com/2014/04/incentiveseverywherepicturecorrect1.jpg?w=444&h=288

   Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

    Wherein we see, once again, that wealth cannot be created by politicians, only destroyed.

Destroying Jobs with Innumerate Compassion
Daniel J. Mitchell

A few days ago, we used supply-and-demand curves to illustrate how taxes reduce economic output.

Supply-and-demand curves also can be used to examine the impact of minimum wage laws on the labor market.

https://doe.state.wy.us/lmi/MW/images/figur3.gif

Workers understandably will be willing to supply more labor at higher wages.

Employers are just the opposite. They demand more labor when wages are low.

In an unfettered market, the interplay of supply and demand will result in an “equilibrium wage.”

But as you can see from the chart, if politicians impose a minimum-wage mandate above the equilibrium level, there will be unemployment.

Some folks, though, may not be overly impressed by theory. So how about empirical research.

Other folks, though, may prefer real-world examples rather than academic studies.

We’ve already looked at the bad results when the minimum wage was increased in Michigan.

Now we have some more unfortunate evidence from the state of Washington. Seattle Magazine has a story about a bunch of restaurants closing because of an increase in the minimum wage.

The article starts by noting a bunch of eateries are being shut down.

    Last month—and particularly last week— Seattle foodies were downcast as the blows kept coming:Queen Anne’s Grubclosed February 15. Pioneer Square’sLittle Uncleshut down February 25. Shanik’s Meeru Dhalwala announced that it will close March 21.Renée Erickson’s Boat Street Café will shutter May 30… What the #*%&$* is going on?

Hmmm…so what’s changed. It’s not higher food prices. It’s not a change in dining preferences of consumers.

Instead, government intervention is having a predictable effect.

    …for Seattle restaurateurs recently, …the impending minimum wage hike to $15 per hour. Starting April 1, all businesses must begin to phase in the wage increase: Small employers have seven years to pay all employees at least $15 hourly; large employers (with 500 or more employees) have three. Since the legislation was announced last summer,The Seattle TimesandEaterhave reported extensively on restaurant owners’ many concerns about how to compensate for the extra funds that will now be required for labor: They may need to raise menu prices, source poorer ingredients, reduce operating hours, reduce their labor and/or more.

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   Politics is not about reality, but about invoking emotions. Here’s an emotional one–Could you live on $8.75 per hour? Note that this is regarded as the terminal state of human existence rather than a lower-paying job as a step to somewhere else, a condition which is true for almost everyone who has a low-paying job. They live with their parents or with many others in cheap housing. Yes, I’ve done it and it’s as unpleasant as it is impermanent.

An industry expert tries to explain the new reality of coping with higher costs.

    Washington Restaurant Association’s Anton puts it this way: “It’s not a political problem; it’s a math problem.” …he says that if restaurant owners made no changes, the labor cost in quick service restaurants would rise to 42 percent and in full service restaurants to 47 percent. “Everyone is looking at the model right now, asking how do we do math?” he says. “Every operator I’m talking to is in panic mode, trying to figure out what the new world will look like.”

Well, we know what “the new world will look like” for many workers. They’ll be unemployed.

So you can understand why this issue is so frustrating. Politicians posture about helping workers, but they wind up displaying their economic ignorance and real-world innumeracy.

And innocent people pay the price, as shown in the Branco cartoon.

P.S. Walter Williams explains the racist impact of minimum-wage laws.

P.P.S. On a lighter note, here are a couple of additional clever cartoons illustrating the negative impact of minimum-wage mandates.

P.P.P.S. And this video is a must-watch on the issue.

P.P.P.P.S. Shifting to a different topic, I’m not quite sure this guy deserves to be in the Moocher Hall of Fame, but I’m glad he’s going to jail.

    Champion golfer Alan Bannister, who played off a handicap of seven, was convicted of benefits fraud after being caught on camera walking around the course on his daily game. He even had a taxpayer-funded mobility car by claiming he was in too much pain to walk. …Inspectors discovered he used his mobility car – intended for people “virtually unable to walk” – to drive to the golf club to play with the “Sunday Swingers” and “The Crazy Gang” players, despite claiming he could barely walk 50 metres at a time. …The court was told Bannister dishonestly claimed £26,090.55 from 2007 until 2012 in Disability Living Allowance.

And while he’s only a borderline case for the Moocher Hall of Fame, he’s a perfect example of eroding social capital.

He’s a dirtbag who decided that it is perfectly okay to scam off taxpayers. When enough of his fellow citizens make the same choice, a society is in deep trouble.

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   There it is, yet another example of hysterical rhetoric leading to misery.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “
Days of Songs and Mirrors: A Jacobite in the ‘45.”
Cui Bono–Cherchez les Contingencies

 

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