Saturday, September 20, 2014
FAIRFIELD-SUISUN, CALIFORNIA
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Time for minimum wage hike in Solano?

By
From page A9 | June 15, 2014 |

The never-ending campaign for minimum wage increases is popping up in cities across America. Seattle recently approved a ramp-up to a $15 minimum wage. Just down Interstate 80, Richmond last week approved a $13 minimum wage implementation plan.
What would happen if a Solano County city pursued this?

Let’s use a pizza parlor as a model. In this parlor, “Joe” has a skill set limited to sweeping floors, and thus is worth $5 an hour to me, whereas “Sally” can sweep floors and run the cash register, so she is worth $10 an hour to me. If I am mandated to pay a minimum of $10 for a unit of labor, I will look for the maximum return. Thus, I will want another person who can sweep and run the register; since Joe can only sweep, he will be out of a job. In order to maintain my labor budget, I will remove employees and/or reduce hours, and implement processes to make them more efficient.

Let’s stand on the other side of the counter: Our pizza parlor sells a small cheese pizza for $5, and a large cheese pizza for $10. If they started charging $10 for either pizza because they “needed” to make $10 per pizza, would you still get the small pizza, or upgrade to the large?

In today’s economy, pressure is on to reduce costs, particularly labor. Countless California businesses can attest to the increasing hassle of hiring employees. Currently, most of California has a reported unemployment level of more than 10 percent. This indicates that the current supply of available labor exceeds the current demand for labor. If your local store has an overstock of product, do they increase the price to sell it?

Any wonderful government mandate must have exceptions. Under the Richmond mandate, businesses that pay less than 800 hours of employee wages over a two-week period will be exempt from the city minimum wage requirements (but still pay the state minimum wage). Additionally, Richmond businesses that “derive more than 50 percent of their income from transactions where the point of sale is outside the city” will be compelled to pay an “intermediate wage,” defined as the average of the city’s minimum wage and the state minimum wage.

Small-business owners: How easy would it be to track these metrics? If I deliver pizzas outside of the city limits, is that point of sale outside of city limits? Does our hypothetical pizza parlor have to start tracking each delivery, and prorate the delivery person’s wages accordingly?

Additionally, migration is a factor. If Richmond has a minimum wage of $13 and hour, and Dixon has a minimum wage of $10 an hour, many Dixon residents would be motivated to hunt for jobs in Richmond. A business in Richmond, as a buyer of labor, would have more selection of labor, and thus would be pickier. When prices rise, naturally or artificially, supply will inevitably increase.

I acknowledge that it is near impossible to raise a family on a minimum wage job; but here is the cold truth: minimum wage jobs aren’t supposed to; they are entry-level jobs. If a job seeker views entry-level jobs as their “forever” career and plans to support a family with it, they will be sorely disappointed.

If our goal as a society is to raise the price of labor, the most feasible method is to increase the long-term demand for labor. If the goal is to increase the labor participation rate, then remove restrictions and barriers. Those in favor of mandating and restricting what employers should pay for a job will find employers choosing not to participate in the labor market.

Brian Thiemer is chairman of the Solano County Libertarian Party. He can be reached at lpsolanocounty@gmail.com.

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Discussion | 16 comments

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  • rlw895June 15, 2014 - 3:37 am

    So, should there be no minimum wage anywhere?

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  • Tax PayerJune 15, 2014 - 6:12 am

    wow, some common sense. Let's see how it goes in Richmond paying $13 per hour! Maybe all of our hommies we go back there!

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  • CD BrooksJune 15, 2014 - 7:02 am

    I'm all in against raising the minimum wage. It was never intended to be a living wage and should not be considered as such. I have stated and stand by my assertion that it should be reduced back to $5 an hr. If you want to make the argument that it is all relevant then a return to $5 is relevant also. It will once again open opportunities for young people to enter the work force, allow the business to make a tidy profit and save us consumers a little, while driving all those people using the jobs as supplemental income elsewhere. A win-win in my opinion. NO, I understand that won't happen but I firmly believe it should. I will not patronize a business that raises the minimum wage.

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  • CD BrooksJune 15, 2014 - 8:16 am

    Sorry, meant to say "relative" not relevant.

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  • archieJune 15, 2014 - 7:03 am

    Couldn't agree with you more Mr. Thiemer,,,,,,,,, sometimes the truth hurts but you stated the reality of the matter,,,,,, well done.

