Recently, Washington D.C.’s council almost (but not quite) passed an ordinance that would require Walmart and other large big-box stores to pay a “living wage” of $12.50 an hour. Being that 23,000 applications were submitted for the 600 jobs that will be available as Walmart opens its first store in the area, it is evident that workers have not balked at the current D.C. minimum wage of $8.50 an hour.
Wednesday, March 16, 2016
Why a “Living Wage” in D.C. Does Not Make Sense | Retirement Reform Policy | NCPA.org
Why a “Living Wage” in D.C. Does Not Make Sense | Retirement Reform Policy | NCPA.org
Should Walmart Imitate Costco? | Retirement Reform Policy | NCPA.org
The following is the Executive Summary from a soon-to-be-published NCPA policy report. (Now published here.)
There has been much debate over the past few years about raising the national minimum wage to $10 or even $15 an hour. In areas where the minimum wage is at or slightly above the federal level of $7.25, unions have complained that big box retailers and fast food restaurants do not pay “living” wages. Living wage advocates often accuse Walmart of being the worst offender, and point to Costco as a model to follow because it allegedly pays higher wages. But is it realistic to expect all retailers to pay the same wage?
Retail Wages Vary by Store Type and Product Specialty. Average wages for various retail stores vary widely depending on the type of retail. According to the Bureau of Labor Statistics, if all the retail subsectors are combined, the average hourly earnings of retail nonsupervisory employees was $14.90 as of October 2015. Divided by retail store type, some have lower average hourly wages than others — ranging from $11.19 for gas station clerks to $22.12 for electronics and appliance store clerks.
Profit Margins in Retail Compared to Other Industries. If a large firm earned “record profits” last year, surely they have the money to boost the pay and benefits of their workers. However, profits as measured by dollars do reveal much about a firm’s expenditures. The question should be: What is the profit margin — the percentage of income earned on a dollar of expenditure? The retail industry has some of the lowest profit margins of all industries. After-tax operating margins (after-tax operating income divided by total revenues) in retail segments range from 2.23 percent to 4.38 percent.
Walmart Compared to Costco. In addition to differing types of retail stores with different profit margins and labor productivity, retailers have various business models — which include the products they sell, their customer base and their sources of potential revenue. Consider the two primary stores labor activists like to compare in terms of wages, Walmart versus Costco. The inherent difference between Costco and Walmart is their business model.
Walmart operates 5,300 stores (including the smaller Neighborhood Markets and Sam’s Clubs) and tries to cater to the widest range of customers and provide quality and cost options that appeal to a range of lower to higher income shoppers.
Costco operates about 447 stores under a subscription business model, charging customers for membership. It offers relatively fewer choices to customers compared to Walmart. Costco is geared toward a smaller, more selective clientele than Walmart. Costco stores tend to be located in more affluent neighborhoods and a higher percentage of Costco’s customers are business buyers.
A Statistical Analysis of Walmart and Costco Locations. Given that Costco targets a higher income demographic than Walmart, one could surmise that both store chains would locate in areas that suit their desired income demographic. To test this hypothesis, we compiled a dataset of counties in Texas and Florida (states selected for their population size, relatively weak zoning laws, and presence of both Walmart and Costco) using five explanatory variables of interest: population, median household income in each county, number of Costco stores in each county and number of Walmart stores and Sam’s Clubs in each county. The results indicate that Costco locations are largely dependent on income, while Walmart locations are not. Given two equally sized (500,000 residents) counties, if one is in the top 40 percent of median income it has a 76 percent probability of having a Costco; if it is in the bottom 60 percent, it has only a 20 percent probability.
Do Retailers Pass on Labor Costs to Their Customers? Several studies have found that “price sensitive” shoppers (those who are more likely to change their buying habits based on price changes) were more likely to have larger families, lower incomes and patronize more stores. Those who were less price sensitive were more likely to be older, of higher income and loyal to a particular store. If high-income consumers are less sensitive to price changes, as the research suggests, stores that cater to higher income shoppers could pass on the costs of higher wages to their consumers (to some degree) through increases in product prices. But a store that caters to price sensitive shoppers would more likely be unable to raise prices.
