Guest Post by Joe Guzzardi
Raising and sustaining higher wages for American workers is impossible as long as the labor pool keeps expanding. Serious discussion about lasting improvements to the lives of the 40 million Americans stuck in low-paying jobs has to include an equally thoughtful discussion about limiting immigration.
While many in Congress and private sector economists embrace raising the $7.25 federal minimum wage where it’s been frozen in place for a decade, few speak out about reducing immigration as a permanent income-boosting cure. The academic exercise is basic – the more available workers, the better for employers. Conversely, tighten the labor pool, then advantage shifts to workers and job seekers.
Recently, the House Education and Labor Committee passed the Raise the Wage Act which would, if it became law, gradually raise the federal minimum wage over five years to $15 an hour. So far, six states – California, Illinois, Maryland, Massachusetts, New Jersey and New York – and the District of Columbia have adopted $15 as their minimum wage. Although not enough data is available to make a final conclusion about the $15 wage’s broad effects, Georgetown University public policy professor and former Clinton administration Labor Department economist Harry Holzer predicts significant job losses that would hurt low-skilled, less-educated minority employees who would resort to accepting cash off the books, and thereby forfeit any benefits they may have had.
In New York, and in other major states like California, Professor Holzer is spot on. Over the past four years, for New York City restaurants that employ 10 or more workers, the minimum wage increased from $10.50 an hour to $15, a whopping 43 percent increase. By 2020, all restaurants large and small will shell out $15 an hour. The consequence: in last year’s final quarter, 4,000 full-service restaurant workers lost their jobs. And by the end of 2018, New York City had fewer restaurant employees than in November 2016. Deeper restaurant staffing cuts are anticipated, and fast-food workers are lobbying city officials to protect them from being fired without just cause.
And former California Gov. Jerry Brown’s $15 minimum wage law has forced employers to reduce staff or leave the state in search of a friendlier business climate. Michael Saltsman, managing director for the Employment Policies Institute, projects that by 2022 the $15 wage will eliminate 400,000 jobs.
Turning to immigration statistics and analyzing the four-year data from 2015 through 2018, the U.S. admitted more than 4 million lawful permanent residents, roughly 1 million or more annually, and granted them lifetime work authorization. During the same period, about 3 million guest workers arrived, about 750,000 per year. With work permits in hand, immigrants can compete head-to-head with citizens for the shrinking number of restaurant jobs, adding to the existing workers’ burdens. Consider also the hundreds of thousands of illegal immigrants the food services industry employs. Their presence in the labor pool makes $15 an hour personnel layoffs easier since cheap labor can readily replace them.
As long as immigration remains at record levels, a truly tight labor market will always be elusive even though, by definition, it translates to higher wages. For unemployed Americans, their job search becomes easier, and those who have quit the workforce out of frustration become eager to re-enter. But Congress refuses to get the message about the link between over-immigration and depressed U.S. wages, a problem that a mandatory $15 minimum wage can’t solve.
Last week, the Trump administration announced that 30,000 more H-2B visas for low-skill seasonal workers – in landscaping, leisure, and seafood – have been approved, thus increasing the annual authorized H-2B total from 66,000 to 96,000. That’s nearly 100,000 jobs that Americans would do yet won’t be able to compete for. The H-2B visa hike represents a big win for employers, but also shows the continued congressional abandonment of U.S. workers.
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Like $15 an hour is a panacea for anything but more poverty. And, as if falsely inflated wages won’t result in inflated costs to consumers, which makes those 15 bucks per hour worth even less in the long run (pardon my flair for the obvious). Who are the effin’ retards running this shitshow, and who are the effin’ retards buying what they’re selling? How can that many people possibly be that effing stupid? I’m sure its all that reality tv. And video gam…wait…social media? Poor nutritional quality in everyday diets? Really, how can so many people be so effing stupid?
