Submitted by Tyler Durden on 03/28/2016 10:21 -0400
Over the past 12 months, America has had front row seats for a real-life experiment with across-the-board wage hikes.
In January of last year, a grinning Doug McMillon appeared in a video message posted to Wal-Mart’s website to announce that the world’s biggest retailer was set to implement one of the “largest single-day, private-sector pay increases ever.”
Now first of all, McMillon and the rest of the executive suite probably should have reread the statement in quotes above and asked themselves whether that sounded like something that was likely to turn out well. Wal-Mart employs a whole lot of people, and giving everyone a raise is the kind of thing that can end up having unintended consequences – especially when your business runs on the thinnest of margins.
But Wal-Mart pressed ahead anyway and almost immediately, things started to unravel. First, Bentonville moved to squeeze suppliers by forcing them to plow their excess cash into savings rather than in-store advertising. Next came storage fees and eventually, Wal-Mart even tried to compel vendors to pass along any savings they might have recognized from the yuan devaluation.
But squeezing the supply chain proved inadequate to make up the money spent on higher wages and so, Wal-Mart did what anyone with any common sense knew they would end up doing: they fired thousands of people and closed hundreds of stores. Or, visually:
A valuable lesson was learned by all. Or maybe not, because over the weekend, California lawmakers and labor union reps struck a deal to raise the statewide minimum wage to $15/hour.
“The deal was confirmed Saturday afternoon [and the] compromise ends a long debate between Democratic governor Jerry Brown and some of the state’s most powerful labor unions,” the LA Times writes, adding that “for Brown, it’s political pragmatism; numerous statewide polls have suggested voters would approve a minimum wage proposal — perhaps even a more sweeping version — if given the chance.”
Here’s how it will work: the statewide minimum will rise from $10 an hour to $10.50 on Jan. 1, 2017, with a 50-cent increase in 2018 and then $1-per-year increases through 2022. Here’s more from the Times:
Sources say the Legislature could vote on the wage compromise as soon as the end of next week by amending an existing bill on hold since 2015. Its passage would place California ahead of a minimum wage increase now being considered in New York, and would probably add fodder to the raucous presidential race. Both Sen. Bernie Sanders of Vermont and former Secretary of State Hillary Clinton have endorsed the goals of a nationwide campaign to raise wages to $15 an hour, and advocates say swift action in California could force both Democratic candidates to embrace what would be a more aggressive plan of action.
In January, Brown warned of a $4-billion-a-year increase in state budget expenses if public-sector care workers — who are paid the minimum wage — were to receive $15 an hour. The gradual ramping up of wages and benefits in the new agreement is more aligned with Brown’s larger budget philosophy.
“Raising the minimum wage to fight income inequality has cropped up on many Democratic candidates’ agendas ahead of the November presidential, congressional and state elections,” Reuters wrote this morning. “But the idea has drawn fierce opposition from conservatives and some business groups, who have said a higher minimum would harm small businesses and strain the budgets of government agencies forced to pay more to workers.”
Yes, this could “harm small businesses.” Businesses like the Marmalade Café which has seven locations. “First, you have to raise prices, otherwise you’ll be out of business,” owner Selwyn Yosslowitz told the Times. So higher prices for diners. That’s “first.” We imagine you can guess what’s “second.” “We will try to re-engineer the labor force,” Yosslowitz said. “Maybe try to reduce the number of bus boys and ask servers to bus tables.” In other words: “Maybe” we’ll fire some folks and the people who keep their jobs will have to be more efficient.
Yosslowitz also worries about the dynamic we’ve discussed over the course of documenting Wal-Mart’s experience with wage hikes: namely that you have to preserve the wage hierarchy. You can’t hike wages for the lowest paid workers and then expect those further up the pay ladder to be satisfied with what they made before. “The other big worry [is] that employees already making $15 an hour will demand a raise as well”, Yosslowitz said. “It’s a chain reaction.”
Indeed, the problems with haphazard wage hikes are now readily apparent even to those who stand to benefit the most from the new legislation. Take Miguel Sanchez of Highland Park who works two jobs making tortillas. “It’s good for workers, but I imagine this is not going to be good news for employers and small businesses,” he says. “Will the cost of things go up?” he asks. “Are employers going to cut back hours because they can’t afford it? I worry.”
