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Obama's Minimum Wage Utopia Just Hit A Brick Wall
Who could have possibly seen this coming? Almost three years we first detailed how America has become an entitlement nation where "work is punished." It appears President Obama is about to discover this first hand as his populist 'raise the minimum wage' strategy is showing yet another major unintended consequence. On the same day as New York acts to mandate a $15 minimum wage for fast food workers, Seattle's $15 minimum wage law - which is supposed to lift workers out of poverty and off public assistance - has hit a snag. As Fox News reports, evidence is surfacing that some workers are asking their bosses for fewer hours as their wages rise – in a bid to keep overall income down so they don’t lose public subsidies for things like food, child care and rent. So not only is work 'punished' it is now 'disinentivized by mandate' as part-time America toils amid ever-rising costs of living.
This isthe painful reality in America: for increasingly more it is now more lucrative - in the form of actual disposable income - to sit, do nothing, and collect various welfare entitlements, than to work.
This is graphically, and very painfully confirmed, in the below chart from Gary Alexander, Secretary of Public Welfare, Commonwealth of Pennsylvania (a state best known for its broke capital Harrisburg). As quantitied, and explained by Alexander, "the single mom is better off earnings gross income of $29,000 with $57,327 in net income & benefits than to earn gross income of $69,000 with net income and benefits of $57,045."
We realize that this is a painful topic in a country in which the issue of welfare benefits, and cutting (or not) the spending side of the fiscal cliff, have become the two most sensitive social topics. Alas, none of that changes the matrix of incentives for most Americans who find themselves in a comparable situation: either being on the left side of minimum US wage, and relying on benefits, or move to the right side at far greater personal investment of work, and energy, and... have the same disposable income at the end of the day.
And so, as Fox News reports, it is no surprise that the sudden gains in income from a government-mandated $15 minimum wage would tip some over the edge of their handouts entitlement... and thus dicincentize work altogether...
Seattle’s $15 minimum wage law is supposed to lift workers out of poverty and move them off public assistance. But there may be a hitch in the plan.
Evidence is surfacing that some workers are asking their bosses for fewer hours as their wages rise – in a bid to keep overall income down so they don’t lose public subsidies for things like food, child care and rent.
Full Life Care, a home nursing nonprofit, told KIRO-TV in Seattle that several workers want to work less.
“If they cut down their hours to stay on those subsidies because the $15 per hour minimum wage didn’t actually help get them out of poverty, all you’ve done is put a burden on the business and given false hope to a lot of people,” said Jason Rantz, host of the Jason Rantz show on 97.3 KIRO-FM.
The twist is just one apparent side effect of the controversial -- yet trendsetting -- minimum wage law in Seattle, which is being copied in several other cities despite concerns over prices rising and businesses struggling to keep up.
The notion that employees are intentionally working less to preserve their welfare has been a hot topic on talk radio. While the claims are difficult to track, state stats indeed suggest few are moving off welfare programs under the new wage.
Despite a booming economy throughout western Washington, the state’s welfare caseload has dropped very little since the higher wage phase began in Seattle in April. In March 130,851 people were enrolled in the Basic Food program. In April, the caseload dropped to 130,376.
At the same time, prices appear to be going up on just about everything.
Some restaurants have tacked on a 15 percent surcharge to cover the higher wages. And some managers are no longer encouraging customers to tip, leading to a redistribution of income. Workers in the back of the kitchen, such as dishwashers and cooks, are getting paid more, but servers who rely on tips are seeing a pay cut.
Some long-time Seattle restaurants have closed altogether, though none of the owners publicly blamed the minimum wage law.
“It’s what happens when the government imposes a restriction on the labor market that normally wouldn’t be there, and marginal businesses get hit the hardest, and usually those are small, neighborhood businesses,” said Paul Guppy, of the Washington Policy Center.
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As we previously concluded, with more than half of welfare spending going to working families...
The irony here seems to be that because companies would rather spend their money on raises for "supervisors" and on stock buybacks which benefit the very same supervisory employees who are likey to own stocks (and which artificially inflate the bottom line), everyday taxpayers just like the ones who can't get a raise end up footing the bill via public assistance programs. The companies meanwhile, get to utilize nice little tricks like corporate tax inversions in order to avoid paying their share of the assistance handed out to the very same employees they underpay.
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Isn't the whole idea of Capitalism to gate your capital working so you don't have to?
Once your capital is doing all the work and you are doing nothing you are a Capitalist success story.
How do you think Charlie Munger got so fat?
"I just sit on my arse and my capital does all the work" Charlie.
Capital for the common man sure has a hard time finding earnings these days of ZIRP.
These right wing propagandists will turn everything upside down--tell a big lie and everyone will believe it. If you want to incentivize people to work you pay them more. This is TURE and always has been. The more you pay them, the more overtime they want to work!
