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HOWS THAT MINIMUM WAGE LAW WORKING?: Spike may actually limit number of jobs

HOWS THAT MINIMUM WAGE LAW WORKING?: Spike may actually limit number of jobs

By DAVID W. SKINNER

The minimum wage rate in Arizona has risen from $8.50 to $10 since Jan. 1 and will continue to rise 50 cents each year until the minimum wage reaches $12 by the year 2020.

This isn’t going to work. Raising the minimum wage will put people out of work.

Before voters approved the Proposition 206 wage increase, businesses kept many people on staff at $8.50 an hour. Employees worked shifts throughout the week, whether they were a student, a working mother or a father with a second job trying to pay the bills.

With the pay raise, companies that already could barely afford their overhead are looking at layoffs or reduced hours.

I wish state voters had been more diligent before approving this plan.

We all know businesses are going to do what’s best for their bottom line. As an employee, I hear all the time how my company cares about its employees and all that nonsense.

But now is when we get to see a business’ true intentions.

Surprisingly enough, it’s to make money.

If making money takes firing people in order for those corporate suits to cash their quarterly bonus, they won’t even think twice.

To the everyday working man or woman who depends on part-time jobs to pay the

bills, having to replace those lost hours with another part-time job is going to be much harder due to a company’s requirement to hire an entry-level employee at $10 compared to $8.50.

The company will hire fewer people for those part-time jobs and some workers will be left out in the cold.

As a state, Arizona needs more companies to want to move here. Occupants of this beautiful state must be able to work and live in comfort.

The minimum wage increase adds another roadblock for companies planning to move their business operation to the Tucson area.

Bringing new jobs to the Tucson community shows other companies that Arizona is a great home base. I just don’t think raising the minimum wage was a step in that direction.

Making sudden, drastic changes without any real adjustment period or plan has left employers all over Arizona having to make hard decisions.

Arizona should want its working people to make money, not lose their jobs entirely.

 

David Skinner is a journalist major whose opinions are just as bad as his writing style. He loves long walks on the beach but hates getting sand in his shoes. Do not follow him on twitter @daveyskins_.

HOWS THAT MINIMUM WAGE LAW WORKING?: Increase sets social Darwinism in motion

HOWS THAT MINIMUM WAGE LAW WORKING?: Increase sets social Darwinism in motion

By NICHOLAS TRUJILLO

For minimum-wage earners who’ve had a taste of the $1.95 per hour pay raise, I can relate if you are feeling both happy and scared by the change.

My eyes light up when I see the significant increase in my paychecks. However, my face turns gray when I hear that another store has closed or raised prices because it can’t keep up.

In Tucson, the owner of Shlomo and Vito’s Deli blamed the minimum wage when it closed. The move threw 43 employees out of work.

I’m not an economist, but I would argue the closing represents free market principles. It’s not great a local deli closed, but it allows other entrepreneurs an opportunity to open another food store that might be economically stronger.

The ability to adapt and overcome obstacles shows the strength of a business. This life-and-death business cycle is healthy for an area’s economy.

The Metro Chamber of Commerce recently sent an anonymous survey to businesses across Tucson.

About 40 percent of businesses that responded said they are increasing prices to keep up.

Thirty-two percent are reducing employee hours.
I see this happening at my own job, at Frys. Many of my fellow employees are seeing their hours cut because they don’t have seniority and the store has to save money.

The chamber survey said 13 percent of businesses are considering closing for good. This is without a doubt bad for the individual businesses that close. However, a growing customer base will greet those that ride the wave of uncertainty and stay open.

Another 11 percent of the business owners said they would move to automation.

We won’t be having much human interaction at those stores. They’ll be based on machines with one or two people keeping up day-to-day maintenance.

Again, this process eliminates the weak businesses and allows others to come up with fresh ideas to keep their business going. This is good for everyone in the long run.

I understand that finding a new job is scary in the short run, especially when you have a family to feed. It’s also scary to see businesses close.

Focusing on that, however, will only make you close-minded to that fact that other businesses may perform better.

Opportunities are driven by the free market and its ability to make and break businesses.

This is the circle of life in the world of economics. We shouldn’t be afraid to take it on.

 
Nick Trujillo isn’t a conservative, but he likes a free-functioning market.

A living wage for real, living people

A living wage for real, living people

By NICK MEYERS

In November, Arizonans will have an opportunity to vote on the first minimum wage initiative since 2006.