So even tortilla makers get it, but like Wal-Mart, “some folks” will need to actually see the layoffs before they’ll concede that you can’t cheat economic truisms and that’s really a shame for the people who will lose their jobs in the meantime.
Of course how much you earn and even whether or not you have a job at all only matters to the extent that “shit” costs money, which is why it might be a good idea to just go ahead and vote for “A Future To Believe In”…
If they order everyone to get paid at least $100k a year, then they will be able to pay higher taxes, and it will solve all of Commiefornia’s fiscal problems. Spending and taxing their way into prosperity.
$15 an hour is just the tip of the iceberg, then those making $15 will demand a raise, and so on, and so on, and….
Which is a beautiful thing for a hungry government seeking more revenue as they just got the ignorant to demand a raise, but shocking for the typical FSA member who suddenly finds they just voted for a tax increase, on themselves.
Reality is a bitch.
good, hopefully it draws all the degenerates into that haven for free-shitters and then a natural “event” occurs that causes a spike in the birth/death model..
Cali could essentially become a giant bug zapper.
What your article leaves out is the fact the increase will be gradual and won’t arrive at the $15 an hour figure until 2023. Until then, let the workers eat cake!
Bottom line, people need to be paid a “living wage” for their labor.
WC says:
Bottom line, people need to be paid a “living wage” for their labor.
Labor is a contract between the worker and the employer. I will pay:
1) The market rate &
2) work hard and work smart and I will agree to give you a raise.
If you aren’t worth a shit you will not have a job and at $15 I may not be willing to train you.
Invest in companies that specialize in robotic replacements for low end workers, you won’t go wrong with this over the next decade.
Government and the Unions will guarantee this.
An example:
http://www.naturalnews.com/053432_fast_food_industry_robot_employees_minimum_wage.html
Westcoaster,
There are some jobs that just aren’t worth that “living wage” you want.
What needs to be done is to create more jobs that are worth the higher wages, not demand higher wages be paid for the jobs that aren’t.
Sanders wouldn’t understand this, but Trump directly addresses it whenever and wherever the subject come up and points it out even when it doesn’t.
Vote for the American worker, vote Trump.
Awesome. I agree with the “bug zapper” view. Let’s see them legislate their way to prosperity!
The problem, of course, is that once the stupid takes hold, it tends to dominate until there is complete ruin.
@Leftcoaster – The utility generated by said labor must exceed the wage being paid, or else the extra cost will be born elsewhere. In the case of Wal-mart, they tried and failed to push that off on their suppliers, and are now looking at other wage savings.
That means “lay-offs” for those who live in unicorn-land. So now that extra cost is being born by the employees who are now losing their jobs.
It also means that jobs will flee high-wage areas, much like how the US offshored all of its manufacturing, these areas will see businesses pick up and move elsewhere.
Higher minimum wage works in small areas like Vermont or Delaware, but in larger states with a diverse population it will absolutely fail.
What in the hell are you even doing here, you think the government is here to fix our problems and refuse to see the forest for the trees.
Assuming most are earning $10 / hr – a 50% wage hike would mean to FICA – an extra 13% of that $5 raise.
This is really what’s driving it.
Well, Ca is left coast. That the sort of sanders communist jew garbage.
Somebody, anybody, please define “Living Wage” then explain “labor” and then explain why any business owner owes you that wage.
I wish economics were so simple that anyone can place an arbitrary number on a wage in exchange for what exactly?
That seems to be the argument, there is no exchange, just pay the living wage goddammit.
One sided maff never works in the real world, just in the pink polka dot purple sky world of progressive liberals.
Hey voters! Ya want a living wage? Yepsirie, vote for me!
westy,
fuck their “living wage”, but ultimately whatevs, they’ll keep stealing from their neighbors and getting the govt to do the collecting as long as there are dipshits willing to live and be milked in Cali..can’t stop stupid people from being stupid, its what they’re good at…
Liberals think that the laws of basic economics are wrong and that they can make them “right” and that despite its horrid history, they can do socialism “right” too…..butterflies, zebras,…fairy tales…They’re just “enlightened”…
Card/TPC/et al – the “living wage” bullshit is just that. Westcoaster and his ignoramus ilk believe that people have a right to a living, whether or not they can actually produce enough for said living.
