Countering the Right: Right-Wing Scare Tactics on Seattle Minimum Wage Increase

Every once in a while a news headline on Yahoo’s home page catches my eye, mostly because it seems completely ridiculous.  Yesterday was no exception when I saw the ominous headline “Restaurants in Seattle Going Dark as $15 an Hour Minimum Wage Looms“.  A scary headline for an article with content that shouldn’t scare anyone that made it past kindergarten.

When it comes to right-wing scare tactics on minimum wage increases in general, one is forced to accept a fallacy that would crush their argument if they ever had to address it.  The fallacy is this: people making minimum wage would not spend the extra money they would make from a wage increase.  In other words, the money would simply be paid to them and then find its way into a black hole, never to be heard from again.  There would be no increase in consumer spending on basic products or other goods and services and no increase in the sales and production of residual businesses not paying their workers minimum wage.  The article linked is no exception as it feeds the reader the fallacy and makes no mention of the reality of minimum wage increases. 

Another right-wing tactic is to always focus on restaurants and how they will fail if the minimum wage is ever increased.  This is nothing more than using a convenient target to try to sway the uninformed.  Depending on what statistics you use, the failure rate of restaurants in the first three years is generally accepted at roughly 60%.  In other words, most restaurants will fail regardless of the minimum wage so its an easy but deceiving target for the right to use when arguing their absurd points.

While this is no surprise, there is another snippet of info given in the piece that deserves further analysis.  The article gives us some numbers that seem scary on the surface when read:

Washington Restaurant Association’s Anthony Anton puts it this way: “It’s not a political problem; it’s a math problem.”

“He estimates that a common budget breakdown among sustaining Seattle restaurants so far has been the following: 36 percent of funds are devoted to labor, 30 percent to food costs and 30 percent go to everything else (all other operational costs). The remaining 4 percent has been the profit margin, and as a result, in a $700,000 restaurant, he estimates that the average restauranteur in Seattle has been making $28,000 a year.

Gasp!  The owner only making $28k a year on a $700k a year restaurant?  Sounds horrific…unless we choose to do some math.  Let’s play this game.

$700k divided by 365 days gives us an average daily revenue of $1918.  Let’s assume the restaurant is open on average 12 hours a day (10 am-10 pm, for example, lunch and dinner).  $1918 divided by 12 gives us roughly $160 per hour.  Assuming the average customer spends $10 per meal and drink, we get 16 customers per hour.  If a restaurant in a major city like Seattle is only getting that many customers per hour, they are clearly on their way to closing their doors anyway.  But wait, there’s more.

As is noted, 36% of funds are devoted to labor.  36% of $700k is 252000.  A 36-hour per week worker (6 days, 6 hours per in this scenario) making Washington’s minimum wage ($9.47) makes $17,725 a year.  $252k divided by $17,725 gives us roughly 14 workers.  With a 12 hour day, you would need a minimum of two workers per position.  That gives us 2 hosts/hostesses (assuming you need it), 2 cooks, 2 kitchen preps, 2 dishwashers, 1 additional manager, and 5 servers (who apparently make the state minimum wage in Washington).  Here’s where an important reality comes to light in their numbers given.

With 5 servers, you would have 3 working half of the time to split the previously derived 16 customers per hour, which is completely ridiculous in terms of being grossly overstaffed.  Assuming the 16 customers are 8 couples dining together, this means a little less than 3 tables per hour per server.  As someone who was once an atrocious excuse for a server in my earlier working days and can speak from experience, a server can easily handle 6-7 tables per hour without breaking much of a sweat.  And that’s if you’re terrible at your job, like I was.

In other words, the restaurant in the example given is clearly overstaffed and badly run on top of not getting enough foot traffic in the first place.  If we were to bring the server situation down to a more appropriate level, what happens with the owner’s $28k a year takeaway on a $700k restaurant?  What if you take away 1 or both hosts/hostesses because they aren’t needed due to the light customer traffic?  If we take out 4 workers, we suddenly get an additional $70k.  Obviously, some of this would go to the additional manager and (hopefully) some raises, but the owner is likely taking a good chunk of this home.  What happens to that $28k per year?  Exactly.

If the right wants to scare the country into believing the minimum wage should not be increased or should go away entirely, they should probably use a better hypothetical example than a badly run, overstaffed restaurant with too little of a customer base to survive in such a big city.

