Minimum wage hikes tend to hurt lower income-wage earners more than help.
California recently mandated a $15 minimum wage. Now, facilities maintenance and food service workers at UC Berkeley may find their jobs imperiled.
Justin Holcomb writes for Townhall:
The $15 minimum wage hike in California has sent financially troubled UC Berkeley into decision making mode, and “the people who clean buildings, who work in food services or health clinics,” says Todd Stenhouse, will be the ones without a job.
Stenhouse, a spokesman for the American Federation of StateChancellor, also said “There’s a very clear need for those front-line services. But the question is whether there really is a need to hemorrhage resources on executives.”
Nicholas Dirks sent a memo to employees Monday informing them of the job reductions and said they will amount to “a modest reduction of 6 percent of our staff workforce.”
Berkeley employs about 8,500 staffers, from custodians to administrators. Departments on campus were reportedly also told to reduce their budgets by 10 percent in whatever way they wish.
New wage requirements will cost UC Berkeley 500 jobs, but at least everyone is earning a living wage… except for you know, the one’s who no longer have jobs as a result.
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The only people surprised are those who have lived under a rock since the invention of money, or possibly, also registered liberal voters.
The “idiots” also are baffled by the automation of food service jobs. ( i.e. no wait staff, a touch pad takes orders instead. )
The first person who comes up with a affordable and dependable robotic replacement for a janitor will make a fortune. Business will not hesitate to convert and cut operating costs ( while having everything spotlessly clean ).
The key is “income tax”. Think about all the associated payroll taxes the business must pay for the privilege of employing a person. Robot = no tax.
Also think SS contributions. Remember, the employer pays half the required SS contribution. And shouldn’t their unemployment insurance go down if they employ fewer people? Also, health insurance. Boy oh boy, the dems are going out of their way to eliminate entry level and low skill jobs aren’t they?
Robot = no tax.
For now.
If it becomes a ‘tax loss problem’, they’ll impose an ‘automation tax’ on businesses to force them to hire minimum wage humans.
It depends if the “automation tax” is higher in cost than the total of ALL the “payroll taxes” paid by a business on a single employee.
Also, at some point, closing or moving the business might be the employers only choice, from financial pressure.
Think about the “Law of Diminishing Returns” and taxes.
“The effects of the minimum wage have been concentrated on the groups that the do-gooders would most like to help. The people who have been hurt most by the minimum wage laws are the blacks. I have often said that the most anti-black law on the books of this land is the minimum wage law.” Milton Friedman
http://www.aei.org/publication/thomas-sowell-on-the-tragedy-of-the-minimum-wage/
It’s not the raise in minimum wage, so much as the SIZE of the raise — from $10.00 to $15.00. At those rates, it pays to get rid of people.
Here’s the history of California’s minimum wage. No wonder kids can’t get jobs.
https://www.dir.ca.gov/iwc/MinimumWageHistory.htm
Now take that minimum wage data and calculate a “take” for the State on income taxes. I think that may contribute to the planned rate of inflation, as just like the minimum wage, politicians don’t bear the brunt of their dogoodery.
Who needs a job when you’ve got an Obamaphone, foodstamps and free healthcare?
If UC-Berkeley is cutting jobs due to the higher minimum wage, what’s going to happen to the five million Californians living in rural areas?
Just collateral damage.
I am confident that, just like here in NY, the city folk who come up with their bright ideas do not give the rural folks in the state a second thought.
“But the question is whether there really is a need to hemorrhage resources on executives.”
Minimum-wage executives? Now, there’s a breakthrough idea.
“…financially troubled UC Berkeley…”
Do-gooder spokesdweeb: “But, but, aren’t all these employers supposed to be in good financial shape? They HAVE to absorb the minimum wage increase. Now you’re telling me LAYOFFS are happening?”
“NO! NO! WHY WEREN’T WE TOLD THIS WOULD HAPPEN! SAFE SPACE! SAFE SPACE! WE NEED SAFE SPACE! WAH WAH WAH! I NEED MY BLANKIE!”
the real minimum wage is $0/hr
welcome to reality, pal!