Researchers from Georgia State University measured the effect of the 2007 to 2009 incremental minimum wage increases (from $5.15 to $7.25 an hour) on 81 fast food restaurants in Georgia, including medium and large-sized cities and rural areas. They found that among adjustments in response to the wage hikes, there was a nearly 11 percent increase in the price of the combo meal.
Conclusion. Living wage advocates claim that putting more money in the pockets of low-wage workers boosts the economy by enabling them to buy more goods and services. But this argument ignores the potential increased price of products as a result of labor costs being passed on to consumers. If lower income earners are already as price-sensitive as the research suggests, making basic goods more expensive will not financially benefit them, particularly if they have large families with several dependents who do not work. There are better ways to help lower-income households than to mandate high minimum wages.
Related posts:
Why Did Walmart Raise its Minimum Wage?
More Flimsy Reasons For a $15 Minimum Wage
The Fast Food Industry Takes an Unfair Beating…Yet Again
Will Minimum Wage Hikes Help Red States or Hurt Them?
The Minimum Wage Fairy Can’t Fix Everything
The $15 Minimum Wage and the End of Teen Work | Foundation for Economic Education
A new report from JP Morgan Chase & Co. finds that the summer employment rate for teenagers is nearing a record low at 34 percent. The report surveyed 15 US cities and found that despite an increase in summer positions available over a two year period, only 38 percent of teens and young adults found summer jobs.
This would be worrying by itself given the importance of work experience in entry-level career development, but it is also part of a long-term trend. Since 1995 the rate of seasonal teenage employment has declined by over a third from around 55 percent to 34 percent in 2015. The report does not attempt to examine why summer youth employment has fallen over the past two decades. If it had, it would probably find one answer in the minimum wage.
Most of the 15 cities studied in this report have minimum wage rates above the federal level, with cities such as Seattle having a rate more than double that. Recent data from the Bureau of Labor Statistics seen in the chart show exactly how a drastic rise in the minimum wage rate affects the rate of employment.
Seattle has experienced the largest 3 month job loss in its history last year, following the introduction of a $15 minimum wage. We can only imagine the impact such a change has had on the prospects of employment for the young and unskilled.
Raising the minimum wage reduces the number of jobs in the long-run. It is difficult to measure this long-run effect in terms of the numbers of never materializing jobs. However, the key mechanism behind the model—that more labor-intensive establishments are replaced by more capital-intensive ones—is supported by evidence. That is why recent research suggesting that minimum wages barely reduce the number of jobs in the short-run, should be taken with caution. Several years down the line, a higher real minimum wage can lead to much larger employment losses.
Nevertheless, politicians continue to push the idea that minimum wage laws are somehow helping the young “earn a decent wage.” It is important to remember the underlying motives behind pushes for higher minimum wage rates. Milton Friedman characterized it as an “unholy coalition of do-gooders on the one hand and special interests on the other; special interests being the trade unions.”
Several empirical studies have been conducted over the course of more than two decades, with all evidence pointing toward negative effects of minimum wage rises on employment levels among the young and unskilled. A study conducted by David Neumark and William Wascher in 1995 noted that “such increases raise the probability that more-skilled teenagers leave school and displace lower-skilled workers from their jobs. These findings are consistent with the predictions of a competitive labor market model that recognizes skill differences among workers. In addition, we find that the displaced lower-skilled workers are more likely to end up non-enrolled and non-employed.”
Policy makers who continuously raise the minimum wage simply assure that those young people, whose skills are not sufficient to justify that kind of wage, will instead remain unemployed. In an interview, Friedman famously asked “What do you call a person whose labor is worth less than the minimum wage? Permanently unemployed.”
The upshot: Raising the minimum wage at both federal and local levels denies youth the skills and experience they need to get their career going.
This post first appeared at CEI.org.
Low-Skilled Workers Flee the Minimum Wage | Foundation for Economic Education
What happens when, in a country where workers are free to move, a region raises its minimum wage? Do those with the fewest skills seek out the regions with the highest wage floors?