Proposition 206 will increase the wage from $8.05 to $10 starting on New Year’s Day, to $10.50 a year after that, to $11 a year after that and to $12 in 2020.

Minimum wage initiatives in Seattle, San Francisco and New York have graciously provided a Petri dish to examine the effects of minimum wage increases on what many call a “living wage.”

The verdict? Not much has changed.

That’s right, fire didn’t fall from the sky and land on every mom n’ pop shop trying to put kids through college. Thousands didn’t lose their jobs, resulting in unprecedented unemployment. Prices didn’t skyrocket, driving poor people out of the market for basic goods.

In Seattle’s case, the rate of employment tripled that of the national average after the city voted to raise the minimum wage in 2014.

A recent study from the University of Washington failed to “find compelling evidence that the minimum wage has caused significant increases in business failure rates.” It explicitly states that any closures were far dominated by business openings.

New York only voted to raise its minimum wage earlier this year, but economic analysts are already chomping at the chance to predict how it will affect the nation’s largest city.

A recent study out of UC-Berkeley speculates the boost in wages will only raise payroll costs by 3.2 percent across the entire city over the next six years. Businesses can absorb this cost by increasing prices .14 percent per year.

It also estimates a .04 percent increase in employment, which would amount to 3,200 jobs by 2021.

The same group concluded a Santa Clara County initiative would increase payroll costs by 1 percent and could account for the cost with a .2 percent increase in prices by 2019.

We’re talking about pennies, here. Pennies to the consumer and thousands in annual earnings to minimum-wage workers. Somehow, the doomsday scenario just isn’t adding up.

But enough of the data.

When it comes down to it, responsibility lies with business owners. When we envision our perfect economy, do we enjoy seeing mega chains and international brands take over our consumption? Not usually.

We like the idea of going to Sally’s hardware shop and Bill’s flower stand, chatting about the latest ball game, asking about the kids and giving our hard-earned cash to people we don’t mind sharing it with.

Aztec Press cartoon by Coral Yankey

Aztec Press cartoon by Coral Yankey

These small businesses are indeed the backbone of a healthy economy and it isn’t the fault of their employees that they struggle.

It’s the mega chains that offer prices too low to compete with and use cost-benefit analyses that tell them how little they can get away with paying their employees.

The medicine for this sickness is boosting those at the very bottom of our economic ladder. Help them reinvest in their immediate markets.

The goal is to get a majority of Americans to a place where they can start saving money. They’ll put it in a bank, where Sally and Bill can apply for a business loan and become providers in our community.

This isn’t an argument won in Economics 101. The real-world examples speak for themselves and the important thing about the real-world examples is they involve real people with real lives.

 Nick Meyers is a former Aztec Press editor who now attends the University of Arizona, where he studies Journalism and Philosophy, Politics, Economics and Law, or PPEL. He actually thinks the minimum wage is a silly argument because robots will end up taking your job.

Online hyperlinks:

UW Study: http://evans.uw.edu/sites/default/files/MinWageReport-July2016_Final.pdf

Berkeley, NY: http://www.irle.berkeley.edu/cwed/briefs/2016-01.pdf

Berkeley, SF: http://irle.berkeley.edu/cwed/briefs/2016-03.html

Increase could hurt workers

Increase could hurt workers

 

By NICHOLAS TRUJILLO

No one works at minimum wage in my family except me. I’m the youngest. A proposal on the November ballot would not provide a whole lot of improvement.

Proposition 206 would increase the minimum wage from its dormant state at $8.05 an hour to $10 in 2017, then slowly creep to a ceiling of $12 an hour in 2020.

At first it looks good because that means more money in your pockets if you work at minimum wage. You get to circulate more money into the economy. Go you!

You can now become a contributing member of society to our free market in the US of A.

It’ll start potential job growth in all fields, as shown by the Economic Policy Institute in 2006. The Institute said a wage increase would create 85,000 jobs, and they weren’t wrong.

The unemployment rate for Arizona went from about 4.2 percent to 3.7 percent in 2006-07, according to the Bureau of Labor Statistics.

Take a look at what happened next, however. After it dropped, unemployment quickly spiked back up to even higher than it was in 2006, to a little over 11 percent.

Of course this was before the 2008 recession, and I’m not saying that increasing the minimum wage will definitely increase unemployment in 2017.