This article is an example of the lies that elites are pushing. When there are no jobs, they claim that millions of jobs exist except that people are too lazy to work; when families subsist on rice and beans when on food stamps, they make up stories that the poor on food stamps are eating shrimp, lobster and steak.
But the biggest lie is that the poor in US are better off than most in the world so they should be happy making $7.25/hr.
The food stamp program is administered by the U.S. Department of Agriculture. They proudly report that they distribute free meals and food stamps to over 46 million people on an annual basis. Meanwhile, the National Park Service, run by the U.S. Department of the Interior, asks us ‘please do not feed the animals.’ Their stated reason for this policy being that the animals will grow dependent on the handouts, and then they will never learn to take care of themselves. This concludes today’s lesson. Any questions"
Standard Disclaimer: Now back to HuffPo, where you can bleat amongst your own kind...
Am I the only person who remembers the stories about the Department of Agriculture trying to get more people on food stamps pre 2007-08? They were advertising for new recipents. I guess it didn't work, so they had to crash the economy to get more customers.
In an unrelated story, I had to use a HELOC to purchase a pound of hamburger and two ribeyes.
As a person who observes what goes on around him, I can assure you that many of the FSA are not living on "rice and beans" based on what I see them buying at the grocery store. There is a reason Kroger puts orange stickers on racks of pre-cooked BBQ ribs stating they can be purchased with food stamps.
"...all you’ve done is put a burden on the business and given false hope to a lot of people..."
^...and Peter Schiff was right, again.
Too bad he hasn't been right about the POG, yet.
The handouts equal less than mininium wage. Welfare solved.
The intentional destruction of the middle class continues unabated.
I am so sick of the stupidiy regarding this minimum wage thing. Holy crap people wake the fuck up, ALL of you! Wages aren't the problem. Costs are the problem. Shit costs too much. Inflation managed by the fed is horseshit management! The damned government needs to step in and get the fed in line. I remember a price freeze back in the 70's. Where have those ideas gone but down the shitter never to return. Up to or exceeding $15 an hour ain't no good as prices continue to rise and they will. It's all about the destruction of the middle class, period. Put the smaller independents out of business so the major corps can gain more market share and take the fuck over raising prices even higher. It's a game of monopoly and you ain't in it!
I agree, $15 today is a far cry from $15 10 years ago, 20 years ago, etc.
But I think you're missing the point that the currency has been debased by government defict spending, enabled by our loving and caring overlords, the Federal Reserve Bank, and of course Congress. If the money was still worth a shit, $15 an hour would be good money and minimum would still be less than $2.00 per hour if it existed at all. When I made $17-$20 per hour 20 hears ago, it was good money. I had more purchasing power with that than I did with the $35-$40 hr I was getting at my last job last year. My internet is faster now and my TV is bigger, but every other product I use or consume has shrunken and/or reduced in quality significantly since then.
But so many people don't understand what's happening.
For example, the media usually says the average income in America is ~$50k. The fact is that the average HOUSEHOLD income is ~$50k. The indiviual median income for the US is closer to $26,000 per year according to the SSA. That means that of the ~150 million Americans with a job, ~75 million make less than $26,000 per year, or $13 per hour if it's a full time job. Even in flyover country, grossing $26k or less isn't going to put you in position to have much disposable income.
Not exactly an environment where one would expect consumer spending to be on the rise now and forever.
Wages were attacked haven't kept up with inflation, They used open borders, free trade agreements, and currency debasement as tools in their mission to impoverish Americans amd create a huge class of dependents. It's all been discussed here ad nauseum.
This whole minimum wage discussion is avoiding the elephant in the room. Said elephant can never be mentioned and it never is. I have never heard a MSM story mention ANY of the above factors as being the reason the country is turning to shit. They act as if deficit spending is fine and dandy and has no consequences ever. They NEVER NOT ONCE connect the dots between deficit spending and currency debasement. I don't think their avoidance of unpleasant truths is an accident.
Stories like this are used to get us arguing amongst ourselves while the banksters print money and steal everything that isn't bolted to the floor.
I thought because of Obama Care workers were only working 29 hours to start with. Make up your mind.
The solution Congress and POTUS will pursue next, is easy to forecast...:
"The math indicates that our solutions are having the opposite effect to what we originally intended, and since the math is inescapable, it is becoming less and less popular amongst elected officials... Therefore, math must be outlawed, and labeled as a threat to national security..."
Expect a full-fledged "War on math" to emerge from Washington DC in 5,...4,...3,...2,...
....just niggers going what they do best. Being lazy.
Move along, nothing to see here.
This is Seattle and it doesn't matter what you think at all. The city is controlled from top to bottom, from the State to the County. They got this on Lock! We got bums in Tent Cities, Free Wifi, Free Electricity, and the good bathroom stall trailers. You just don't get it! The 3rd biggest finacial hub in the country. With I remind you with a Small population. They got the Land Under Control! They got Water, Food all under control.
Where you going to go and build? You can't just build without there permisson! Either Get With the Progarm buddy or Move the Hell Out!