Just Like in 2012, Progressive Ideas Win Big on Election Day

Elizabeth_Warren_Nov_2_2012
Photo: Tim Pierce

After President Obama won reelection in 2012, I pointed out how progressive ideas did really well when put to the vote by the public on ballot measures.  While the Republican party is celebrating their non-surprising gains in the legislative branch, progressive ideas absolutely dominated on the ballot, even in red states.

Taking a look at the 13 initiatives highlighted by CNN, 12 have been decided as of this writing.  In only one case did the progressive side lose and even that was not a majority loss (58% approved medical marijuana in Florida, 60% was needed).  CNN’s list did not include other victories for progressive thought, such as the legalization of marijuana in D.C. or the lopsided defeat of the North Dakota anti-choice measure.  Whether it was marijuana, minimum wage laws, birth control or most other issues, the left won.

The fact is, progressive thought is winning and winning big everywhere in the country, even in the alleged “red states”.  But the Republican wins would suggest a different story.  How to explain this?

The reasons are many but I’m reminded here of something Bill Maher recently asked of Senator Elizabeth Warren: “Why aren’t there more people who talk like you in the Democratic Party?”

Again, there are a lot of factors at play here but there is little doubt Democrats have been (and many still are) terrible at pointing out what is a progressive position and what is a conservative one on so many issues.  And when they fail to do that it not only makes voters ignorant as to who stands where, it takes all the energy out of your base and they will only lackadaisically support you, at best.  Seriously, Democratic candidates.  If you are going to lose, at least have some guts to speak forcefully about what it is your ideology means to the everyday person.  Maybe then you won’t have to watch so many of your candidates lose while so much of your ideology wins.

Dying Conservative Myth: Raising the Minimum Wage Leads to Job Loss

While watching this debate on raising the minimum wage in the U.S., one commentator made a point that deserves further recognition on this issue.  When asked why economists are so split on the issue of job losses and the minimum wage, Jack Temple, a policy analyst at the National Employment Law Project, points out more and more evidence in research is showing there is a positive effect on the economy when the minimum wage is increased and more economists are beginning to realize this.  The more research is done, the more minds are changed to the truth.

Not a living wage. Not even close.

The problem, however, is the level of paradigmatic belief among economists when little evidence and research existed in this area was so heavily to the contrary.  The hurdle in making this change is getting people to abandon belief in the face of new facts that disprove long held notions originally based on seemingly common sense assumptions.

Why people believed in the myth is easy to see.  We assume employers are spending everything they must on wages and have no more profits to spare on this area of the balance sheet.  If they are forced by law to spend more on wages, job losses occur.

And therein lies what we are now learning is the faulty assumption: employers have plenty of profit left over for higher wages, they just choose to inflate the salaries of the minority at the top instead of the majority at the bottom.

And this is leading to more and more economists dropping the belief of the past and accepting the truths of the present.  Take a look at the evolution of economists being polled on this issue from its own subhead on Wikipedia’s minimum wage section:

According to a 1978 article in the American Economic Review, 90 percent of the economists surveyed agreed that the minimum wage increases unemployment among low-skilled workers.[81]

A 1992 survey by published in the same journal revealed 79% of economists in agreement that a minimum wage increases unemployment among young and unskilled workers.[82]

In 2013, a diverse group of economics experts was surveyed on their view of the minimum wage’s impact on employment. Thirty-four percent of respondents agreed with the statement, “Raising the federal minimum wage to $9 per hour would make it noticeably harder for low-skilled workers to find employment.”

Yes, there is money there to cover raising the minimum wage.

From 90% to 34% and clearly continuing to fall.  Probably took a while for people to believe the earth orbited the sun and wasn’t actually flat but new scientific facts eventually won the day over faulty beliefs.

The information on minimum wage and job loss is expanding as are corporate profits.  This combination is leading to more anger at the incredibly low level the minimum wage has fallen to over time relative to inflation (as shown above).  As people see Wall Street continue to hit record highs and show no ongoing ill effects from the Great Recession, they will question more and more why this stock boom isn’t “trickling down” in the form of higher wages and lower unemployment?

And the reason this anger is growing is because the science and facts are changing.  The truth is the world is not flat, the sun does not orbit the earth, and raising the minimum wage is not a job killer.  And for those that continue to believe the contrary, as the old saying goes, I have a lovely bridge in a wonderful location I think you might be interested in buying.