New minimum wage research by economist Joan Monras of the Paris Institute of Political Studies (Sciences Po) attempts to answer that question. Monras theoretically shows that there should be a close relationship between the employment effects of raising the minimum wage and the migration of low-skilled workers.
When the demand for local low-skilled labor is relatively unresponsive (or inelastic) to wage changes, raising the minimum wage should lead to an influx of low-skilled workers from other states in search of better-paying jobs. On the other hand, if the demand for low-skilled labor is relatively responsive (or elastic), raising the minimum wage will lead low-skilled workers to flee to states where they will more easily find employment.
To test the model empirically, Monras examined data from all the changes in effective state minimum wages over the period 1985 to 2012. Looking at time frames of three years before and after each minimum wage increase, Monras found that
- As depicted in the graph below on the left, those who kept their jobs earned more under the minimum wage. No surprise there.
- As depicted in the graph below on the right, workers with the fewest skills were having an easier time finding full-time employment prior to the minimum wage increase. But this trend completely reversed as soon as the minimum wage was increased.
- A control group of high-skilled workers didn’t experience either of these effects. Those affected by the changing laws were the least skilled and the most vulnerable.
These results show that the timing of minimum wage increases is not random.
Instead, policy makers tend to raise minimum wages when low-skilled workers’ real wages are declining and employment is rising. Many studies, misled by the assumption that the timing of minimum wage increases is not influenced by local labor demand, have interpreted the lack of falling low-skilled employment following a minimum wage increase as evidence that minimum wage increases have no effect on employment.
When Monras applied this same false assumption to his model, he got the same result. However, to observe the true effect of minimum wage increases on employment, he assumed a counterfactual scenario where, had the minimum wages not been raised, the trend in low-skilled employment growth would have continued as it was.
By making this comparison, Monras was able to estimate that wages increased considerably following a minimum wage hike, but employment also fell considerably. In fact, employment fell more than wages rose. For every 1 percent increase in wages, the share of a state’s population of low-skilled workers in full-time employment fell by 1.2 percent. (The same empirical approach showed that minimum wage increases had no effect on the wages or employment of a control group of high-skilled workers.)
Monras’s model predicts that if labor demand is sensitive to wage changes, low-skilled workers should leave states that increase their minimum wages — and that’s exactly what his empirical evidence shows.
According to Monras,
A 1 percent reduction in the share of employed low-skilled workers [following a minimum wage increase] reduces the share of low-skilled population by between .5 and .8 percent. It is worth emphasizing that this is a surprising and remarkable result: workers for whom the [minimum wage] policy was designed leave the states where the policy is implemented.
These new and important findings reinforce the view that minimum wage increases come at a cost to the employment rates of low-skilled workers.
They also pose a difficult question for minimum wage proponents: If minimum wage increases benefit low-skilled workers, why do these workers leave the states that raise their minimum wage?
Tuesday, March 15, 2016
Investigating global warming using a new graph style | Watts Up With That?
Because there is so much detail in a contour map, it is best to look at a large image. I think that I am limited to a small image in this article, so I will put a link after the small image, which will take you to a large image that I put on the Photobucket website. I hope that this works, it is the first time that I have tried this. If you can’t get to the large image, then you could try magnifying the small image using your browser. I know that Chrome has a Zoom control, and I assume that other browsers will have something similar.
For a large image of this contour map, from the Photobucket website, click this link:
http://i1042.photobucket.com/albums/b424/mta-graphs/Contour%201880%20to%202015%20-%20big%20with%20copyright_zps6tvnym4k.pngThe legend for global warming contour maps is here:Now that you have looked at a contour map, and looked at the legend, we can discuss what is on the map.
Along the bottom of the contour map, there is a line of what appear to be small red flames. These are not real flames, but they do represent a source of heat. These are the natural warming events, like El Nino and the Blob. If you count them, then you will find that there are about 46 of them between 1880 and 2015. Some of them merge together, so an exact count is difficult. That is about one natural warming event every 3 years, and I believe that El Nino’s occur about once every 2 to 5 years, so the number seems about right.
