The Energy And Market Page, And Some Politics Thrown In, T+19 -- February 9, 2018

WTI: drops over 3% in mid-morning training. WTI now solidly below $60.

LNG exports: it never quits. With CNPC deal, Cheniere's train 3 at Corpus Christ becomes more likely.  Wow -- China. Ka-ching.

Cheniere Energy, Inc. has entered into two liquefied natural gas (LNG) sale and purchase agreements (SPA) with China National Petroleum Corp. (CNPC), the Houston-based company reported Friday.

“These long-term SPAs build upon the Memorandum of Understanding we signed in November, and we look forward to a successful long-term partnership with CNPC,” Cheniere President and CEO Jack Fusco said.

According to Cheniere, CNPC unit PetroChina International Co. Ltd. will purchase approximately 1.2 million tonnes per annum (mtpa) of LNG under the SPAs with Cheniere subsidiaries Corpus Christi Liquefaction, LLC and Cheniere Marketing International LLP. A portion of the supply will start this year and the balance will begin in 2023, Cheniere added. Each SPA term continues through 2043 and the LNG purchase price will be indexed to the Henry Hub price plus a fixed component.

Fusco also stated that Cheniere expects the SPAs to support the development of a third train at the Corpus Christi Liquefaction export terminal that it is building along Corpus Christi Bay in San Patricio County, Texas.

Road To Canada: from Bloomberg, but a paywall, so this link with the same story to the Financial Post:

• Canada institutes minimum wage; this was from globalnews less than six months ago -- repeat, less than six months ago:

Concerns over the provincial minimum wage increasing to $15/hr by 2019, combined with the proposed elimination of so-called tax loopholes for small business have some economists predicting significant job losses in Ontario.

• Canada's labor market suffered its biggest monthly job loss since the last recession -- all part-time -- as employers faced quickening wage gains
• Canada shed a net 88,000 jobs in January (2018), a sharp drop to a recent stellar performance that saw 2017 produce the biggest increase in jobs since 2002
• the drop
• 137,000 part-time jobs
• a gain
• 49,000 in full-time work
• the drop coincided with an increase in the minimum wage in Canada's largest province -- Ontario; the national wage rate accelerated an an annualized pace of 3.3 percent, the fastest since 2015
• but one can find any number of folks arguing just the opposite, and finding statistics to prove their point (see the comments at the linked article), but it's hard to argue with facts even if you have your own statistics

Whatever.   

Making America great: I find this graphic incredibly interesting. The dollars spent on utility infrastructure in the United States doubled -- from $10 billion to $20 billion over seven years of one administration. I find that remarkable. Doubled. As in 100% increase. One would think that this might be something we would have seen in a developing country but this was in a country that apparently had a pretty good utility infrastructure.

These are the kinds of graphics we need in the Obama Library. One would think that this would be something he would want to showcase. By the way, the $10 billion over seven years works out to almost exactly one penny per American per day (assuming I did the math right). What a great country.

People talk a lot about the money needed for the country's infrastructure. My hunch: a lot of money is already being spent on infrastructure. (And, yes, I know what drove that doubling of infrastructure expenditures. Don't even get me started.)

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Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship-related decisions based on what you read here or what you think you may have read here.

Geee! GE is solidly below $15/share now. I remember some weeks ago, the talking heads over at CNBC suggested GE could/would/should hit $15. The question, I suppose now, is whether GE will hit $10? Probably not. Maybe $14 is its floor.

Wow, I would love to opine, but this is not an investment site.

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Island Rising!

Updates

February 10, 2018: from JoanneNova --

Original Post 

The poster-child island for "anthropogenic global warming sea rising" or AGWSR for short -- is growing. I can't make this stuff up. From phys.org: 

The Pacific nation of Tuvalu—long seen as a prime candidate to disappear as climate change forces up sea levels—is actually growing in size, new research shows.

Has the UN sent Tuvalu that $50 billion -- mostly from US taxpayers -- to save themselves from rising seas yet?

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Budget Busting BS

Somehow I can't get too excited about all that talk that the budget deal went too far -- busting the budget caps again.

We're talking $300 billion over two years -- over two years. Or less than $150 billion / year -- Buffett, Bezos, and Cook could cover that without blinking an eye.

