Hillary Clinton: Raising the Minimum Wage Won't Kill Jobs

At a recent campaign rally, Hillary Clinton said this: “Don’t let anybody tell you that raising the minimum wage will kill jobs, they always say that.”

That comment is sheer stupidity. Forcing higher wages always puts jobs at risk.  It is why union jobs have declined from a peak of 35% of the workforce in 1954 to today's meager 9%.  The same is true for minimum wage jobs.

Millions of minimum wage jobs have already been lost to automation. Raising it will only hasten that trend.

One of the most plentiful minimum wage jobs before the introduction of the fast food restaurant was that of the gas station attendant at a full-service gas station.  Millions of these jobs have been eliminated by the broad application of automated self-service pumps. ATM's have replaced the need for millions of teller jobs.  Self-checkout lanes in grocery stores and stores like Home Depot are also killing  jobs.  Many hotels and motels have abandoned sit-down breakfast, lunch and dinner restaurants in favor of a complimentary self-serve breakfast that is easily handled by only one or two members of the normal housekeeping staff; thus eliminating minimum wage waitresses, busboys, and dishwashers.  

I guarantee, that if there is another 40% increase in the minimum wage to $10.25 an hour in the next year or so, there will be an eventual blood bath of these jobs being lost.

First, small businesses that are heavily labor intensive and already marginally profitable will have to shutter their doors because, to raise prices in order to cover the higher cost of labor, would make them non-competitive to other, more labor-efficient competitors.  Others will raise prices but, as a result, may see a loss of foot traffic because some of their customers will no longer be able to afford the new higher prices.  As a result, this could cause layoffs or, worst case, bankruptcy.  This would be especially true for businesses who are operating in blighted and economically depressed areas of our major metropolitan cities such as Detroit.  Areas that can ill afford any more job losses.

Secondly, automation will become more cost effective.  I could easily see robotic arms, hanging from  ceilings, in retrofitted fast food restaurants, that are able to cook and bag fries, cook and assemble sandwiches, or do whatever.  Kiosks could easily replace order takers and cashiers. All the while killing jobs.  The technology is already here.  After all, look at all the manufacturing jobs that have already succumbed to robotics.  And, artificial intelligence has advanced to the point where we already have self-driving and self-parking cars.  So, cooking and assembling a burger can't be that impossible for a machine to do. In fact it isn't impossible.  A company by the name of Momentum Machines will soon start introducing gourmet burger operations that are fully robotic.  Some hotels are already introducing robotic butlers that would replace traditional bell hops.  Then, too, there is already a robot, called the Vigilant MCP, that is able to replace your average low-paid security guard.

So, go ahead and believe Hillary.  But, don't say you weren't warned when the inevitable loss of jobs begins happening. To me, pushing a higher minimum wage will only hasten to push those kinds of jobs out of existence.

One last thing.  In that very same speech, Hillary made another remarkable claim: “Don’t let anybody tell you that it’s corporations and businesses that create jobs...”  Well, every month, when the government reports job gains, it's from the private sector.  Typically, 64% of those jobs are from small businesses with the rest from larger businesses and corporations.

She wants to be our next President?  Sometimes, even the idiot Joe Biden makes more sense.  At least he's honest about not being rich!

References:

“Don’t let anybody tell you that raising the minimum wage will kill jobs, they always say that.”: http://www.foxnews.com/politics/2014/10/26/hillary-clinton-corporations-and-businesses-dont-create-jobs/

Labor unions in the United States: http://en.wikipedia.org/wiki/Labor_unions_in_the_United_States

AI, Robotics, and the Future of Jobs: http://www.pewinternet.org/2014/08/06/future-of-jobs/

The ‘Fight for $15’ Suffers A Setback As McDonald’s Flirts With Automation: http://dailycaller.com/2014/10/25/the-fight-for-15-suffers-a-setback-as-mcdonalds-flirts-with-automation/

Here's The Burger-Flipping Robot That Could Put Fast-Food Workers Out Of A Job: http://www.businessinsider.com/momentum-machines-burger-robot-2014-8

Panera Bread Will Replace Cashiers With Robots By 2016: http://dailycaller.com/2014/05/14/panera-bread-will-replace-cashiers-with-robots-by-2016/

McDonald's orders 7,000 touchscreen kiosks to replace cashiers: http://www.neowin.net/news/mcdonalds-orders-7000-touchscreen-kiosks-to-replace-cashiers

Nextep Systems: Self Order Kiosks for Restaurants: http://nextepsystems.com/who-we-serve/restaurants/13?gclid=Cj0KEQjwt7KiBRD9lOePpe_BhrgBEiQAHaS_1yFKWq6AEfaYRemW_3C8rXA2vU2-R5MTDdcYbbpSRu4aAnf48P8HAQ

Robot Butlers: Automated Room Service at Aloft Hotels!: http://www.travelandtourworld.com/news/article/robot-butlers-automated-room-service-aloft-hotels/

Mass Produced Security Robots Introduced in U.S.: http://www.activistpost.com/2014/08/mass-produced-security-robots.html