I am saying the Bureau, and many minimum-wage working Americans, didn’t factor in long-term effects. Those effects include inflation for products they normally buy, and a shortage of popular items.

While the rise in minimum wage may have motivated people to search harder for jobs, it didn’t necessarily mean employers were looking to hire more people.

Of roughly 1,200 business and human resource professionals surveyed by the Congressional Budget Office, 38 percent said they would lay off some employees. Another 54 percent said they would reduce hiring levels in 2006.

So much for the .5 percent decrease in unemployment.

Why don’t we talk about relativity? It is true the minimum wage has not kept up with inflation. It was $6.75 in the new millennium, when rich people were making money faster and the poor were losing it faster. As always, though, there’s a but.

A pay raise won’t make everything else static. We’ll see price jumps in just about everything we buy.

Beef ribeye steak currently costs $5.99 per pound at Frys. After the 67 percent increase in wages, how do we know Frys won’t raise its prices by that much? Prices might get raised even more, because grocery stores have a plethora of employees.

Inflation is very real and it happens very quickly.

And will businesses even provide raises? The other option is to just fire employees

Yes, the minimum wage will have great impact on the economy and on the consumers in the economy. However, the little people will only reap benefits for a short time before prices increase.

In a perfect world, a wage increase means people spend money on items beyond essentials, without causing inflation.

But let’s face it, America isn’t perfect and neither are we. An increase in the minimum wage will only hurt us unless people make big and, more importantly, right decisions.

Nicholas Trujillo believes in both sides for minimum wage but doesn’t trust Americans to make the right decisions with the pay increase.

Minimum wage not only issue

Minimum wage not only issue

BY NICK MEYERS

Citizens of San Francisco voted Nov. 4 to increase minimum wage to $15 per hour over a four-year timeline.Anyone with a rudimentary understanding of economics might call this a bad idea.

Supply and demand suggests that raising the price of employment will decrease the number of people employed.

Only large corporations could afford the wage hike. Small business would need to decrease employment — or go out of business — to manage costs.

However, evidence suggests this is not the case.

In the two areas of the country where minimum wage is highest for their categories, Washington state and the city of San Francisco, unemployment has decreased.

More importantly, the number of jobs increased.

In 2013, California experienced a 2.95 percent increase in employment. Washington saw a 2.10 percent increase.

There is one simple reason this happens: people who make minimum wage don’t save money, they spend it.

Those who make minimum wage are more likely to turn right around and spend that money where they work, especially when businesses offer incentives in the form of discounts.

Large corporations especially should increase the minimum wage of their employees. Some economists say that if Walmart or McDonald’s doubled the minimum wage of employees, prices would experience minimal increases.

Other economists say prices would not increase at all since they are set by the market, not by the cost of production.

Either way, those companies would still experience greater returns as their employees shop there.

There are other problems, however.

For starters, San Francisco has the third highest cost of living in the United States.

A $15 minimum wage roughly equates to $1,800 per month.

Median rent for a one-bedroom apartment in San Francisco is $2,800. That means you’d have to work a nearly 80-hour week on minimum wage just to live in the city.

Additionally, McDonald’s has found a way around the increase in minimum wage: by employing machines instead of people.

That may seem like a cheap tactic, but isn’t this the direction all labor is headed?

As technology advances, more and more jobs will be replaced by machines. We are already experiencing this trend.

The move by McDonald’s is a symptom of an even greater problem than increasing minimum wage: What will humans do when machines do all the work?

That is the question we should be trying to answer, not whether to increase minimum wage.

Meyers intends to study journalism in conjunction with economics to make the subject more accessible.

Pg06-Opinion-Nick Meyers

 

Give us higher wages or give us a hand

Give us higher wages or give us a hand

By JAMIE VERWYS

I want more money. No, scratch that, I need more money.

With the high cost of living, poverty is a real and debilitating epidemic. According to a U.S. Census Bureau report in June, more than 2 million Arizonians live in a poverty area.

Poverty is largely affected by income, and although the state’s minimum pay is higher than the federal wage, it’s not enough.

In order to improve quality of life, the minimum wage needs to increase.

Since 2006, Arizona has followed a plan that increases the wage as cost of living rises. I hardly think the recent increase in wage from $7.80 to $7.90 is enough to alleviate workers from the stress of making ends meet.