And, of that $300, $90 billion (or over 25%) will be for disaster relief --

The aid package would earmark $23.5 billion to replenish FEMA's primary fund for recovery and repair programs, provide $28 billion for block grants to rebuild housing and essential infrastructure such as highways, and dedicate $2 billion to improve the power grid in the U.S. Virgin Islands and Puerto Rico where nearly 40% of the island remains without electricity months after Hurricane Maria made landfall.

After you subtract all non-military stuff out, in the big scheme of things, on a percentage basis, the military isn't getting the windfall Rachel will have you believe.

The agreement would increase defense spending this year by $80 billion and domestic spending by $63 billion beyond strict budget caps, according to a summary of the deal obtained by POLITICO. Next year, defense spending would increase by $85 billion and domestic funding by $68 billion beyond the caps. The deal also includes $140 billion for defense and $20 billion for domestic in emergency spending over two years.

Most entertaining: Senator Bernie Sanders went through a laundry list of why this was a great bill -- all the funding it provided for his favorite programs ... but, as he said, "at the end of the day, I have to vote no on this budget deal." Why? Because he's Bernie Sanders. That's what he does.

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Notes to the Granddaughters

Sophia's pre-kindergarten class has been studying space travel for the past two weeks. I assume they are watching videos of Elon Musk's red Tesla hurtling towards the red planet. Today, they are enjoying real astronaut food. What an incredibly clever way to market ice cream. Color me impressed:

Hey, We're Not Carl's Jr -- Yet -- So, Two Trainwrecks To Hit Fast Food This Year And Next: ObamaCare AND $15 Minimmum Wage -- May 13, 2016

Updates

Later, like just one minute later: The story below regarding Wendy's and kiosk ordering is a pretty good story. But this is even more interesting: Starbucks is way ahead of the game. They don't use kiosks. They use those 6-inch, hand-held, personal assistant, mobile devices called iPhones. Yup. That's right. You've seen them. Really thin.

I could not believe the number of folks who now purchase their pineapple-infused, triple-sugar, double-caffeine, guano gluten-free, chocolate lattes off their iPhones.

Seriously. The drive-through lines at Starbucks here in north Texas are so long, folks are now ordering ahead on their iPhones, and then going in to pick up their drink. It's actually faster for the baristas and the customers. First of all, the stuff is already paid for; no messy handling of gooey Starbucks cards or Hamiltons (or Tubmans in the future). Second, you don't end up behind the office gopher who was sent to order 23 coffee drinks for the office.

And if folks are willing to do this for a cup of coffee, they will have no trouble doing this at Wendy's. I have no idea why Wendy's, et al, would go to the expense of putting in kiosks when iPhones work just as well.

And don't tell me "well, not everyone has an iPhone." LOL. Maybe not in Tibet, but here in the good ol' USA even a two-year-old, like Sophia, has her own iPhone. [She doesn't know, that it's a fake.]

Original Post

Investor's Business Daily is reporting that self-service ordering kiosks will be made available across Wendy's 6,000-plus restaurants in the second half of the year as minimum wage hikes and a tight labor market push up wages.

It will be up to franchisees whether to deploy the labor-saving technology, but Wendy’s President Todd Penegor did note that some franchise locations have been raising prices to offset wage hikes.

McDonald’s (MCD) has been testing self-service kiosks. But Wendy’s, which has been vocal about embracing labor-saving technology, is launching the biggest potential expansion.

Wendy’s Penegor said company-operated stores, only about 10% of the total, are seeing wage inflation of 5% to 6%, driven both by the minimum wage and some by the need to offer a competitive wage “to access good labor.”

It’s not surprising that some franchisees might face more of a labor-cost squeeze than company restaurants. All 258 Wendy’s restaurants in California, where the minimum wage rose to $10 an hour this year and will gradually rise to $15, are franchise-operated. Likewise, about 75% of 200-plus restaurants in New York are run by franchisees. New York’s fast-food industry wage rose to $10.50 in New York City and $9.75 in the rest of the state at the start of 2016, also on the way to $15.

Carl's Jr CEO wrote this just a few weeks ago:

So why the increased use of technology? The major reason is consumer preference. 

Research shows that many appreciate the speed, order accuracy, and convenience of touch screens. This is particularly so among millennials who already do so much on smartphones and tablets. I’ve watched people—young and old—waiting in line to use the touch screens while employees stand idle at the counter.

The other reason is costs. While the technology is becoming much cheaper, government mandates have been making labor much more expensive.