Employment Report: Table A: http://www.bls.gov/news.release/empsit.a.htm

Small Business Administration: Job Creation: http://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf

Joe Biden: I'm not rich: http://www.delawareonline.com/story/firststatepolitics/2014/06/23/biden-not-rich/11265209/

The Minimum Wage and the Big Mac Index

Every year, the Bureau of  Labor Statistics (BLS) generates a report titled: "Characteristics Of Minimum Wage Workers."  According to the latest report, 1.7 million workers, or roughly 1% of the workforce, are paid the prevailing minimum wage.  The report also notes that three-fifths, or 1 million of those workers,  are employed in the fast food industry; an industry made up of a total of 4 million workers.  So, obviously, as a minimum wage job seeker, you would hope for a healthy and growing fast food industry.  That was the case until the last round of minimum wage increases that started in 2007 and ended in 2009.  In those three years the minimum wage was raised from $5.15/hour to $7.25/hour in 2009; a near 41% increase in hourly wages.


Prior to raising the minimum wage, the fast food industry was growing at a near consistent stair-step pace; adding an average of 154,000 new jobs per year (this according to data derived from an interactive chart at statista.com -- see below).  Then, in the 2007, the minimum wage was raised and the fast food industry only added 33,000 jobs; an 80% drop in the amount of new jobs being added in the previous years.  In essence, the raising of the minimum wage killed the golden goose for the very people it was supposed to help.  Of course, liberals would argue that it was the recession that hurt the fast food industry.  But that's not true.  The recession didn't hit until November of 2007; and it wasn't until April of the following year that unemployment started to rise.

The reason why raising the minimum wage hurt the fast food industry, and many other small businesses, is simply price inflation.  If price inflation is too high, many people, especially those on fixed incomes and low incomes, can't afford to buy what businesses are selling.

To that point, I need to introduce you to something called the Big Mac Index. Since 1986, the Economist newspaper has been keeping track of the average price of a Big Mac burger because it is such a pervasive international product. On February 1, 2007, just before the minimum wage increase went into effect, the Big Mac Index reflected an average U.S. price of $3.22 for America's favorite burger; up a meager 2.2% from 2006's $3.15.  Then, by July of 2008 and after two hikes in the minimum wage in 2007 and 2008, the "Mac's" price jumped to $3.57;  a near 11% rise in its price.  In 2010, after the last hike of the minimum wage took place in 2009, the burger's average price was $3.73; an 18% increase in just three years.

Now, to put this into perspective, if it cost $20 for a family of four to eat at McDonald's in 2007. By 2010 that same meal would cost almost $24 ($23.60).  For many families, that made eating at Mickey-D's and other fast food restaurants a luxury that they couldn't afford; either at all or, as often.  Tens of millions of people in this country are either in poverty; or, they live off fixed incomes; or, they are unemployed; or, their incomes are below minimum wage. For them, price inflation only means that their wallets are shrinking while a relative few of us gets a big fat raise.  Keep in mind, too, at a time when the Big Mac's price was rising by 18%, the median household income fell by almost 9%.

That's why the fast food industry is now in decline and probably why, in conjunction with other regulations being imposed by the Obama Administration, job growth and recovery has been so slow.  Raising the minimum wage again by such high percentages isn't going to help anyone in this economy.  Obama and the Democrats would better serve Americans and the minimum wage worker by forgetting the politics of raising it by big chunks ever few years to garner votes and, once and for all, index the minimum wage so it is automatically increased each year.

References:

Bureau of Labor Statistics: Characteristics of a Minimum Wage Worker 2012: http://www.bls.gov/cps/minwage2012.htm

Statistic.com: Number of employees in the U.S. fast food restaurant industry from 2002 to 2016: http://www.statista.com/statistics/196630/number-of-employees-in-us-fast-food-restaurants-since-2002/

The Economist: Big Mac Index, Feb 1, 2007: http://www.economist.com/node/8649005

The Economist: Big Mac Index, Jul 24, 2008: http://www.economist.com/node/11793125

The Economist: Big Mac Index, Jul 22, 2010: http://www.economist.com/node/16646178

Forget The Obama Hype, This Was A Very Bad Jobs Report

Obama will once again hit the airways and tell us how many consecutive months he's had job creation under his "plan" and, as usual, he will also say that his Administration has created x-million jobs.  But all that is just so much political B.S.  You have to ask yourself this simple question: "If the unemployment rate rose last month, how is it possible that the economy could have actually added 163,000 new jobs?"  The answer is as simple as the question.  The workforce size was being manipulated.

Here are the "real" facts.  For 42 consecutive months, the unemployment rate has been above 8%.  In the last 4 months, the rate has gone "up" from 8.1% in April to 8.2% in May; and, from 8.2% in June to 8.3% in July.  That's the wrong direction.  When Obama took office, the unemployment rate was 7.6%. At the same time, the workforce size was 154.2 million and there were 11.6 million unemployed.  Today, the workforce size is 155 million workers and the unemployed number is 12.8 million.  Net those numbers all together and you would find that the economy actually lost 400,000 jobs since Obama took office; not created them.  The bottom line is that you couldn't have created x-million jobs when, on a net basis, our economy actually lost jobs.

