General Economics

Investor’s Business Daily: Job Creation Slows Where Minimum Wages Rise

Stacy French - February 04th, 2016

Jed Graham in Investor’s Business Daily

Minimum Wages Surged In 6 Cities Last Year; Then This Happened

Hiring at restaurants, hotels and other leisure and hospitality sector venues slowed markedly last year in metro areas that saw big minimum-wage hikes, new Labor Department data show.

Wherever cities implemented big minimum-wage hikes to $10 an hour or more last year, the latest data through December show that job creation downshifted to the slowest pace in at least five years.

ECONwage_020416Liberals fighting for a dramatic increase in the minimum wage have insisted that there would be a negligible impact on job creation. Though the data are preliminary and overly broad, Washington D.C., Oakland, Los Angeles, San Francisco, Seattle and Chicago seem to be finding out that the reality isn’t so benign.

A slowdown in job growth can fly below the radar, at least for those who aren’t seeking low-wage work. But the risk of raising the minimum wage too high became fairly obvious last month, whenWal-Mart (WMTbolted from Oakland and Los Angeles and scrapped plans for two stores in low-income areas of D.C.

The big shortcoming in the available data for 5 of the 6 cities is that they cover broad metro areas, far beyond the city limits where wage hikes took effect. Still, the uniform result of much slower job growth in the low-wage leisure and hospitality sector, even as the pace of job gains held steady in surrounding areas, sends a pretty powerful signal.

D.C.’s Great Stagnation

The data from D.C. are the most reliable because they are confined to the city limits. The latest data show that job gains ground to a halt in the nation’s capital in 2015, with average monthly leisure and hospitality sector employment in the fourth quarter virtually unchanged from a year earlier. That was a sharp drop from the 3% annual job gains in 2014, meaning restaurants, hotels and other employers went from adding 2,000 jobs to adding zero. That’s no small thing in a city with a 6.6% jobless rate.

The timing coincides with the $1 minimum-wage hike to $10.50 an hour last July. That jump followed a boost from $8.25 to $9.50 an hour that took effect in mid-2014. Another jump to $11.50 is set for this July.

Chicago Hiring Halved

The Chicago area saw its weakest year of leisure-and-hospitality sector job growth since 2009. The Windy City’s $1.75-an-hour minimum-wage hike to $10 an hour took effect in July. Annual employment gains averaged just 1.1% from October through December, less than half the pace seen in 2014.

Chicago’s minimum wage will get another bump to $10.50 an hour on July 1, another stop on the way to $13 by 2019.

The Chicago data cover the Chicago-Naperville-Arlington Heights area, of which Chicago represents only about 40% of the population.

The Bay Area’s Twin Wage Peaks

Leisure and hospitality sector job growth in the Bay Area slumped to a five-year low after San Francisco and Oakland adopted what was, at the time, the highest citywide minimum wage in the country of $12.25 an hour last spring.

Employment gains slowed to just 2.5% from a year ago in fourth quarter, down from 4.7% a year earlier. Meanwhile, such employment rose 4.8% last year in the rest of California, where the minimum wage was generally $3.25 lower — before the $1 statewide hike to $10 on Jan. 1.

Oakland’s minimum wage got an inflation-related bump to $12.55 with the start of 2016. San Francisco’s will jump to $13 in July.

The Bay Area data cover the entire San Francisco-Oakland-Hayward metro area, of which the two cities’ population is one-third.

L.A.’s Red Carpet For Hotel Workers

Los Angeles hotel workers get the biggest minimum wage in the country, but their ranks got slightly smaller in 2015. Accommodation industry employment averaged 0.8% lower in the fourth quarter of 2015 compared to a year earlier, the first annual decline since 2009.

In late 2014, the L.A. City Council mandated that hotels with at least 300 rooms start paying workers a minimum of $15.37 an hour, starting last July. The same wage will apply to workers at 150-room locations this coming July.

That move was separate from the council’s adoption of a $15-an-hour citywide minimum wage by 2020. The wage will rise to $10.50 in July, then $12 in July 2017. Los Angeles County followed the city’s lead and will gradually move its wage to $15 over the same period in unincorporated areas of the county.