The 10-cent raise only increases a full-time worker’s paycheck by about $4 a week. Many jobs available are only part time.

Those who oppose an increase in wages claim it would inflate prices, causing more harm to employees, consumers and business owners.

I assume businesses would face an increase in operating costs and retail markup would rise. But, let’s look at the way minimum wage employees spend their paychecks.

Most of us making the minimum, or even slightly above, live paycheck to paycheck.

We do not have income available to put large chucks of our money into savings or a 401(k). Our money goes directly back into the economy as we use it for immediate needs such as food.

If consumers continue to have low wages, they will spend less at businesses and therefore business will be negatively impacted anyway.

Higher minimum wages could increase employee productivity, reduce turnover rates and boost the economy.

Those struggling financially have been put into a lose-lose situation. On top of low wages, many assistance programs have been cut.

The state has made cuts to programs such as cash assistance, food stamps, Section 8 housing, education, federal grant money and child-support subsidies.

If these programs continue to receive the knife, people need to get paid more so they can obtain the most basic of human needs.

Verwys believes we all deserve to better ourselves and should have access to basic human necessities.

Pg06-Jamie Verwys

Minimum wage debate concerns small-business owners

Minimum wage debate concerns small-business owners

By JORGE ENCINAS

wPg01-Student-minimum wage

Ernesto Esquer works at his campus job repairing photo equipment.

During his State of the Union address, President Obama appealed to Congress to tie the federal minimum wage to the cost of living and raise it from $7.25 to $9 an hour.

“Tonight, let’s declare that in the wealthiest nation on earth, no one who works full time should have to live in poverty, and raise the federal minimum wage to $9 an hour,” Obama said.

The increase is welcome news to worker advocates and employees making minimum wage. However, some small-business owners say any increase would cause serious concerns for managing expenses and payroll.

Phil Bryson, who owns the brewd coffee shop downtown, said the idea of adding more expenses during the current economy is troublesome.

“It would be very hard to be able to pay that much and then pay the taxes on top of it,” Bryson said. He currently has one employee on staff.

Pima Community College student Ernesto Esquer receives minimum wage as a part-time photo lab aide at West Campus. He also works a second job at a local small business.

Esquer said he has mixed feelings about receiving a bigger paycheck.

“It would be great to make more money, but small business would suffer,” Esquer said. “Who’s going to pay for them?”

Advocates for the increase say the yearly income for a full-time employee earning minimum wage is $15,080, well below the poverty line of $23,550 for a family of four.

The National Employment Law Project, an organization that works for an increase in the minimum wage, says the current level would be $10.56 if the minimum wage had kept up with inflation over the last 40 years.

Currently, 19 states require minimum wages above the federal minimum. Among them is Arizona, which currently requires employers to pay $7.80 an hour.

Arizona is also one of 10 states that use “indexing,” a process of updating the minimum wage each year to keep pace with the rising cost of living.

Margo Susco, owner of Hydra clothing store, pays above minimum wage, and said she sympathizes with workers who need the extra relief that an increase in minimum wage can offer.

At the same time, she understands how raising the minimum wage to $9 an hour could be a burden on small-business owners who have five to 10 employees on the payroll.

“As a human being, I think it’s a good idea,” she said. “As a small-business owner, if I had 10 employees and they tried to raise it, I wouldn’t be pleased with it because I wouldn’t be able to afford it.”

Susco thinks big businesses should be required to pay more in wages, because they have the funds to do so.

“When dealing with these big corporations, it’s really a travesty that they pay minimum wage,” Susco said. “Their profits are huge. The CEOs make millions and millions of dollars.

“They can pay minimum wage; they can pay $9 an hour. They just don’t want to have to.”

For local business owners who work in their shop alongside employees, the debate over increasing the federal minimum wage has a more personal aspect.

wPg04-Brewd owner

Brewd owner Phil Bryson, left, and employee Jeremiah Forbes speak with a customer on a slow day.

“Everybody needs a livable minimum wage, but I think it comes down to who can afford it, and in economic times like this, it’s harder for small business to pay more,” Bryson said while standing next to his employee at the counter of his coffee shop.

“It would be the difference of having a mostly full-time employee to being a mostly part-time employee,” he said.

There is no timetable or agreement in Congress for any increase to the minimum wage, and Esquer questions whether it will even become a reality.

“Probably not,” he said. “Maybe in steps, but off the bat, not likely.”