In June the Center for Economic and Policy Research (CEPR) published analysis of the effect on job creation in thirteen states that raised the minimum wage effective January 1, 2014. According to Republican credo this data analysis should of course reveal a negative effect on job creation in those states stupid enough to raise their wage minimums.
"When you raise the price of employment, guess what happens? You get less of it. At a time when Americans are still asking the question, 'where are the jobs?' why would we want to make it harder for small employers to hire people?" John Boehner after President Obama called for an increase in the minimum wage in his State of the Union speech, January 2013.
http://www.huffingtonpost.com/...
Yes, and when we outlawed slavery we got a lot less of it.
The minimum wage has been anathema to Republicans for decades. An overwrought Boehner even threatened to end his life over the issue. “I’ll commit suicide before I vote on a clean minimum-wage bill,” Boehner, then the head of the House Republican Conference, said in 1996. http://thehill.com/...
Boehner's threat was--alas!--just theater.
Adding fuel to the GOP argument, in February the CBO estimate that a minimum wage increase, while increasing the income of many working poor, effectively lifting them above the poverty line, might cause the loss of 500,000 jobs or 0.3 percent by 2016.
On the other hand, Democrats have a long history of support for the minimum wage. Here is then Senator John Kennedy articulating a point in pre-Civil Rights Act 1957:
Of course, having on the market a rather large source of cheap labor depresses wages outside of that group, too – the wages of the white worker who has to compete. And when an employer can substitute a colored worker at a lower wage – and there are, as you pointed out, these hundreds of thousands looking for decent work – it affects the whole wage structure of an area, doesn’t it?
http://cafehayek.com/...
Plus ça change, plus c'est la même chose.
And just this year, in his 2014 State of the Union speech, President Obama got behind the Harkin-Miller proposal to raise the minimum to $10.10, an hourly wage many progressive economists agree upon.
Now Democrats have the June CEPR report to back them up. It is not an estimate, nor an opinion, but rather an analysis of actual data, the kind of fact based, evidence driven, real world verifiable data type stuff that Republicans and Fox News either discount as biased or simply pretend doesn't exist. To make it worse for conservatives it builds upon evaluations by Goldman Sachs, not exactly your typical purveyor of liberal, anti-business propaganda.
As CEPR noted in March and April posts, economists at Goldman Sachs conducted a simple evaluation of the impact of these state minimum-wage increases. GS compared the employment change between December and January in the 13 states where the minimum wage increased with the changes in the remainder of the states. The GS analysis found that the states where the minimum wage went up had faster employment growth than the states where the minimum wage remained at its 2013 level.
http://www.cepr.net/...
Okay so we have Republicans prognosticating that raising the minimum wage is a job killer and the CBO estimate marginally backing them up. Then we have Democrats asserting that it will be good for people without causing a negative effect on employment, with their assertion supported by quantifiable, actual fact data in the CEPR.
So which is it? Whose argument is the harried, ill-informed, undecided voter to believe? Sometimes a personal story, an anecdote, resonates better than antiseptic statistics presented in economic reports. Ronald Reagan, the Great Communicator, was a master of telling a story to win people over to his side. So here is the story about what happened at my company after we unilaterally raised the minimum wage. My story is not a spellbinder like those Ronnie told, but at least my tale is true. Follow below the orange motif please.
I am a manager at a family owned, service industry company that employs about 260 year round. In 2009, in the depths of the Great Recession, the minimum wage in California was $8.00/hour and we were paying our entry level employees, who comprised approximately 10-15% of our total force, between $8.00-8.25.
After arguing with the board of directors about raises for several years, our CEO decided on his own that he didn't want anyone working for us to earn less than $9.00, so he told all managers to make it happen for their workers. In order to be fair to those with more seniority we had to also give raises to many other non-management employees, increasing our entire payroll by about 6%.
We then lowered qualification for full-time status and participation in our benefits program--healthcare, 401K, paid time off, supplemental insurance, health club membership, on-site childcare and "Cafeteria Plan"--from 40 hours to 32 hours per week simultaneously increasing our company contribution to health insurance from 50% to 80%. This increased payroll and payroll related costs to an average of about 56% of total gross revenue, much higher than our competition. According to conservative principles this would place our company in a position of weakness.