In 2015, 14 cities and states approved $15 minimum wages—double the current federal minimum. Additionally, four states, 20 cities and one county now have mandatory paid-sick-leave laws generally requiring a paid week of time off each year per covered employee. And then there’s the Affordable Care Act, which further raises employer costs.

Dramatic increases in labor costs have a significant effect on the restaurant industry, where profit margins are pennies on the dollar and labor makes up about a third of total expenses. As a result, restaurants are looking to reduce costs while maintaining service and food quality.

Highly automated models have limited applicability for restaurants with more complex menus. For example, at CKE Restaurants, the company I lead, our Carl’s Jr. and Hardee’s employees make biscuits from scratch. They bread chicken tenders by hand, prepare complex burger orders, hand-scoop the ice cream for milkshakes, and the restaurants offer table service. None of these tasks can be effectively automated, and we wouldn’t want them to be.

So, we got two trainwrecks hitting the fast food restaurant this year and next: ObamaCare and the $15 minimum wage.

Actually, there will be a third trainwreck to hit the fast food restaurants this year: restaurants are going to have to install two more restrooms, make a total of four with the following signs: men, women, LGBT, and confused. ["Confused" will be found to be "inflammatory" by the courts, and will be replaced with something more descriptive, perhaps, "still deciding."]

In Tennessee, the restroom signage will have to be in 120 languages. 

A lot of publicly-educated millennials will probably stand in the LGBT line to order a bacon, lettuce, and tomato sandwich because the line will be much shorter than the one out front.

Reality Of Life -- Minimum Wage At UC Berkeley -- April 22, 2016

Reason #235 why I love to blog:

Back on October 31, 2015, I posted:

Saturday mornings in north Texas belong to "other" breakfast restaurants, but we seldom go any more: the lines are way too long, and the waits are upwards of 90 minutes. Yes, the Texas breakfasts are that good. But now McDonald's has added a new wrinkle.

Something tells me that we will be reading articles at the end of this business quarter about the decision made by McDonald's to offer breakfast all day long.

It's very possible someone is going to look like a genius.

It would have been fun to sit in on the focus groups and the PowerPoint Presentations when the idea of "all-day breakfast" was being pitched at McDonald's.

Now this, today, from Yahoo!Finance:

McDonald's just reported quarterly sales that beat analysts' expectations.

In the US, first quarter comparable sales increased 5.4%, fueled by the ongoing popularity of All Day Breakfast and the introduction of McPick 2 - a branded national value platform.

Analysts were looking for a more modest 4.4% gain in comparable sales, which represents sales growth in stores open for more than a year.

McDonald's fans' wish for breakfast served all day came true last fall. While this has been disruptive for the competition (and some franchisees), it has been a hit with customers. And McDonald's numbers show it. 

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UC Berkeley School of Hard Knocks MBA

Investor's Business Daily is reporting:

Hundreds of employees at the University of California at Berkeley are getting schooled in basic economics, as the $15 minimum wage just cost them their jobs. Too bad liberal elites “fighting for $15” don’t get it.

A week after California Gov. Jerry Brown signed the state’s $15 minimum wage boost into law, UC Berkeley Chancellor Nicholas Dirks sent a memo to employees announcing that 500 jobs were getting cut.

Coincidence? Not really.

Last year, University of California President Janet Napolitano announced plans to boost its minimum wage to $15 at the start of next school year, independent of the state law. Since UC Berkeley was already in financial trouble — it ran a $109 million deficit last year and is projecting a deficit of $150 million this year — number crunchers there had to have factored in the higher mandated wage when making their layoff decisions.

Those workers might want to have a chat with the folks at UC Berkeley’s Center for Labor Research, who just days before Brown signed the wage-hike bill released a study touting the minimum wage as a boon to low-income household breadwinners.

After that report came out, Ken Jacobs, chairman of the UC Berkeley center, told the Los Angeles Times, “This is a very big deal for low-wage workers in California, for their families and for their children.”

One thing is missing from this article. The expectation from management is this: if you were making $7.50/hour and now you are making $15/hour, you will be expected to do more.

And, oh, by the way, your social security tax and your income tax withholding will also increase. But, on paper, at least, you are making $15/hour.

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ObamaCare And Part-Time Work

We've blogged about this from the very beginning. Nice to see it's being validated.

