Strikes for higher minimum wage hit CA, USA

Strikes for higher minimum wage hit CA, USA

996989_707153579297241_2034974676_nAnti-Walmart protests struck across California and the rest of America on Black Friday. The protesters demanded that the giant retailer pay its worker higher wages and benefits.

As part of the protests, Robert Reich is pushing a petition on Facebook. The former secretary of labor in the Clinton administration currently is a professor of public policy at the University of California, Berkeley. He argues that low-skilled workers need more money to live on and that Walmart should pay its workers at least $15 an hour, nearly double the federal minimum wage of $7.75.

Strikes next will hit fast-food restaurants on Thursday. Reported the New York Times, “Seeking to increase pressure on McDonald’s, Wendy’s and other fast-food restaurants, organizers of a movement demanding a $15-an-hour wage for fast-food workers say they will sponsor one-day strikes in 100 cities on Thursday and protest activities in 100 additional cities.”

A year ago, 200 fast-food workers held a one-day strike at more than 20 restaurants in New York City, the first  strike in the history of the America’s fast-food industry. In August this year, 50 more fast food wage strikes took place around the country.

One argument by those favoring the higher wages, including mandated higher minimum wages, is that the higher pay would reduce the employees’ dependence on government benefits, such as food stamps.

Why Walmart?

“Why Walmart?” Reich asks on Facebook. “Because it’s the largest American employer with one of the worst labor records of all employers, because it pays its workers so little they have to rely on food stamps and Medicaid to make ends meet, because it could so easily afford to lead the way upward rather than lead the race to the bottom.”

Many of the strikes are organized by the Service Employees International Union, one of the most powerful unions in the country, especially in California. Joining are two activist groups, Fast Food Forward in New York and Fight for 15 in Chicago.

The SEIU is demanding that fast-food chains allow workers to unionize without alleged retaliation. More union members would increase the union’s clout across the country. The SEIU’s website includes a special page boosting Obamacare. It quotes SEIU President Mary Kay Henry, “The healthcare law means that working families can move forward toward more affordable, secure healthcare and better health, not backward to the status quo of skyrocketing premiums, insurance denials and unchecked profits for insurance companies.”

“In America, people who work hard should be able to afford basic necessities like groceries, rent, childcare and transportation,” Fast Food Forward says on its website. “While fast food corporations reap the benefits of record profits, workers are barely getting by — many are forced to be on public assistance despite having a job.”

‘Enormous profits’

“Employers like McDonalds, Whole Foods, and Sears are raking in enormous profits while workers like us, mostly adults with families, don’t get paid enough to cover basic needs like food, rent, health care and transportation,” the Fight for 15 website says.

However, according to a Bureau of Labor Statistics study for 2012:

“Minimum wage workers tend to be young. Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the Federal minimum wage or less. Among employed teenagers paid by the hour, about 21 percent earned the minimum wage or less, compared with about 3 percent of workers age 25 and over. (See table 1 and table 7.)” 

And of the three firms accused of “raking in enormous profits,” one already pays a high wage and the other two are struggling financially.

Yahoo finance reported that Whole Foods “Team Members” already average $15 an hour. It added, “The majority of them also get benefits and stock options, which many retail employees don’t.”

* Reuters reported that McDonald’s “signaled that weakness would continue in the fourth quarter amid stiff competition and a halting economic recovery, heaping pressure on its chief executive,” Don Thompson. “The company has reported four straight quarters of disappointing sales, Hedgeye Risk Management restaurant analyst Howard Penney said on Twitter.”

* AP reported, “Sales declines at Kmart and Sears stores led to a widened loss in the third quarter for parent company, Sears Holdings Corp. The ailing department store chain also was hurt because it had to do some heavy discounting to get shoppers to spend.”

Minimum wage varies

In California, the minimum wage currently stands at $8 per hour, two bits above the federal wage. However, Gov. Jerry Brown signed a bill in September that would raise wage to $9 an hour next July 1 and to $10 on Jan. 1, 2016.

Nationally, low-wage workers have suffered. USA Today found:

“Front-line, limited-service restaurant workers, a category that includes fast-food employees, earned a nationwide average $9.05 an hour in March, up 2.7 percent the past three years, according to the Bureau of Labor Statistics. By contrast, the pay of all private-sector non-management employees is up 5.7 percent in that period.

“Adjusting for inflation, fast-food wages have fallen 36 cents an hour since 2010, even as the industry has raked in record profits.” 

Additionally, many of the fast-food chains have said they will have to cut employees’ hours this year to get below the 30-hour-per-week threshold that makes them eligible for Obamacare. So even if these employees’ hourly wages go up, their weekly wages could drop from working fewer hours.