There are often small black regions between the natural warming events. I use black to show cooling, so these small black regions are either the cooling phase of an El Nino, or possibly a La Nina.
Now look at the big black area near the middle of the graph, As I said before, I use black to show cooling, so this appears to be a large cooling event. When I first found this, I thought that it might be an error in the graph. I checked it carefully, and found that it was an approximately 40 year cooling trend, that started about 1935, and finished in about 1975. As soon as I saw the year 1975, I knew what this was. I remembered that in 1976 there was a scare about a possible ice age happening. Time magazine ran 2 cover stories, one about “The coming Ice Age”, and the other about “How to survive the coming Ice Age”. I don’t believe that Time magazine would invent these stories with no evidence. It would make sense if some scientist noticed the 40 year cooling trend, and said something to somebody.
Saturday, March 12, 2016
Why the Holocaust Should Matter to You | Foundation for Economic Education
The Deeper Roots of the HolocaustFor the last six months, I’ve been steeped in studying and writing about the American experience with eugenics, the “policy science” of creating a master race. The more I’ve read, the more alarmed I’ve become that it was ever a thing, but it was all the rage in the Progressive Era. Eugenics was not a fringe movement; it was at the core of ruling-class politics, education, and culture. It was responsible for many of the early experiments in labor regulation. It was the driving force behind marriage licenses, minimum wages, restrictions on opportunities for women, and immigration quotas and controls.
The more I’ve looked into the subject, the more I’m convinced that it is not possible fully to understand the birth of the 20th century Leviathan without an awareness of eugenics. Eugenics was the original sin of the modern state that knows no limits to its power.
Tuesday, March 01, 2016
The Right Geek: Dear SJW's: We Sad Puppies CAN'T Repent
The Right Geek: Dear SJW's: We Sad Puppies CAN'T Repent
More on the Daisy Hill Hugo Farm, with interesting comments.
More on the Daisy Hill Hugo Farm, with interesting comments.
The Right Geek: Opening a Moderate Conversation on Fandom with "Standback"
The Right Geek: Opening a Moderate Conversation on Fandom with "Standback"
More on the Daisy Hill Hugo Farm
More on the Daisy Hill Hugo Farm
Dear "Standback,"
Again, thank you for your willingness to talk about these controversies without shouting or vitriol. Constructive discussion is indeed sorely needed; if we can at least get to a place of mutual understanding, that will only redound to fandom's benefit.
Disclaimer: Like you, I don't represent anyone in particular; other Pups may dispute some of the points in my analysis. Still, I've been active in the various Puppy groups for a while, so I'd like to think my impressions are fairly accurate.
Let's talk first about what I like to call the "pre-history" of the Sad Puppies. For the past fifteen years (at least), the character of fandom has shifted in a way that many Puppies find very troubling -- and by the way, for the vast majority of our number, this has nothing to do with race, gender, or sexuality. A significant number of us are women who accept the precepts of first wave feminism at the very least. A number of us are "people of color." And a number of us are gay or, at minimum, amenable to leaving gay people alone to live their lives as they see fit. No -- what has disturbed the Puppies is the increasingly strident tone that many fans have adopted in support of their favored cultural and political causes. In our perception, the vague "codes of conduct," the "shit lists," the pilings on, the endless internet flame-wars, and the non-falsifiable accusations of racism/sexism/homophobia/etc. have all created an environment that is extraordinarily hostile to points of view that don't hew to a particular left-wing party line. The result? We've felt unwelcome and stomped on for what, to our mind, should be recognized as sincere and well-meant differences of opinion.
Over the same time frame, the Puppies have also become concerned about the artistic direction of our field. The "Human Wave" movement, the "Superversive" movement, and the more generalized complaints about "message fic" and "grey goo" that started gaining steam before last year's Sad Puppies campaign are all flailing attempts by the Puppies to describe the flatness we've perceived in many recent award winners -- particularly in the shorter fiction categories, where the stylistic sophistication and emotional catharsis beloved by creative writing professors and MFA programs the world over appear to be crowding out more accessible stories with identifiable plots and recognizably science-fictional ideas. Have the aforementioned accessible stories been shut out of the mix entirely? No, thankfully -- but prominent fannish critics have definitely been agitating against any "traditional" authors who happen to be short-listed. When Larry Correia was nominated for the Campbell back in 2011, for example, one such critic hyperbolically proclaimed that a win for Larry would "end writing forever."