From AEI:

And, we still think that the employer mandate to provide health insurance for full-time workers in the Affordable Care Act caused some of the increase in involuntary part-time work. …

In a note last year, we pointed out that the shift strikingly coincided with the passage of the Affordable Care Act (ACA), which included an employer mandate to provide health insurance to employees working 30 or more hours per week. As shown in Figure 3 at the link, passage of the ACA preceded a large and unprecedented shift from workers working more than 30 hours per week to just under 30 hours. We continue to believe that the ACA can explain a significant number of the “extra” involuntary part-time workers.

McDonald's -- $15-Minimum Wage? Here We Go In Missouri -- April 20, 2016; New Poll

Not noted by mainstream media for the most part yet:

McComb says the 6,500-square-foot Missouri restaurant will be unique because it will allow its customers to place their orders at digital kiosks and customize their burgers and desserts.

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New Poll: Your Choice For The $20 Bill

I'm too lazy to change it; I forgot to add the option where one could add one's own answer, so in the new poll at the sidebar at the right you are "limited" to the choices. If you feel strongly that you have a better choice, use the "comment" section below.

I believe the criteria for the current selection was limited to the individuals at this site + 1. 

Longest Jobs Recovery On Record Since US Started Tracking Data In 1939, The Year Germany Invaded Austria; Suicide-In-Seattle

First, the background. When I first started following the unemployment numbers, I could never keep track of the magic numbers (see below). So, I posted the "magic numbers." They have come in very, very handy. The Obama administration moved the goal posts (not surprising) but I've kept the original numbers.

The Magic Numbers

The two key numbers:

• First time claims, unemployment benefits: 400,000 (> 400,000: economic stagnation)
• New jobs: 200,000 (< 200,000 new jobs: economic stagnation)

Economists estimate the labor market needs to create about 125,000 jobs a month to keep the unemployment rate steady, though estimates vary -- Reuters. That was when mainstream media moved the goal posts, the first time I noted that Reuters had changed the number -- and it was changed significantly.

I will stick with 200,000 (the "magic number" prior to the Obama administration) -- it's a nicer, "rounder" number to remember.

Over the two years that I had been posting these updates, it had become clear/obvious that the figures were often suspect, if not outright falsified. On November 18, 2013, it was reported that, indeed, unemployment figures have been falsified.

In the home stretch of the 2012 presidential campaign, from August to September, the unemployment rate fell sharply — raising eyebrows from Wall Street to Washington.
The decline — from 8.1 percent in August to 7.8 percent in September — might not have been all it seemed. The numbers, according to a reliable source, were manipulated.
And the Census Bureau, which does the unemployment survey, knew it.

 Take the numbers for what they are worth, I guess. Not much. As so much else with ObamaNation.

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Today's ADP figure: 179,000 new jobs. Expectation: 210,000.

Analysis: lousy, lousy report.

How the press reported it:

• US News: this is the fewest new jobs created since January.
• Daily Finance: private employers add fewer jobs than expected in May.
• The AP: US businesses pulled back on hiring in May, adding fewest jobs in four months.

How bad was it? Compare this to the report back in February when "everyone" (even CNBC) said 175,000 new jobs was a bad, bad, bad report (today's number was practically the very same number):

February 5, 2014: new jobs, 175,000 in January, 2014. Lousy report. Anything less than 200,000 = economic stagnation. Note: this is the ADP number for new PRIVATE jobs; I believe the government figures for ALL new jobs comes out at the end of the week; analysts are expecting a number of 190,000 which is less than the magic number of 200,000.

 Interestingly, there was no real analysis why US employers pulled back in May. Remember, for months now (actually, years), the AP and Reuters have been telling us the weekly first time claims report is evidence that employers are starting to hire more people. Inconvenient truth: not happening.

And this was in May. One can't blame it on the winter weather (oh, I suppose you can, and some will), but winter is over. Hellooooo. One could make the opposite argument; after the slowdown this past winter, employers should have been eager to get back on track. There should be a lot of pent-up demand. I guess that's what the analysts thought; they expected 210,000 new jobs. So, we got 179,000.

And it appears the mainstream media does not care.

CNBC is focused on what-they-call-the-break-even-point:

Set your sights on this number: 113,000.

That's how many jobs the U.S. economy needs to hit its break-even point, to finally recover all the jobs lost in the financial crisis.