Here’s what I don’t understand about the $15 an hour minimum wage. If everyone gets $15 and hour what happens to all the good loyal workers who are now earning $15 an hour? Do they all get immediate raises? If everyone gets the same raise then the people earning $7.50 an hour will all be paying more for the same goods so there will be no improvement in their lives. Doesn’t anyone understand this? Also, many of the $7.50 an hour workers now get supplement aid in the form of unearned tax credit and welfare. At $15/hr they will lose this. Who in hell thought this was a good idea? If it is a good idea why not $20/hr?
Some people who have worked entry level/dead end low pay jobs understand this hurts them ( by driving prices on food, rent, and electricity up ).
The bigger the raise in the Minimum Wage, the faster the economic slow down. The more people who can’t find a job that will “pay the bills”. The more people who are living “hand to mouth” being forced under financially.
The sooner people understand this vicious cycle, the better.
Everyone above minimum wage will demand or get (through wage linked contracts) higher wages… if they still have jobs. Chain reaction, which is why labor unions love these “base” wages. The push is for a “living wage” for the few workers that have jobs with the rest on public assistance.
A lot of union contracts are linked to the minimum wage. If the minimum wage goes up, so does the per hour for the unionists. Follow the money…
The unions have been on top of this and are all scrambling for from the $15 buck minimum wage. Union bosses do not want to be pulling their BMWs, Range Rovers and Cadis into union halls that are staffed by ppl paid $15 an hour out of the union budget.
What happens is 2 low skill workers are fired and replaced with 1 higher skill worker with increased workloads for all. Minimum wage laws do not actually help poor folks in the end. They simply hasten the closing of businesses who could not handle the required efficiency improvements. It also spurs investment into innovation, as reducing headcount becomes increasingly attractivento many employers.
In this day and age, free market folks should not fight minimum wage laws. Politically it takes a toll, and in the end, the people who want increases in the minimum wage laws (union folks, lefty activists, idiots in general) are not going to ever vote Republican anyway.
You question is irrelevant. The politician does not care one iota about the trickle down effects; they only care about how many votes they can “buy”with their give aways.
Back in post-historic times the Massachusetts minimum wage was $1.60 per hour. As a high school student working part-time at a lowly job in fast food, over the course of a year and a half I had received three $0.05 raises, along with the responsibility of supervising the work of others. When the Commonwealth of Massachusetts raised the minimum wage to $1.75, I asked the manager for a raise of $0.15 per hour. His response is still seared in my memory – “I don’t have to pay you jack sh*t if I don’t want to”. Other than his being compelled by law to pay me at least the minimum wage, he was correct. However, it was also true that I was not compelled to work for his business when there was alternative employment available. Since I received deliveries from vendors as part of my job, I asked each vendor if anyone that they delivered product to was hiring. Within a few weeks, I had interviewed and had in hand another job offer at $2.00 per hour. I gave two weeks notice. When asked for my reason for leaving on my last day, I referenced my previous conversation with the manager regarding terms of employment, stating that I didn’t have to work for “jack sh*t”, either. ECON 101 in action1
If the 8,500 staffers can be reduced by 500 without negative impact on functionality, then it would appear that they were overstaffed before the staff cuts. I see no argument or data on the number of staffers required to provide any specified level of service.
Where’s my raise? If they devalue skilled labor in this fashion, then certainly my skilled labor should see an equal raise to my salary, right? Right?
Your raise will come soon, but be accompanied by an increased workload and/ or expanded job duties. All those 2-5 minute breathers everyone gets now and again, they become opportunities to fill your added responsibilities.
Wealth, babies, etc. grow on trees in liberal land.
Public universities are very poor examples. Even private colleges today have hugely bloated administrations, in many cases 10 or more times the inflation-adjusted administrative dollar spent per student opposed to 40 years ago – and they were no models of efficiency back then, either.
Get rid of all the six-figure administrators whose duties cannot be explained in three sentences of simple English, and you can pay the low-skilled workers easily. Not that state-mandated wages or prices are ever a good idea, just that universities are massive black holes for sucking taxpayer money already, and what they pay the food service workers & lawn-mowers has nothing to do with that.