Public education administered by semi-literate minorities in major urban areas for starters. The numbers of semi-literate to flat out illiterate teachers in big city public schools is a major argument against public education. But, they are in the union, so….
Maybe they can go to night school taught by nuns somewhere and learn to read with that $13,500 raise Kamalato Ho-ass is promising for every teacher?
I am wondering if the $15 per hour will also mean many of these workers lose benefits like SNAP and housing assistance. It doesn’t take much to tip the scales. Although I know in MA they are getting rid of the “child cap” on benefits so now it doesn’t matter how many kids you have while on benefits, you’ll keep getting an additional $100 per kid per month. So possibly the end scenario is just a larger poor family who now keeps qualifying for benefits despite the wage increase. This does have an “event horizon”. No matter how much the government mandates wage hikes, the effect is the same. Less jobs, or the same jobs with less hours. If they succeed in getting the government to institute some kind of law against firing them, it’s going to get really bad.
What most of the working poor cannot fathom is it’s not just about the wages. It’s so much more than that. It’s cost of living increasing quicker than wages can actually keep up with, despite very low interest rates. Food costs more, housing costs more, electric, gas, insurance, etc.
Many working poor also now believe quality of life is about having a fancy phone, a huge flat screen TV, game consoles, and a leased car. None of these things actually add to quality of life, and in many cases, diminish it. Long-term thinking like a genuine education in a field that is sustainable and can pay a living wage, healthy eating, exercise, family, and retirement planning do not even come into the picture.
Encouraging more kids to go to a tech HS, which is free in their district, and learn a trade, that they can do in 4 years, and make real money, should be encouraged. I never met a poor plumber or electrician, at least none that were good at what they do. As a matter of fact, they are overwhelmed with work. They are smart, talented individuals that work hard and make a decent living. There is no shame in being a plumber or electrician, carpenter, mason, welder. These are real skills that someone has to do. These jobs also, for the time being, seem somewhat insulated from the rise of robotic workers, which is NOT the case for low-skilled jobs like order-takers at fast food restaurants.
The only ones trying to shame plumbers and electricians are the fuqueres selling $200,000 degrees in Black Women’s Studies and other such foolishness.
I see McDonalds has purchased an Artificial Intelligence company for $300 million. Their goal is to dominate the fast food order taking and robotization of all aspects of their business. As an investor I have studied the numbers and robots are profitable even if they had to be replaced every six months. Payback is something like four months. Compelling doesn’t even begin to describe the argument favoring robots and AI in fast food.
Actually robotics can last decades with proper maintenance. McDonald’s need only hire competent maintenance professionals to do an inspection quarterly and repair and replace any worn or soon to be defective parts.
I worked for a company that kept ancient point of sale aka cash registers running for more than a century (National Cash Register) due to rigorous maintenance agreements. Look at how taxi companies have managed to keep Crown Victorias running long after Ford quit making them. Proper maintenance schedules with prompt replacement of worn parts can keep any machine running much longer than expected.
Bottom line is automation, in the long run, is less expensive than a warm body. No income tax, no FICA, no Medicare Tax, no insurance, no vacation, no sick pay, no limit on hours worked and lastly no hourly wage.
15 bucks an hour is the threshold necessary to automate menial task. Why have a order taker at the counter when the order can be done via a touch screen by the customer? Need to make change? Automate the cash acceptance with bill and coin validators. Walmart, Home Depot and a host of other companies replace cashiers with kiosk that do exactly that. Kroger and Sams Club now let you scan your order and pay for it on the way out. Sams Club skips the checkout lane altogether by letting you pay for your order through their phone application. Red Robin allows you to pay for your order on a table kiosk using a debit/credit card.
As you can see, the 15 buck an hour wage will force employers to replace menial jobs with robots. Only high value jobs such as engineers, chefs or skilled technicians will still garner more than menial wages.
I pity those that refuse to learn a skill. Their only recourse is to become a thug or die.