The hotel employment data cover all of Los Angeles County, of which the city accounts for about 40% of the population.

Seattle Restaurants Stew

Job gains at Seattle-area restaurants rose just 1.8% from a year ago, down from 4.6% growth a year earlier, in their worst year for employment since 2009. Meanwhile, in the rest of the Washington state, restaurant employment gains accelerated to 6.3%.

Yet Seattle’s minimum-wage hikes were only just getting started. The minimum wage rose last April from the statewide $9.47 to $11 an hour for companies with more than 500 employees. For smaller employers, the minimum got a smaller bump to $10. That rose again to $10.50 at the start of 2016, or $12 for employees who don’t get employer health insurance.

The Seattle-area data cover the entire Seattle-Bellevue-Everett metro, of which Seattle is one-fourth of the population.

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Op-Ed: McIntosh on GOP Debate

Doug Sachtleben - October 28th, 2015


Preview of CNBC’s GOP Debate: It’s the Economy, Stupid!

October 28, 2015

By David McIntosh

A record 20 million-plus watched each of the first two Republican debates. From Megyn Kelly’s now infamous question to Donald Trump about women, to immigration, national security and yes, even vaccines, there were plenty of issues discussed. Unfortunately, however, after almost six hours of debate, there has been very little discussion of the most pressing issue of this election: how to strengthen our nation’s economy and get it moving again.

The economy is barely growing and too many men and women are still without work. All across this country, people are worried about economic uncertainty and their financial futures. According to a Gallup poll earlier this month, Americans’ confidence in the economy remains down. Now, more than ever, we need strong pro-growth leadership on the economy.

The good news for economic conservatives is that the GOP presidential field is one of the strongest pro-growth fields in history, which is why at tonight’s CNBC debate in Colorado, the candidates must step forward and tell the country how they plan to right our nation’s financial ship and restore confidence in our foundering economy.

One way we can get this conversation started is for the moderators to ask each of the candidates the following question: What are two specific pro-growth policies that you will seek to enact within your first hundred days in office?

For some of the candidates, like Cruz, Paul and Rubio, this is a real opportunity to shine. These candidates are truly at the forefront of the Republican presidential field when it comes to issues of economic freedom. They have led on pro-growth issues at every opportunity in the Senate and have put forth bold tax reform plans.

Some of the other candidates’ records and positions, however, raise more questions and concerns about their commitment to pro-growth principles. To that end, I hope that during the course of the debate, we get some answers to these questions:

* Mr. Trump, you have a history of calling for the largest tax increase in U.S. history, of promoting higher corporate taxes to pay for government-run health care, of loudly advocating for sky-high tariffs that will act as a 25% – 35% sales tax on every family budget, and of using Obama-like rhetoric to claim that higher taxes should be imposed on those you deem worthy of such punishment. Please, explain how these long held positions would spur economic growth?

* Dr. Carson, many of your economic position statements are full of significant inconsistencies. You have criticized Obamacare, but promoted a de facto nationalization of private health insurers. You have also called for needed entitlement reform, and yet recommend a new government-run catastrophic care program. How do you reconcile these contradictions?

* Mr. Huckabee, during your time as governor of Arkansas, the overall tax burden increased by 47% and the net tax hike was $505 million. You also raised the minimum wage in Arkansas and flip-flopped on regulatory cap and trade. Why do you still defend raising taxes on hard-working Arkansans, and how large of a role would tax increases play in your economic policy as president?

*Governor Kasich, you vetoed the Ohio legislature’s effort to block Medicaid expansion under Obamacare, and now the projected cost of this expansion is more than double what your administration projected. Since Medicaid expansion was a key component of Obamacare, isn’t it duplicitous for you to call for Obamacare’s repeal?

* Governor Christie, after five years in office, New Jersey is still rated the worst business tax climate in the country. Why have you not been able to significantly improve the business tax climate in the Garden State?