Finally, let's not forget this propagandist chart that the President's economic team put together to justify a near trillion dollars in stimulus spending:

Click on graph for enlarged view

According to the chart, the stimulus was to keep unemployment under 7.9%; and, that, by now, the unemployment rate should be around 5.6%.  Instead, the economy did even worse than what Obama said it would do without stimulus.  Without stimulus, unemployment was supposed to top out at 9%.  In actuality, with stimulus, the unemployment rate hit 10.2%.  Without stimulus, today's unemployment rate was projected to be at about 6%.  Yet, for months, the stimulus has kept us consistently above 8%.  And, now, it's rising again..

Here's a Daily News story on the jobs report: http://www.nydailynews.com/news/national/weak-hiring-expected-fourth-straight-month-article-1.1128191

The Deceptive Argument That Bush Was Losing 750,000 Jobs A Month Before Obama Took Office

Over and over, again, Democrats, such as the DNC Chairperson, Debbie Wasserman Schultz, keep repeating the fact that, before Barack Obama took office, George Bush was losing 750,000 jobs per month; somehow thinking that, by quoting that job loss number, you would believe that Obama had managed to turn around a terrible unemployment situation.

But, what is not being told is the fact that the unemployment rate was still only 7.2% when Bush left office.   From there, the unemployment rate rose to a 26-year high of 10.2% under Obama.  This despite the fact that he had promised that his stimulus package would keep the rate below 8%.  Yet, for the last 41 months in a row, unemployment has stayed above 8%; a post-World War II record.  And, that's a horrible fact that the Democrats are trying to hide with that 750,000 a month job-loss deception.

The Economy Actually Lost Jobs (again) Last Month

Depending on which economist you listen to, the economy needs to add somewhere between 125,000 to 166,000 jobs every month; just to account for population growth.  A failure to do so actually means that the economy lost jobs.  According to last Friday's employment report, only 80,000 jobs were added.  What that really says is that the we actually lost between 45,000 and 86,000 in June.  Would somebody please tell Obama that this is not "a step in the right direction" as he had commented on Friday with regard to the jobs report:

The Stimulus Package Job-Creation Deception

I must have heard this said a hundred times: The Stimulus Package has saved or created 2.5 million jobs. In fact, the President and Vice President have staked this claim in numerous speeches. But, there's a couple of big problems with that claim.

First, the number of unemployed Americans in this country has gone from 11.1 million, when Obama took office in January of 2009, to today's 14 million. That, to me, is a loss of 2.9 million unemployed when the Stimulus Package was supposedly creating 2.5 million jobs.

Secondly, according to the data provided by the Bureau of Labor and Statistics (BLS), the workforce has remained relatively flat at 154 million workers over the last 32 months. This despite additions through normal population growth. In reality, the workforce should have grown to just under 160 million by now. But, instead, it lost all that growth because, statistically, 6 million workers are being categorized as "discouraged." In a nutshell, a discouraged worker is a special unemployed individual who is no longer being counted as part of the workforce because they, for a variety of reasons, have temporarily stopped looking for a job. Usually, when the employment picture improves, these people will start looking for work again and, then, will be counted back in as a valid unemployed worker. Of course, when this happens, the number of unemployed and the unemployment rate will both rise in response.

While the Stimulus Package might have a legitimate claim to having created some jobs, it's hard to tell when looking at the situation from the top down. That's because, as so noted above, our economy has shed nearly 9 million jobs since Obama took office and since the enactment of the Stimulus bill. That's the reality and that's the truth that is being intentionally hidden when the President claims that the Stimulus Package has created jobs. People understand this and that is why 3 or 4 to 1, Americans give Obama a failing grade on both jobs and on the economy.

The Wind-Down Of Iraq/Afghanistan Wars Will Hurt and Help The Economy

Not that I am any fan of war but, Americans should be made aware of the economic consequences of winding down our involvement in the two wars in Iraq and Afghanistan in 2012. In a nutshell, we will lose jobs. That's because the military industrial complex, in support of any war effort, is a real job creator. It's what most economists call a "war-time economy" and, for those spendthrift Keynesians, it is often referred to as "military Keynesianism". But, like all Keynesian spending efforts, the direct economic benefits will also stop as soon as the spending stops.

Right now, we have thousands of workers who have been "employed" in the re-arming, feeding, and outfitting of our military. What percentage of those who will actually lose their jobs is hard to determine. It depends on how many will continue in the war effort by supplying Iraq and Afghanistan troops. In the short term, there is bound to be a hit on employment. However, in the long term, the economic benefits will be significant, because contrary to Keynesian spending theory, the U.S. deficits will be reduced; the dollar strengthened; and consumer spending will benefit from lowered import prices.

Of course, this will all be for naught if Obama and the Democrats try to use the decline in war-spending as some kind of new found money they can spend on more economy-killing social programs. Hopefully, the Republicans won't let this happen.