Conservative critics, such as the Heritage Foundation, have blamed the sluggish economy on high taxes and more regulations, such as the Obamacare mandates. The critics insist that wage growth won’t resume for such workers until Reagan-style cuts in taxes and regulations are passed.

What’s wrong with the strikes?

Nobel economics laureate Milton Friedman taught for many years about the dangerous consequences of government intervention, such as mandated prohibitions on the employment of low-skilled workers. Friedman said that, if those workers could not persuade employers to hire them at higher hourly wage rates, without acquiring more skills, lower wages were appropriate, and what the market would bear.

Friedman explained his position in the following YouTube:

There’s no free lunch

As Friedman reasoned, when the government mandates a higher minimum wage, businesses are forced to make adjustments to pay for the added costs. Consequences include reduced hiring, reduced employee benefits, reduced work hours and usually higher prices for consumers, threatening inflation.

Advocates of raising the minimum wage claim businesses are able to absorb the costs through reduced profits, “but that’s rarely the case,” according to economist Mark Wilson, in a 2012 study by the libertarian CATO Institute. “Instead, businesses rationally respond to such mandates by cutting employment and making other decisions to maintain their net earnings. These behavioral responses usually offset the positive labor market results that policymakers are hoping for….

“Seventy years of empirical research generally finds that the higher the minimum wage increase is relative to the competitive wage level, the greater the loss in employment opportunities. A decision to increase the minimum wage is not cost-free; someone has to pay for it, and the research shows that low-skill youth pay for it by losing their jobs, while consumers may also pay for it with higher prices.”

Such arguments have not convinced the advocates of a higher minimum wage, such as President Obama. He recently said:

“As they struggle to put food on the table and pay their rent, minimum wage workers aren’t standing for it any more. Across the country, we have seen courageous workers go on strike to call attention to the fact that their wages cannot support their families. We stand behind these workers in their effort to raise their wages. We cannot rely on employers to pay a living wage, the federal government must intervene and that is what these workers are fighting for.”

Unlike in California, a state dominated by Democrats, Republicans control the U.S. House of Representatives. That gives the GOP veto power over any minimum-wage increase. So the battle largely will remain at the state level. Soon we will see the effects, for good or evil, of California’s higher minimum wage.

21 comments

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  1. Queeg
    Queeg 2 December, 2013, 20:11

    Here’s the deal.

    Never buy a service job…….join a union……….buy a cheesy franchise……keep open a low margin service business.

    Never tip service workers…..let their employer pay them what they are worth to the business.

    Never glorify MBA’s…….the modern slave masters ala globalism.

    Domestic Manufacturing….the hope for future economic growth.

    Reply this comment
  2. LetitCollapse
    LetitCollapse 2 December, 2013, 22:02

    I personally hope they raise the minimum wage to $25/hr. and turn the California strip malls into ghost towns. For every action there is a reaction. For every cause, an effect. You want to mess with the laws of basic economics? Bring it. Wait until the 11M-30M amnetized illegals become americanized and grow an attitude. lol. Didn’t you see the tens of thousands of them marching in downtown LA during the MayDay protests demanding equal rights? lol. And they don’t even belong here. Try doing that in Mexico as a foreign national. lol. Wait until they get amnetized. lol. See what happens then. That’ll turn you dyed in the wool liberals into hardcore conservatives overnight. lol. Trust me!

    Reply this comment
  3. Katy Grimes
    Katy Grimes Author 3 December, 2013, 07:22

    Queeg, I was a business owner – a manufacturing business with very tight margins. But we employed 250 employees. Some were very skilled and earned really good salaries, and some had few skills and were paid $8 per hour. But acquiring more and new skills was possible and employees moved up and increased pay quickly. But they did it through the acquisition of skills, which made them very good employees, and proud they earned the raise.

    It’s a simple lesson, but an important one.

    Katy

    Reply this comment
    • dave bowen
      dave bowen 12 December, 2013, 09:52

      Good for you Katy,but the problem is,you are the exception to the rule,especially in so called right to work states like Arizona. Here,even good workers can go literally for years without a raise,and get fired for their audacity when they are forced to craawl and beg for one. I know one fellow who was on the same job for six years,never offered a raise. When he asked his boss why,he was told it was because he was unproductive and unreliable. Now,what kind of an idiot employer would keep a lousey worker on staff for six years? But that kind of cheapskate attitude and employee abuse if the rule in right to starve states not the exception.