Finally, before the Puppies became a controversial sensation, many of the same people were getting nominated for the Hugo year after year after year. Now, this state of affairs may have been justifiable if fandom were really tiny, but it's not. As I remarked in my previous post, thousands of science fiction works are published and bought every year, and the most recent circulation figures I could find for, say, Asimov's or Analog exceed the number of people who voted in the Hugos in 2012 by over 1000%. To us Puppies, the proposition that a couple thousand super-motivated Pre-Puppy World Con voters were in any way representative of the fandom in the aggregate was and is ridiculous on its face.
So we got involved.
I've already acknowledged the flaws in our process. We should've checked the eligibility rules more carefully before making our suggestions, we should've widened our crowd-sourcing pool, we should've included more options on our list, and we shouldn't have called it a "slate," as that wasn't really what we intended it to be. Additionally, while we've recommended authors who were conservative, liberal, apolitical, and every flavor in between, we've often failed to separate our political disputes from our artistic arguments when responding to our detractors. But overall, we Sads really did just want to vote for what we liked; we wanted to give several very successful authors and editors a fighting chance to be recognized, and we wanted to highlight some newer writers (like Kary English) who may otherwise have been overlooked. Was there also a little "we hate those guys!" folded into the mix? I'd be lying if I denied it; as I explained above, a lot of us have been "hit" in the fandom over the years, and the anger has been simmering for quite a while. But this "resentment vote" was driven less by a desire to destroy the Hugo and more by a desire to assert our right to dissent without being abused.
I can understand our opponents' being upset that their choices were effectively locked out of the ballot by the combined activities of the Sad and Rabid Puppies campaigns. Indeed, I highly respect certain prominent Antis - like Eric Flint and George R.R. Martin - who've written calmly worded blog posts on the subject. What I can't understand is the manner in which other Antis have often expressed their disappointment. Steve Davidson is, even now, busily trying to define us out of the fandom even though many of us have loved science fiction for decades. Others, meanwhile, have repeatedly called us vile and defamatory names in some very high profile venues and have yet to retract their statements. And the less said about the comments on File 770, the better.
Do we have unsavory characters on our side? Yes. However, I do think there's a critical difference between the Puppy trolls and the Anti trolls: the Antis, as a group, have more power in the fandom. You may scoff at this, but I invite you to consider several key facts. Number one, it wasn't the Puppy position that was spread far and wide in mainstream entertainment publications once the 2015 ballot was announced. Number two, among the Antis behaving badly were editors and art directors from at least one major publishing house, while among the Puppies behaving badly was -- well, no one of any import. Number three, we lost. The Antis trounced us when it came to the final vote and felt perfectly free to gloat about it in public afterwards; indeed, I saw at least one officer of SFWA congratulating the Antis for their "victory" on Twitter. And lastly, there's a objective double standard in the way the opposing trolls are treated. While the Sad Puppies are urged to denounce Vox Day and other malefactors, Requires Hate continues to be published in Clarkesworld with nary an acknowledgement of the contradiction.
Above, I mentioned our resentment. Sadly, the events of last year did much to sharpen those feelings of ill-will. That's why you're hearing talk of "conspiracies" -- and why you may have heard a Sad or two saying, "To hell with those twat-waffles. They can fuck themselves with rusty chainsaws for all I care." Personally, I think this is deeply unfortunate; though our respective groups may have irreconcilably different tastes in science fiction, there's no reason we can't find some common ground when it comes to the need for more civility in our disputes -- not to mention greater participation and viewpoint diversity in both the nominating and voting rounds of the Hugo Awards. MOAR recs, MOAR voters, and MOAR discussion? Sounds good to me! So let's try to make it happen.
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