Maine Working Hard To Kill Any Businesses COVID Hasn't Already Picked Off
Maine will soon have an $18 minimum wage, due to a measure that increases their $12 minimum wage to time and a half during a civil emergency (a pandemic apparently qualifies).
This is a fine idea for an area where money grows on bushes in public parks. In real life, there are sure to be some obvious consequences. Jon Miltimore writes at FEE:
Portland House of Pizza has been around for 30 years. Restaurant manager Craig Allare hopes it will be around another 30 years.But now he's left trying to figure out how to keep that dream alive after the passage of a minimum wage hike that has many businesses in Portland, Maine worried.
...While Florida, which on Tuesday passed a $15 an hour minimum wage referendum, was the only state to have the minimum wage on the ballot in 2020, some localities also voted on the issue.
One of those cities was Portland, the largest city in Maine. The referendum sought to increase the minimum wage from $12 an hour to $15 by 2024. The measure also mandated that workers receive time and a half during a civil emergency (like, say, a pandemic).
Despite opposition from the city's mayor, seven members of the city council, and dozens of Portland businesses, the measure passed with 60 percent of the vote. That means as early as next month the minimum wage will be $18 an hour, since Maine has declared a civil emergency. (The time-and-a-half will kick in on the $12 minimum wage.)
Businesses already ravaged by stay-at-home orders from the coronavirus have expressed worry about how they will manage to stay in the black.
"In the last 7 months business has dropped from 30 to 50 percent and food costs have skyrocketed. This added increase on a business already depressed due to the pandemic is tough," one Portland business owner who declined to speak on camera told WCSH, an NBC-affiliate. "We may have to either cut employee hours or cut back on business hours."
Cutting employee hours is just one of the ways employers negatively respond to laws that artificially raise the price of labor. Other responses include cutting other forms of compensation, such as health care or 401k benefits, replacing workers with robots, and simply assigning employees to do more work.
These are hardly the only unintended consequences. For example, economists David Neumark and William Wascher found that higher minimum wages decrease the number of teens enrolled in high school because they encourage high-skilled teens to drop out; this in turn displaces low-skilled workers.
Welcome to a future where everyone is an independent contractor.
Also a large black market.
Isab at November 11, 2020 4:27 AM
Damned childish. Pols get VOTES this way, from people who wish to GET, not DO things.
Here is why minimum wage law is going to starve people.
"I just got a raise today, thanks to my Governor!"
"Cool. Here's your Coke. That'll be $6."
Radwaste at November 11, 2020 4:41 AM
Restaurants and grocery stores, two industries heavily affected by labor costs, run on profit margins of ≈1-3%. Increased labor costs will require an expense cut somewhere else or an increase in prices.
That means your Big Mac is now gonna cost you ≈$11. And that means that your new government-mandated "living" wage rate is gonna leave you exactly where you were before.
Conan the Grammarian at November 11, 2020 6:21 AM
"exactly where you were before" well not exactly. Inflation of that type harms savers helps the indebted. if you owed $50 that will be only worth $25, or if you had saved $50 you just lost half.
Joe J at November 11, 2020 7:13 AM
That means your Big Mac is now gonna cost you ≈$11. And that means that your new government-mandated "living" wage rate is gonna leave you exactly where you were before.
Conan the Grammarian at November 11, 2020 6:21 AM
Except that those of us who are prudent enough to not spend every dime we make will have the value of our retirement assets chewed away by that same inflation.
I read an article many years ago, about how most Scandinavians brown bag their lunch. Restaurants are for the tourists because mandated wages, prices and taxes have made eating out at all unaffordable for the average worker, except for very special occasions.
A cousin who lives in Sweden but has a second home in Norway, tells us that barter and the black market have pretty much replaced actual transactions, since the list price of things like Pizza, and hair cuts is double what you will be charged if you know the business owner.
It can happen here as well.
Isab at November 11, 2020 7:19 AM
I was wondering if that time and a half increase applied to all hourly workers in Portland. I was afraid that it would include people who make $20 an hour and that would have even more devastating effects. But it doesn't work that way. The maximum civil emergency pay is 1.5 times the minimum wage. So, if someone makes $13 an hour, the most they can get is $18. If someone makes $17.99 an hour, the most they will get is $18. Also, the time and a half increase doesn't apply to employees who are allowed to work from home. But it's still going to result in a lot of businesses closing.
Fayd at November 11, 2020 7:22 AM
Still trying to repeal the Law of Unintended Consequences I see.
jobs cut
hours cut
duties increase
increased costs
They forget that the true minimum wage is $0.00/hour.
The people most hurt by this will be the first time job seekers. They'll find it difficult to get that job. Next will be the workers who were let go because their value in relation to the wage was inadequate. Next will be the ones who see the greatest increase in their wage, because their expenses are going to go up as well.
Everyone else will take a hit. But eventually everyone not working minimum will see their wages creep up to keep pace, and perhaps outpace the minimum increase(s).
Also the number of small businesses will also take a hit. So, fewer employed, fewer taxes collected, fewer business licenses, etc.
I R A Darth Aggie at November 11, 2020 8:28 AM
With roughly 2000 hours in a work year, $15/hr is $30,000/yr (plus payroll tax and benefits). The starting salary for my friend's daughter fresh out of college (in a tech job) was $16/hr. So this says that a kid manning the cash register at fast food is the same as a college grad. These people think they can just create wealth out of nothing. I saw a study with data from Chicago--after each min wage hike, employment for young black men dropped for several years. What they forget is that your first job at McD's is not meant to support a family. It is for high school kids, people who lack skills. A lot of new hires are worth less than $0/hr because they are not on time and don't know beans. After a while they are worth $8/hr but not $15.
cc at November 11, 2020 12:28 PM
Vox: What Seattle learned from having the highest minimum wage in the nation
JD at November 11, 2020 1:21 PM
The article raises some interesting points, but comes across as an editorial in favor of the increased minimum wage rather than a disinterested analysis of the effects.
The UW study the article dismissed estimates that the higher minimum wage has cost the city 5,000 jobs, both existing and future jobs.
EPI, cited in the article as a critic of the UW study, has a history of skewed economic analyses to prove a partisan point.
EPI's CEO pay gap analysis used selected data to prove the point the analyst wanted to prove, a massive wage gap. Instead of using average CEO pay in toto, it selected the pay of the top 350 CEOs in the US and compared it to the lowest paid employees. Of course it found a wide gap.
Conan the Grammarian at November 11, 2020 1:49 PM
Just put it out there as an FYI, Conan, not as any kind of proof that a higher minimum wage is good or bad.
JD at November 11, 2020 1:58 PM
Duly noted. It was a good article and, as I said, did raise some interesting points.
I understand the advocacy for a government-mandated higher minimum wage, but I think it's misdirected and economically illiterate.
Conan the Grammarian at November 11, 2020 2:12 PM
It does seem a bit odd to raise wages just at the moment revenues are down.
NicoleK at November 11, 2020 9:16 PM
The great thing about living in a gated community is the gate. I mean, who wants to look at all that poverty and despair out there anyway?
Yuck.
Gog_Magog_Carpet_Reclaimers at November 12, 2020 4:04 PM
Most gated communities I’ve ever seen, Gog, always have an unguarded back door, a way for the working classes to make their way in.
Conan the Grammarian at November 12, 2020 8:27 PM
Most gated communities I've seen leave the gate open most of the day. You can also order an extra clicker for the gate so various people can get in and do their job.
Ben at November 13, 2020 11:20 AM
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