Get ready, because we're about to get there this Friday.

That's when the U.S. Department of Labor will release its May jobs report, and the outlook is rosy. Economists surveyed by CNNMoney expect the U.S. economy added 200,000 jobs in May.

"The outlook is rosy." That's why the Dow is barely in the green today. LOL.

So, $1 trillion in stimulus (and the stimulus continues) and six years into the Obama recovery, we are at the break-even point. You have got to be kidding: CNBC thinks this is good. And folks listen to them for investment advice. Okaaaaaayyy.

Another inconvenient truth:

Breaking even is a key milestone, but was a long time coming. It took just two years to wipe out 8.7 million American jobs, but it took more than four years to recover them all, making this the longest jobs recovery on record since the Department of Labor started tracking the data in 1939.

Despite $16 trillion in debt, $1 trillion initially in stimulus. Or whatever it was. Maybe it was $2 trillion when you add in the printing of money since then. The numbers hardly matter any more, do they. 

The question needs to be asked: why did employers pull back on hiring in May, just when everyone thought we turned the corner?

When you are listening to the mainstream media talk about the break-even point this Friday, remember, in the past six years the US population has increased significantly, mostly due to illegal immigrants, I suppose. Even as the population is increasing, a smaller percentage of folks are actually finding jobs. The percentage of Americans in the labor force has decreased significantly under President Obama.

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Suicide in Seattle

The $15/hour minimum wage approved by the Seattle city council continues to reverberate.

The Washington Post is reporting:

DRAKESBORO, Ky. — In the shadow of Paradise Fossil Plant’s aging smokestacks, where white steam and carbon dioxide rise into the sky, outdated coal-fired generators are being replaced with one that runs on natural gas.

The change in Muhlenberg County, once the nation’s top producer of coal, is emblematic of what’s been happening across the U.S. as natural gas becomes cheaper and electric utilities try to meet stiffer carbon emissions rules the Obama administration announced this week. When the $1 billion natural gas facility is finished in 2017, the Tennessee Valley Authority, the nation’s largest public utility, will shut down two coal-burning units at Paradise that date to the 1960s.

Randall Parham, who earns about $19 an hour working at the Paradise No. 9 mine, said new restrictions set forth by the White House on Monday could endanger the livelihood of many in Kentucky. The state is required to cut its carbon emissions by 18 percent by 2030.

Forget all the EPA stuff. We already know the proposed rules are DOA.

Did you see what I saw in that article?

I consider coal mining one of the most dangerous jobs in America. It is surely one of the most arduous. It may be one that is least glamorous. And look what coal miners get paid: $19/hour (before union dues). So, they probably make about ... drum roll... the same wage entry-level hamburger flippers now expect to earn in Seattle. 

Time to get back to the Bakken. Have a great day folks.

For Investors Only -- June 3, 2014; Seattle Raises Minimum Wage To Double Federal Minimum

Dividends: Lowe's increased their dividend substantially, from 18 to 23 cents.

Trading at new 52-week highs: DVN, EPD, ERF, PSXP, TRGP,

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here.

AAPL is moving back up after yesterday's incredible WWDC announcements. I thought the presenters' narratives were often a bit cheesy and unnecessary, but the software was incredible. Steve Jobs would have been a better pitchman. May he RIP.

AAPL will soon execute its announced 7-1 stock split. Just looking at the graphs of a number of energy stocks it looks like there may be a number of other companies that may be split 3-2 or 2-1 before the end of 2015.

Car company news I heard on the radio sounded good. So let's check.

Ford: May sales rose 3.0% year/year to 254,084 vehicles: Retail sales set several model records with 174,889 vehicles sold - an increase of 6 percent.

Data points:

• Fusion: best month ever 
• Escape: best month ever 
• Explorer: best month in 10 years 
• Lincoln MKZ: best May ever

Ford sales in India? Up 105%. Most of the probably run on gasoline.

Comment: this certainly doesn't sound like a bad economy despite all the bad mainstream news. No wonder the president is not worried about jobs.

General Motors: same with GM -- a huge month. General Motors delivered 284,694 vehicles in the United States in May, up 13% compared to a year ago.

Data points:

• company's best May in seven years
• best total sales since August 2008
• sales to individuals up 10 percent
• fleet sales up 21 percent

Comment: this certainly doesn't sound like a bad economy despite all the bad mainstream news and the lawsuits. No wonder the president is not worried about jobs.

