Saturday, May 31, 2014

There will be no job for Junior at Carl's Jr.

According to the President, and lots of other folks (some, ironically, well-known economists), forcing a higher cost for low-skilled labor onto employers will, by some magic, result in more jobs for all---or, at a minimum, help low-skilled individuals while exacting no harm onto the economy. Apparently, for these folks, the price of labor is the one thing that defies the most basic of economic laws.

I've beaten this one to death here on the blog, so, for this morning, I'll turn it over to a far greater authority than me, the President, or the most academically-acclaimed economists: Here---from a CNBC article titled "Fast Food CEO: Minimum wage hikes closing locations"---is Andy Puzder, the CEO of CKE Restaurants (the parent company of Carl's Jr. and Hardee's): 
What's causing what company CEO Andy Puzder describes as "very little growth" in the state?

In part it's because "the minimum wage is so high so it's harder to come up with profitable business models," Puzder said in an interview. The state's minimum wage is set to rise to $9 in July, making it among the nation's highest, and $10 by January 2016.

In cities in other states where the minimum wage has gone up considerably, Puzder said "franchisees are closing locations" after riding out lease expirations.

If the federal minimum hourly pay shoots up to $10.10 from the current $7.25—as many lawmakers and President Barack Obama are advocating—Puzder predicts fewer entry-level jobs will be created. If this happens, CKE would also create fewer positions, he forecast.

When the minimum wage increases, there are two things you can do," he said. "One is you can reduce the amount of labor that you use or you can increase your prices."

Well, shoot, I can't---after watching the video attached to the CNBC article---resist adding another two-cents. Host Melissa Lee challenges the gentleman with the AEI who opposes minimum wage hikes as she, it appears, reviews something in front of her that claims that the data show that raising the minimum wage doesn't hurt employment---that the state of Washington and the city of San Francisco, sporting two of the highest minimum wages in the country, are showing relatively good job growth. Jared Bernstein adds that while the CBO says 500,000 low-skilled folks may lose their jobs, it also states that some 24+ million may indeed benefit from a minimum wage hike.

So, let's say you live on a budget and you love potato chips. One day you visit your grocer to grab your weekly supply and find that the government---in an effort to help, um, potatoes I guess (politicians know what's better for potatoes than do potato producers)---has forced a 40% increase in the price of chips. Now what do you do? Do you simply bite the bullet, figure out what you'll give up (maybe drink more water and less diet soda, cancel a movie channel, or reduce your 401(k) contribution) and continue to indulge your taste buds? Or do you buy fewer chips and try to like celery? If, later that evening, you hear on the news that potato chip sales were on the rise in Washington and San Francisco---while celery sales are booming in your hometown (you then recall seeing the President on CNN a few months ago hugging the boss of the Celery Grower's Union and think hmm)---would it in anyway change your reality? Would it make you feel better?

And what would you think about some scheme where the government rounds up 500,000 people (some who work for, say, Carl's Jr.), eliminates their jobs and distributes what was once their incomes to millions of others---and, in the process, erects a huge barrier to millions of other young and unskilled individuals hoping to enter the workforce in the coming years? Put that way it sounds criminal. But how else would you---with no political ambition---put it?

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