Saturday, January 23, 2016

6 Big Cities See Hiring Fade After Minimum Wage Hikes | Stock News & Stock Market Analysis - IBD

6 Big Cities See Hiring Fade After Minimum Wage Hikes | Stock News & Stock Market Analysis - IBD

U.S. cities that implemented big minimum-wage hikes to $10 an hour or more in 2015 have seen a strikingly similar aftermath: Job gains have fallen to multiyear lows at restaurants, hotels and other leisure and hospitality venues.

The data aren’t, for the most part, stark and reliable enough to amount to smoking-gun proof.

But Chicago, Oakland, San Francisco, Seattle, Los Angeles and Washington, D.C. — all on the leading edge of the push for big minimum wage hikes — all show worrisome job trends.

D.C. Jobs Decline Linked To Wages

The strongest evidence comes from the nation’s capital, where leisure and hospitality employment, which rose at least 3% annually over the prior four years, fell an average of 1% from a year ago in the three months through November. So instead of adding 2,000 or more jobs per year, restaurants, hotels and the rest of the leisure and hospitality sector have lost about 700 jobs.

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.

The D.C. data are key because they reveal outright job losses confined to the city limits. Researchers studying the latest round of citywide minimum-wage hikes generally have had to rely on data for a big chunk of the broader metropolitan area, making the analysis more speculative. More reliable data through 2015 will be available in June via the Quarterly Census of Employment and Wages.

Still, the available data provide plenty of reason to be wary of the big minimum wage hikes in the pipeline, as well as the push for a national minimum wage of $12 an hour by Democratic front-runner Hillary Clinton and the fight for a $15 wage by the further left.

Chicago Hospitality Hiring Stalls

Job gains in the Chicago-area leisure and hospitality sector slumped to a five-year low after the Windy City’s $1.75-an-hour minimum-wage hike to $10 an hour took effect in July, Labor Department data show. Annual employment gains at restaurants, hotels and other leisure-sector venues averaged just 1.1% from September through November, about half the pace seen in 2014 and the weakest since the summer of 2010.

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.

Bay Area Job Blues

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

After rising close to 5% a year, leisure and hospitality industry hiring slowed to just 2.2% from a year ago in November in the Bay Area. Meanwhile, such employment rose 4.9% 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, with San Francisco’s jumping 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. Hotel Jobs Hit By $15.37 Wage

Los Angeles-area hotels saw job growth fizzle after the L.A. City Council mandated that hotels with at least 300 rooms start paying workers a minimum of $15.37 an hour, the highest minimum in the nation, starting last July. The same wage will apply to workers at 150-room locations this coming July.

After growing by 3% or more the prior three years, Los Angeles County accommodation industry employment fell by an average of 3%, or 1,300 jobs, vs. a year earlier in the first 10 months of 2015. Meanwhile, hotel and motel jobs in the rest of California saw steady growth. Preliminary November data show employment bounced back just above year-earlier levels.

Seattle Restaurants Curb Hiring

Seattle-area restaurant job gains have fallen below 2% from a year ago for the first time since 2010 following a minimum wage hike in April from $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 just rose to just $10.50 at the start of 2016, or $12 for employees who don’t get employer health insurance.

Job growth at Seattle-area restaurants is now less than half the pace in the prior three years. Meanwhile, as highlighted by American Enterprise Institute economist Mark Perry, restaurant job growth in the rest of Washington state hasn’t seen a similar slowdown.

However, these seasonally unadjusted data cover the entire Seattle-Bellevue-Everett metro, of which Seattle is one-fourth of the population.

ObamaCare Impact

Another challenge in looking for the minimum-wage hikes’ employment impact is that employers might alter total hours worked, rather than payrolls. That response might be likelier in the ObamaCare era, when employers with at least 50 full-time-equivalent workers can face large fines if they fail to offer health benefits to employees who clock at least 30 hours a week.

Employers seem to have figured out ways of avoiding the ObamaCare mandate, but Seattle’s linking of the minimum wage level to health benefits appears designed to avoid such gaming of the system.

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