Gold his a four-month low, longest losing streak in seven months.

T is getting a lot of press today: the company raised revenue guidance, but lowered earnings guidance. Maintains #1 position among Dow dividend payers.

I see the city of Seattle increased its minimum wage to $15/hour.

This may be one of the more interesting "local" stories to watch. If the entire state went to $15/hour minimum wage, that's one thing, but the city is awash with suburbs just outside city limits. It doesn't take a Ronald McDonald clown to figure out where Burger King will expand.

Inner city folks will note it first. In Seattle it may not be a big deal, the inner city is probably not as poor as the inner cities of Detroit, NYC, Boston, and Atlanta. But stereotypically, inner city residents will have more difficulty paying higher prices for commodities (fast food, gasoline, everything in Wal-Mart) than the folks in the suburbs.

I saw a great example of this in Belmont, a suburb of Massachusetts, during the four years our younger daughter and her family lived there. Not quite the same story, but a great analogy.

Belmont is a prosperous suburb (home of Mitt Romney). A lot of rich folks live there. The not-so-rich represent the spectrum: well-to-do to lower middle class homeowners. It's a big suburb, population: 24,000.

But over the four years I visited there I noted there were no restaurants to speak of (except pizzarias). I did not notice any nice restaurants. Finally, I asked about that, curiosity getting the best of me.

It turns out Belmont was a "dry" city up until very recently: no alcohol allowed to be served in any restaurants. So, no restaurants. But plenty of nice restaurants in the city of Boston and all the surrounding suburbs. So, I suspect the same thing will happen in Seattle and other cities who unilaterally raise the minimum wage to double the state minimum wage: new retail stores will build on the other side of the street, just outside the city limits. Gradually, over time, the existing retail base will gradually melt away. The city will lose its tax base, and its poorer citizens will lose access to less expensive alternatives. The inner city workers -- bankers, brokers, lawyers, pharmacist, physicians -- might work in the inner city during the day, but they will go home to their suburbs on evenings and weekends.

It will be interesting to watch this play out. I may be wrong. Inner city folks may get used to paying higher prices for McDonald's, along with their higher electricity bills, and earning $15/hour will allow them that luxury.

With regard to the "Suicide-in-Seattle" a reader raised a couple of issues:

• customers willingness to tip "high-paid" Starbucks baristas?
• 7.65% for social security from both employer and employee
•  grocers to benefit as more folks brown-bag it, rather than stop at fast-food restaurant for lunch

  >Sleepless in Seattle
, Soundtrack

Fast Food Restaurant Expansion -- Ain't Happenin' With Minimum Wages Rising To $15/Hour

See this earlier post on same subject, Connecticut's experience.

I do a lot of long distance driving; I love fast-food restaurants. I have also spent a lot of time in California (and go back twice/year). One of the first fast-food restaurants I first saw when I moved to Los Angeles 30 or 40 years ago was Carl's Jr. I always wondered why I never saw new ones going up in southern California. I assume "In 'N Out" was part of the reason, but so is the story being reported by CNBC below.

CNBC is reporting via Yahoo!Finance is reporting:

CKE Restaurants' roots began in California roughly seven decades ago, but you won't see the parent company of Carl's Jr. and Hardee's expanding there much anymore.

What's causing what company CEO Andy Puzder describes as "very little growth" in the state?

In part it's because "the minimum wage is so high so it's harder to come up with profitable business models," Puzder said in an interview. The state's minimum wage is set to rise to $9 in July, making it among the nation's highest, and $10 by January 2016.

That's as far as I've read ... so far. Let's see if the 800-pound gorilla in the room is mentioned?

Yup, there it is, a bit farther down:

ObamaCare regulations, which impact businesses with 50 or more workers more than those with fewer employees, are also affecting CKE's franchise growth.

"I actually have franchisees...who've either gotten out of the business or refused to build two restaurants because with one restaurant you have less than 50 employees," he said. "With two, you have more than 50."

Instead, some cautious franchisees are considering alternatives to expanding their businesses.

Apparently at least one group of Chicago aldermen want to minimize entry-level jobs and even minimize new fast-food outlets by proposing a $15/hour minimum wage.  But Seattle appears to be beating Chicago to its own no-growth program; a Seattle city council committee voted for a $15/hour minimum wage and now the entire city council will decide.

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).