Stacy French - February 04th, 2016
Jed Graham in Investor’s Business Daily
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.
Liberals 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 (WMT) bolted 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.
-See more at: http://www.investors.com/news/economy/hiring-slowed-where-minimum-wage-surged-in-2015/
Doug Sachtleben - January 11th, 2016
Op-Ed available online here.
Desperate and out of touch. That’s what comes to mind when lobbyists who want ethanol mandates are driving around in an RV, stalking and criticizing Sen. Ted Cruz as he campaigns in Iowa.
If there’s one message Americans are sending this campaign season it’s that they want Washington out of the business of picking winners and losers. Yet, that’s exactly what the ethanol mandate does. And the losers are every American who pays higher prices.
For decades the federal government has either subsidized the production of corn ethanol or mandated that American motorists pay for it at the gas pump. Subsidies and mandates put power in the hands of lobbyists, bureaucrats, and Members of Congress; it’s the power to show favoritism to a particular industry and give it special benefits.
And benefits come with a price. It’s been estimated that those subsidies and mandates have cost taxpayers and motorists $170 billion since 1982.
For years, a number of Iowans have made support for the ethanol mandate a rite of passage for presidential candidates. Democrats, being all too happy to embrace big government, have lined up in lockstep for subsidies and mandates.
What’s troubling is that more than a few Republicans have been eager to pander to voters with the ethanol mandate in Iowa, even as they’ve tried to make the case for less government and less burden on taxpayers.
And now one candidate, Cruz of Texas, is drawing the ire of an ethanol lobbying group for his clear opposition to forcing ethanol on the American people.
The issue here isn’t corn or farmers, or any other industry that benefits from subsidies and mandates. What’s wrong is the federal government artificially creating a market for an industry by requiring that Americans buy whatever the product is. That’s what needs to stop.
Free markets work by a simple principle: if consumers want your product they’ll buy it. And when there’s a level playing field, some products will thrive, others will not.
Subsidies and mandates distort the free market by socializing certain products, and letting certain industries reap the profits.
It’s time to end the ethanol mandate, and the fact that Ted Cruz, the leader in most Iowa polls, holds that view should send a clear warning to the subsidy-hunting lobbyists that their days are numbered.
McIntosh is president of the Club for Growth and former member of Congress from Indiana.
Doug Sachtleben - July 30th, 2015
The Sugar Scandal
Wall Street Journal (Editorial)
Americans pay nearly twice as much per pound as foreigners do for sugar, thanks to U.S. import restrictions and subsidies. We’ve tilted at this corporate welfare for decades, but new political forces are aligning to take another run.
The absurdity of the federal sugar program is legendary. Every year the government grants sugar processors nonrecourse loans linked to the amount of sugar the government says they can produce at a set price per pound: 18.75 cents for raw cane sugar and 24.09 cents for refined beet sugar. If the market price is below the loan price when it’s time to sell, the processors simply forfeit their crop to the U.S. Department of Agriculture in lieu of repaying the loan. They can still make a profit thanks to the price guaranteed by the loan.
To ensure that imported sugar doesn’t drive down U.S. prices, provoking a sugar dump on Uncle Sam, there are also import quotas. Anything above the quotas gets hit with a hefty tariff—16 cents a pound on refined sugar.
Yet all of this central planning is harder than it sounds. According to a January 2014 USDA report, for the 2013 crop year the government’s net cost “to remove” sugar from the marketplace was $258 million. But sometimes there’s not enough sugar, as in 2010, and prices skyrocket. If the secretary of agriculture decides that shortages will drive prices too high, he can increase the quota. But he has to make sure that more imports won’t mean lower prices and thus sugar forfeitures to the feds. All the risk lies with consumers or taxpayers—not producers.
The Congressional Budget Office estimates that the loan program will cost some $115 million over the next 10 years. But the greater cost is to the economy. The food and drink industry, which has sales of some $387 billion, is less competitive when it has to pay twice the world price for sugar. In a July 2 letter to U.S. Trade Representative Michael Froman, the Coalition for Sugar Reform estimated the program has cost American consumers and businesses $15 billion since 2008 and 120,000 jobs since 1997.
The relatively few sugar cane and beet producers have grown fat and happy off this racket, but they are losing support. Growers of other crops had their subsidies cut in the last farm bill, and many are asking why sugar gets a pass. Last month the Corn Refiners Association, which produces high-fructose corn syrup, began lobbying on Capitol Hill for a level playing field with sugar.
They’re allied with Republican tea party Members of Congress who dislike business subsidies, led by Joseph Pitts (R., Pa.). In 2013 he led a floor revolt with an amendment to the farm bill that would have permitted more foreign sugar to enter the U.S. and reduced the price guaranteed by the federal loan. He lost 221 to 206.
Mr. Pitts is now seeking another opportunity for a vote to limit the size of the nonrecourse loan to any single sugar processor, and we hope he gets it. This wouldn’t end all of the political help that guarantees profits for sugar producers. But it would be a start, and a sign that American democracy isn’t so calcified by special interests that it can’t reform one of Washington’s worst welfare schemes.