Back To Minimum Wage Debate: All That Noise To Drown Out The 800-Pound Gorilla Story

The other day I mentioned I would get back to these two stories if I remembered/had the time. I'm caught up for the moment, so back to the story on minimum wage. This is what I wrote a couple of days ago:

In Connecticut, some minimum-wage workers say raise hasn't helped much. Actually, it's much worse than that.  The second story, it appears, has already been removed. It was about support for minimum wage in California. I guess the Times editor thought the story should be pulled for some reason. I will watch for it. [Update: I can't find that second story but now the LA Times has an op-ed suggesting that the liberal newspaper is changing its stance on the minimum wage -- perhaps after reading the Connecticut experience.]

The Connecticut story is important. It has all the usual arguments, pro and con, but there was a section of the story that caught my interest. See if you see what I saw:

Employment growth in Connecticut has lagged behind the nation since December, data show. Nationally, employment grew 0.62% from December through April, while employment in Connecticut fell 0.19% over the same time period.

Much of that drop-off was related to the elimination of 10,900 jobs in January, the month employers had to start paying 45 cents more. In the previous three years, Connecticut had added an average of 4,000 jobs over the same time period.

More job cuts wouldn't surprise economists. If companies have to pay more for labor, they'll try to save somewhere else, said Keith Hall, a research fellow at the Mercatus Center at George Mason University.

Did you see it? Do you really think that employers eliminated 10,900 jobs in January because of a "proposed" wage increase, that was incredibly low to begin with? You have to be kidding.  Okay, here's another hint:

When Segui began working at Dunkin' Donuts, she was scheduled for 35 hours a week. A few months ago, she and other workers starting getting fewer hours. She now works from 20 to 27 hours a week.

Employers say they're worried that minimum-wage hikes will inflate their whole pay scale; they fear they'll have to raise all wages so that skilled workers proportionally get more than unskilled workers.

Whether you schedule someone to work 35 hours or 27 hours ,you still need all the hours covered.

Regular readers know the 35-hour vs 27-hour 800-pound gorilla in the room. I have to go back and see if the story mentions that 800-pound gorilla.

Yup, here it is:

Shanece Coleman, 25, began working at Burger King in Hartford a year and a half ago. At first, she worked 40 hours a week, and it was still difficult to pay her rent of $625 and provide for her 8-year-old son.

Then Burger King reduced her hours to 28 hours a week because, she was told, the company didn't want to have to provide her with healthcare under the Affordable Care Act.

And so it goes. The minimum wage story: it's all noise to drown out the bigger issue that will affect jobs: ObamaCare.

Also note: the companies are reducing hours/week well below the 30-hour threshold so there's a bit of slack in case someone actually clocks in a bit early or clocks in a bit late. The stories above show 20 - 27 weeks, and 28 hours, well below the 30-hour threshold.

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Housing (Non) Recovery

By the way, this leads me to the next story: Fed Chairman's problem with housing.

Background: it really, really helped me to have read Grand Pursuit by Sylvia Nasar to help me understand macro-economics, and help me understand why we are not seeing a housing recovery. The two main reasons we are not seeing a housing recovery despite record low mortgage rates: a) lowest labor force participation rate in quite some time; and, b) lack of capital due to Dodd-Frank, SEC, government rules on banking. The second reason (lack of capital) is mentioned in the linked article; labor force participation rate is not mentioned.

The other reason, of course, is the effect ObamaCare is having on the economy in general. If folks required a second income to afford a home, getting one's hours cut from 40 hours to 20 hours because of ObamaCare will probably nix the deal on buying a home.

Another reason was mentioned in the article: a dearth of starter homes. 

But any article on the economy that fails to take into consideration ObamaCare is missing a huge story line. ObamaCare is "US Health" and health represents 1/6th of the US economy.

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I Am Not Weak

The DailyMail is reporting:

–  'I believe in American exceptionalism with every fiber of my being,' the president insisted, yet he used the words 'partner' and 'partnership' 16 times in his speech at West Point, outlining a contradictory foreign policy 

– Obama replaced the phrase 'collective action' in his prepared remarks – with the words 'multilateral action' several times 

– working through NATO and the UN will dominate American foreign policy, Obama said: 'This is American leadership, American strength' 

"I am not weak." At least that's better than "I am not a crook." I guess.

Actually, again, one must parse the words. "I am not weak," suggesting he IS (Captain) America. If so, "I am not weak" suggests America is not weak. I agree: America is NOT weak. But America is a whole lot less strong than when Obama came into office. I've run out of fingers and toes to keep track of the lines the President has drawn in the sand (and the Black Sea).