Actually just the opposite was true.
Now it should be noted that we are an 18 acre campus and therefore maintenance is very labor intensive and much higher than most businesses, including our competitors, so our payroll has always been high.
We raised our minimum wage in the middle of a depression and are thriving. Department managers were directed to control expenses and to stay within budget. The company also made some keen decisions that kept our cash flow steady. While the economy was tanking we did not lay off a single employee.
Additionally our CEO has dedicated a significant portion of our facility to special needs populations, who wouldn't normally have access to a place like ours often at low or no cost, in partnership with a non-profit foundation, hospitals and universities. This has created a lot of good will in our community and positive buzz in the industry, to the extent that we have even been featured on ABC and CBS and our CEO has been invited to speak about our efforts in the U.S. and abroad.
While the board of directors has not always been supportive of these seemingly counterintuitive moves, it is impossible to ignore the results. We have shown a profit throughout the recession and 2013 was our best year financially in a decade. We have happier, healthier employees and our attrition rate is at 13%, a rate unheard of in our industry.
Raising our minimum wage and increasing participation in our benefits package, not only improves the lives of our staff but also mitigates the increase in payroll and actually strengthens our bottom line. Healthier employees are more efficient and take fewer sick days. Every time we have to hire someone new it costs us about $900, not including the value a veteran adds to our business in efficiency and customer service. I believe the industry standard employee attrition rate is around 30% so the annual savings is substantial. Happy veteran employees mean better service and a higher percentage of satisfied, repeat customers. During the recession our traffic remained stable and now it is growing. We are adding on to our main building, our parking lot is frequently overflowing and we are negotiating to open a satellite location.
We are located in California where, as of July 1st, the minimum wage went up to $9.00. Last week, in keeping with our directive to stay ahead of the minimum, I happily approved raises to $9.50 and $9.75 for the front line staff in my department. On January 1st, 2016 the state minimum will be at $10.00 so our goal in the coming year will be to get our minimum to $10.50. This of course doesn't match what a company like Costco is doing but I am happy to provide a real world story to counter the conservative economic mantra that raising the minimum wage is a "job killer."
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Many of the moves our CEO has made could be considered fairly progressive and so it often befuddles me that he is a staunch Republican. It is not unusual for him to make disparaging remarks about President Obama, Obamacare, big government, taxes, regulations, unions and even the minimum wage. His actions as CEO often don't match his rhetoric.
When employees have become gravely ill and were no longer able to work, he has without fanfare, paid them their full salary and maintained all their benefits so they could end their lives with dignity. When my wife was very sick and I was basically raising our two girls by myself, while working full time plus 15 hours/week doing gigs on the side, he gave me free onsite childcare for two years. Part-time childcare (<20hr/wk) for employees was at that time $100/month for the first child and $50/month for each additional.
He knows I am a lifelong Democrat. He was hired during the contested election between Bush and Gore and we had several intense but civil disagreements about the vote count in Florida. Since then he has tried to make his case for the conservative cause with me on numerous occasions. I listen respectfully, and then respond with an "I understand what you are telling me but here is what I have a problem with . . ."
A few months ago I forwarded him a Huffington Post article about Costco's progressive business practices and their success compared to Sam's Club and Walmart. He responded positively and said he believed we conducted ourselves in a similar manner. I agreed and told him I was proud to tell people about all the great things our company did for our employees and community. Accentuate. The. Positive.
My boss is a contradiction. He is both a testament to, and a victim of his conservative upbringing. He has a blind spot for trickle down "Reaganomics." Reagan was his hero. He sees all the bad things in government but not the good. He champions the superiority of the private sector, but doesn't acknowledge that the private sector is often inept and does even more damage to common citizens than the government. I truly believe his mission in life is to prove that the private sector will always outperform government both fiscally and ethically. His business practices are an example for other CEO's to follow, but unfortunately, in a "free" market economy, most will not hold themselves to such standards, even if they want to, unless required by law.