This election is going to give economic conservatives an historic opportunity to elect a president who is committed to shrinking the size and scope of government, cutting taxes and spending, and reducing the regulatory burden on small businesses and families.

The candidates who stand for these principles must remind voters of their strong record and plans. For those who don’t, it is an opportunity to either change course or further regress. Either way, GOP primary voters deserve answers.

David McIntosh is President of the Club for Growth and a former Congressman from Indiana.  

A Washington Pastime: China-Bashing!

Doug Sachtleben - August 13th, 2015

by Andy Roth, VP of Government Affairs


After news broke this week that China was devaluing its currency, Sherrod Brown (D-OH), leader of the Senate China-Bashing Caucus*, wasted no time in…well, bashing China:


“China will stop at nothing to give its exports an unfair advantage in the global marketplace and this devaluation by the Chinese government is concerning.”


Senator Chuck Grassley (R-IA) also chimed in:


“China has manipulated its currency for a long time. This is just the latest example, and it’s past the time to do something about it.”


Manipulation.  Unfairness.  They’re highly-charged political buzzwords; but let’s step back a bit and examine what’s truly going on.


China’s economy has stalled and its government has decided that expanding its monetary supply will help reinvigorate it.  Some people call this “manipulation.”  Other people might call it “quantitative easing.”  That’s right.  The United States manipulates its currency too.  All sovereign governments do.  I would argue that expanding the money supply is not exactly a wise move, but Schumer and Grassley are engaging in some massive pot-calling-the-kettle-black name-calling.


So let’s drop that “manipulation” buzzword.


By devaluing their currency, China’s exports are now at a competitive advantage to American products.  That’s true, but is it unfair?  Chinese products will compete more easily with some products made by some American companies, potentially harming those companies.  But what about the American companies that use Chinese raw materials or equipment in making their final products?  They would benefit from cheaper imports.  What about American consumers who would benefit from paying less for the Chinese product?  They could use the savings for more spending that boosts the U.S. economy.


So, if China’s currency devaluation is unfair, why are politicians like Grassley and Schumer siding with some American companies at the expense of other American companies and American consumers?  Probably because they’re politicians, who like to pick winners and losers for political purposes.


So let’s drop that “unfair” buzzword, too.


One more thing to think about:  what is a Chinese product and what is an American product?  Global supply chains make it impossible to define that nowadays.  Everyone would agree that the iPhone is an American product, but it’s assembled in China and shipped to the U.S., thus iPhones could become cheaper because of China’s latest monetary decision.  The Toyota Camry is considered a Japanese car, but a lot of Camrys are produced in the United States, and built with a ton of American parts.  In fact, a Camry has so many American parts, it’s consider the Most American car in the market.  Brain. Explosion!


So when Schumer, or Grassley, or even The Donald decide to bash China and recommend higher taxes (that’s their solution), you’ll know they are just being politicians who aren’t mindful of the facts.


* There is no China-Bashing Caucus, but if there was, Brown would be its leader!

Wall Street Journal: Poll: Voters want economic growth

Barney Keller - September 11th, 2014

The Wall Street Journal’s James Freeman reports:

Now here’s something you don’t see every day. A prominent Democratic polling firm has found that voters don’t view reducing income inequality as a top priority. Instead, they want economic growth.

Our columnist William Galston has the story: “Surveys of 3,000 Americans conducted between January and March of 2014 by the Global Strategy Group found that fully 78% thought that it was important for Congress to promote an agenda of economic growth that would benefit all Americans. Support for policies that help the middle class and bolster equal opportunity for everyone were also highly rated. Strategies to spread wealth more evenly and reduce income inequality received the least support; 53% believe that fostering economic growth is ‘extremely important,’ compared with only 30% who take that view about narrowing income inequality.”

Again, the surveys were conducted not by Steve Forbes but by Global Strategy Group, whose distinguished clients have included Eliot Spitzer and whose current executive team includes former Obama aide Bill Burton. (MORE AT THE LINK – SUBSCRIPTION REQUIRED)

The Kronies: Laughing All The Way to the Export-Import Bank

Barney Keller - June 16th, 2014