If a person cannot or will not produce enough, well then, those that can/will simply must transfer wealth to those that cannot/will not.
That is some fucked up logic right there. There is no connect between output and wage for these shithead lefties. Everyone gets a trophy! That is their motto.
And these lefty fuckwits believe that employers will actually pay people a “living wage” even if the employee does not produce enough to justify said wages.
Here is a clue – no, the employers will NOT do that. You cannot force employers to hire employees at a loss. They will not do it.
Fucking imbeciles.
Living wage defined for most of the world ? Eating !,
Bernie comes from a very wealthy family. Taxing others only appeals to him when its not him, or his family, getting dinged.
But what will happen with these wage hikes is that cost will be transferred to the consumer. IE higher prices in an economy that is already stagnant.
I’d like to take up a collection to pay Westcoaster fifteen bucks an hour … to stop posting his Silly Shit.
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WC points out (from article) that this is a process over 6-7 years. Inflation may ramp up to levels that would make $15 per hour basically on par with $7.50 or $8 per hour now.
We will consider that $12 happy meal for kids a treat and imagine what mom and dad will pay to feed a typical family of four. Rice and beans would be a good investment going forward.
Is this called the ‘Underground Economy Enabling Act?’ If not, they should change the name of the law.
Since things will need to be done – but can’t be done economically within the ‘legitimate’ economy – it stands to reason that these things which must be done, will still get done, but not within their licensed and approved economy, and not for $15/hr.
I think I’ll invest in a company that makes organic, free-range, cruelty-free, vegan, transgender, cardboard boxes, because that is all the home many Californians will be able to afford.
More people in the world + More robots needing no rest or food, taking jobs + Financialization of the economy, siphoning money from productive things + Wiping their ass with the rule of law + Corruption increasing, both in govt and private enterprise, self-explanatory = If you are not fucked, you will be. It’s only a matter of time, unless there is real change. The system is broken…
I thought Brazil was supposed to be one of those booming wonderful can’t-go-wrong economies? Looks like they are actually headed into a Depression.
http://govtslaves.info/brazils-economy-entering-dangerous-depression/
Looks like Bea Lever wins the award today for “reading comprehension”. The so-called “increase” to $15 incrementally takes until 2023 to get to the $15. By then with real inflation, it won’t even be a “raise”. You MFers would rather see American workers starve. Ever try to find a place to live in CA? At the current minimum wage, you don’t even QUALIFY!
Truth is, as Admin has previously pointed out, wages in this country haven’t kept up with productivity, but you dumbasses that spewed off against my post automatically disregard that; you’d rather see the profits be shunted off to the 1/10th of 1% that’s been benefiting for the past 20 years.
And you Anonymous Coward posting at 3:16, you DO know that Trump admits employing H1B Visa slave labor at his Mar-A-Whatever resort in Florida, don’t you? AND the fact he’s flip-flopped on the subject of H1B Visa labor and NOW says “it’s needed, to find qualified workers”. Yeah, vote Trump to support the American worker. Asshat, no wonder you’re “Anonymous”!
I was stunned for a moment to think California could be this stupid seeing how this is working out in other areas. But then again, it is California.
Westcoaster continues to be the TBP village idiot.
Why should anyone subsidize a worker that cannot create enough value to cover his/her wage?
What do you think will happen to youth unemployment when the wage goes up to $15/hour?
What do you think will happen to unemployment? To prices of goods and services? Wonder if the wage increase will have anything to do with the inflation amount?
What evidence do you have that more than doubling the wage in 6 years will be out-striped by inflation?
Why would I, or anyone else, want anyone to starve? Maybe we just want to see them take care of themselves.
Yes, wages have been outpaced by productivity. What has the worker contributed? If the productivity is created by automation, just what has the worker done to earn more himself?
How has the worker increased his/her skills and education to justify increased wages? We all know that education levels have plummeted.
How much debt has the worker incurred? Why are they living in California if they do not have skills enough to earn a living wage there?
Why the fuck should anyone be forced at the barrel of a fucking gun to transfer their wealth to someone who is not producing enough value themselves? What right does anyone have to force, at the barrel of a gun, someone to pay for someone else?
Westcoaster is an A-Grade dumbass.
Raise it to $100/hr. Fuck it let’s go full retard! Just keep adding zeros Zimbabwe style!