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  • Mr. PracticalJune 15, 2014 - 7:54 am

    All these current minimum wage increases is election year politics. Cities and California propose and pass these bills without any understanding of the complicated impact these increases have on the economy. While there is never a good time to burden business, this is the worst time to implement huge increases. California has a bill working its way through the legislature now that would incrementally increase the minimum wage from the $8 an hour we have today to $13 an hour in 2017, a 62% increase over a 3-year period. Keep in mind that employers pay 15% in payroll taxes and their workers comp premium is based on payroll. Auto mechanics, by California law, must pay double the minimum wage if they don't supply all tools and equipment required for the job. Most mechanics bring their own tools to the job. This proposed increase, for auto shops, would result in an increase of $12.80 per mechanic, per hour. A shop that has 3 full-time mechanics would see a payroll increase of $7,987 per month. Do you think that mechanic, in this recession, are taking home $8,000 a month?

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  • CD BrooksJune 15, 2014 - 8:50 am

    Mr. Practical, good morning and Happy Father's Day! I knew mechanics were usually hired and required to bring their own tools. Never heard about the salary requirements, wow interesting.

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  • MarkJune 15, 2014 - 7:58 am

    Raising the minimum wage will have businesses doing one or more things...reducing costs (often labor), increasing prices, accepting lower profits or closing/leaving the area. Three out of four of those things hurts the minimum wage worker. Every business is going to do a slightly different mix of those things, but as prices rise the minimum wage worker is the one that is the least able to afford the rise in prices.

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  • rlw895June 15, 2014 - 8:51 am

    Good analysis.

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  • rlw895June 15, 2014 - 8:55 am

    Good point that raising the minimum wage will tend to reduce the market for unskilled labor.

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  • Rick WoodJune 15, 2014 - 8:59 am

    The "never ending campaign" over the minimum wage should end. I agree with that. It should be set at a national level and then be adjusted automatically based on a CPI. But I think politicians in Washington like the unending campaign.

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  • Mr. PracticalJune 15, 2014 - 4:27 pm

    Rick, what would you say to the already struggling business owners to which another minimum wage increase could be their final straw? Labor can't be reduced further. Prices can't in most cases either. During the recession, revenues have been reduced dramatically for the vast majority of businesses. The cost of doing business, particularly in California has continued to rise. Do you really want more empty buildings and storefronts? There should not be any federal minimum wage. It should be solely a state issue and never be adjusted for inflation. The impact it has on the economy is not consistent with CPI. It should always require legislation.

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  • Rick WoodJune 15, 2014 - 9:01 pm

    I agree that it should be a state issue, but as well as a federal issue, not instead of. Some states will only race to the bottom and feel very smug about it. I also agree that adjusting for inflation, or a CPI, is a good idea only if the adjustment is carefully crafted. It should be revisited from time to time to see how it's working and adjusted accordingly, but not every year. The idea is for the impact to be realized in increased prices to consumers and to minimize other impacts.

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  • JagJune 15, 2014 - 10:00 am

    I agree with the article but WHAT no one caught the fact this guy thinks someone is going to go from Dixon to Richmond to get a minimum wage job,,,, Lol But in all serious I just checked yesterday on San Francisco is gathering signatures as we speak they have until July 7th to gather what they need to make the November ballet, They to want to go from the current $10.51 to $15.00 in the company I work for we currently have about 300 employees with that wage, the problem for them is we have a larger facility in Los Angeles and I have no doubt the company will have to move these positions if San Francisco makes that move, and at some point I think we will have to look outside California

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  • CD BrooksJune 15, 2014 - 1:15 pm

    We’re not big on fast food but occasionally use them for a quick stop on the road or if it’s just too hot for cooking, whatever. We like to go to restaurants where I’m a 20% or nothing tipper and you have to really screw up to get nothing. If the raises occur, we simply will not go for fast food and I’ll lower my tip at restaurants by the actual dollar amount of the raise. When they raise it again, I will no longer tip at all. This is a really bad idea folks. Can you say “domino effect?”

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  • Obama another 8 more years!June 15, 2014 - 8:41 pm

    The lowest wage in Solano County should be $52 dollars a hour......It's time to make it easier for people to survive. After this increase.. Min. wage should go up $5 a year...This is the only way to make it where people can survive and get off welfare!

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