Seriously, if I can go out and buy a machine – at my cost/risk – that reduces my production costs by 10%, just why the fuck should I share that with my workers? Just how did they contribute ANYTHING to that that makes them deserve or worth more money?
When wages were tied to productivity, it was often driven by the workers becoming more skilled/educated or the systems that were being used more complex requiring greater skills, etc.
That is largely no longer the case. The productivity gains are largely automation, or computer-driven. And so the workers, not being contributors to that, no longer get increased compensation for productivity, as they have little or nothing to do with the gains being made.
Llpoh
Westcoaster is hopeless. Do something more important. For example, can you please verify this?
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$15 hr is NOT enough!! Here is a gr-r-r-r-reat way to supplement that income. Pay kneegrow utes NOT to shoot motherfuckers!! Really. It’s working great, and other cities are planning to do so.
Even Westcoaster likes the idea!
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The odds were good that Lonnie Holmes, 21, would be the next person to kill or be killed in this working-class suburb north of San Francisco.
Four of his cousins had died in shootings. He was a passenger in a car involved in a drive-by shooting, police said. And he was arrested for carrying a loaded gun.
But when Holmes was released from prison last year, officials in this city offered something unusual to try to keep him alive: money. They began paying Holmes as much as $1,000 a month not to commit another gun crime.
Cities across the country, beginning with the District of Columbia, are moving to copy Richmond’s controversial approach …..
.
rest of story here — https://www.washingtonpost.com/local/dc-politics/cities-have-begun-to-challenge-a-bedrock-of-american-justice-theyre-paying-criminals-not-to-kill/2016/03/26/f25a6b9c-e9fc-11e5-a6f3-21ccdbc5f74e_story.html
Stuck – verify what? That Westcoaster is hopeless? I so verify.
But I bet you left something off.
Stuck – I read that somewhere today, but tried not to give it any thought. Paying the fucks not to do anything has worked great so far, so let’s pay them even more! Yep, that will work.
We are doomed.
“But I bet you left something off.” ——- Llpoh
Posted a pic …. I can see it on my computer …. of a spider on the wall whose leg span must be at least 18 inches.
Digging our own graves sure feels great, don’t it?
MINIMUM wage is supposed to be for the lowest skilled and least productive, what TEENS used to be.
Start at the bottom learn/earn some skills, increase your wages.
And people/experts wonder why business creation has rolled over?
Everything that once made us great has been destroyed. And those that are harmed are now proving that Stockholm Syndrome is growing.
As for “investing” in automated companies, I guess you believe that the Wall Street Ponzi will not stop in the next decade.
Whom, exactly, will these automated corps going to sell their products to?
The true consumers are tapped, and those rich, smart, investors are going to be as screwed as the millions that will be getting the living wage through unemployment benefits that they won’t qualify for.
Oh, I know, let’s push a mandated minimum investment income! That’ll surely fix it.
Cripes, we are so fubar that we no longer understand anything.
Not basic math, and certainly not truth, liberty or freedom.
“Everything that once made us great has been destroyed. And those that are harmed are now proving that Stockholm Syndrome is growing.”
Lady, you do have a way with words.
Stuck – seriously, Australia has more shit that can kill you or scare the bejesus out of you than anyplace on earth. Yes, there are some giant ass spiders out there. Some big enough to eat birds. Some big enough to trap small snakes in their webs and kill them. Venomous bastards they are.
I have seen some giant crocs up close and personal while fishing – 15 – 18 footers.
I have seen a croc take a 300 pound wild pig off a bank where the previous day a guy was standing and fishing. We told him not to do it – he saw the pig get taken, and turned white as a sheet. Crocs learn, and probably was hoping the dumb bastard was coming back.
And snakes – holy shit, they are all deadly here (not quite, but like 2/3rds of them). And by deadly I mean the most poisonous snakes on earth are here – 22 out of the 25 most poisonous are from Australia. I hate snakes.
The list of shit here that can kill you goes on and on – snakes, crocs, insects, fish (sharks especially), seashells, octopi. Hell, the kangaroos and birds (emus, and cassowaries) can kill you here.
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Kangaroo Jack’d – Thats some Aussie roids for sure, no way that beast is all natural.
When are people going to be fed up with corruption and secede?
Minimum wage should be $35 / hour in San Fran. A living wage. Things are expensive there and shit.
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