      Reply this comment
  4. LetitCollapse
    LetitCollapse 3 December, 2013, 08:02

    Of course, a BIG part of the ‘immigration reform’ and ‘path to citizenship’ scam is to keep wages suppressed by flooding the job market with indigents who are used to living 10 to a one bedroom apartment. The oligarchs want you to live that way eventually too. Poor people are darn easy to control. You don’t believe me? Look to India, China, Afghanistan. The elite on Wall Street and in DC observe how these other nations have turned their people into indentured servants and say “Heck, if they can do it, why can’t we?” And now you are seeing their plan put into action. But many of you are in denial because you prosper from the status quo. So why would you question the progressive destruction of the middle class? You feel free. You feel above the status of an ‘indentured servant’. Like a superior. Like a typical insider. If you live in San Diego take a drive through East San Diego. If you live in Orange County take a drive through Santa Ana. If you live in LA take a drive through East LA. If you live in Sacramento take a drive through North Sactown, Oak Park, Del Paso Heights. See the implementation of the plan of action for yourself. Saturate society with foreign indigents who will work for practically nothing, keep wages suppressed, displace the american underclass from prospects of viable employment, tax the working middle class producer to the hilt to subsidize the poor, erode the middle class, grow the poverty class – and there you have the perfect formula for total control over a society. Look to India. Look to China. Look to Afghanistan. Oh, and pay the high school educated cops over $100k a year to maintain order. lol. More bread and circuses for the masses.

    Reply this comment
    • dave bowen
      dave bowen 12 December, 2013, 09:55

      Hey letitcollapse! Right to work laws that give employers the legal right to lie to,steal from cheat and otherwise abuse the help is the problem not immigration

      Reply this comment
  5. Queeg
    Queeg 3 December, 2013, 11:18

    Katy

    Manufacturing is our only hope for true economic growth. Exploitive service jobs have little hope to improve productivity….

    Liberals want shiny toenails and ultra premium coffee; they pay for such services with dirty money…..government direct/indirect funded jobs and cronyism ….

    Everywhere you observe…..people are seething, stressed and experiencing the cooking frog syndrome….more fees, more regulations, more taxes, poor roads, bizarro political payoffs to windmill/solar/pseudo bullet train grifters and there is a nightmare assault to socialize an already wobbly health care system shackled with more non payers than payers.

    Concluding, add in globalist parasites……sucking out precious local community dollars…..sorta like giving the Indians cheap shiny beads for Santa Barbara coastal land……is California truly too big to fail!

    Reply this comment
  6. LetitCollapse
    LetitCollapse 3 December, 2013, 12:08

    The great bond market guru, Pimco’s Bill Gross, just issued another warning to America today. In so many words Bill said that the Fed continuing to perpetually suppress the interest rates at ZIRP levels with QE to promote growth is like holding a rattlesnake by it’s tail. And I have said this same thing many times in the past. It’s like flooding a man’s endocrine system with bolus doses of testosterone to make him feel better. It’s all good until his organs start to fail. FOR EVERY ACTION THERE IS A REACTION. FOR EVERY CAUSE, AN EFFECT! Bill says that the global economies and their artifically prices markets are increasingly at risk. And he’s absolutely correct. Bill says the low interest rates are ruining rates of return on fixed income investments and are forcing ordinary people to move into higher risk investmetns that are not compatible with a sound investment strategies. Yep. You bet. And when the bubble bursts – they get caught holding the empty bag. lol. You mess with the classic laws of economics and you get burned. Bill sees it. So do I. Naturally, as a bond man Bill’s getting burned with these perpetually low interest rates. It’s great for the mortgage holder. It’s a hellish nightmare for someone who relies on interest income. And it’s not only grandma’s savings deposit account. It’s the pension funds, and the social security/medicare trust funds. And by penalizing the one who relies on interest income they are destroying his incentive to infuse capital back into the system to build a strong and vibrant economy. You can get away with it only so long before the classic laws of economics drop the hammer. lol. Oh, and it’s coming. You see, they have painted us into a corner. If they raised the interest rates the stock market would plummet, house prices would tumble, U/E goes northbound and the GDP would go into negative numbers immediately. The only thing keeping GDP positive today are the massive infusions of fiat QE. It’s like handing the drunk with stage 4 liver disease another bottle of scotch to cure his alcoholism. lol. An invitation to disaster.

    Oh, and the FDIC released it’s latest financial numbers ending 3Q/2013. The massive QE machine infused $118B into the banks for the quarter. That’s about $400B a year or about $1200 for every man, woman and child in the country. Do you know how much interest those same banks paid out? Only $13B. Don’t believe me? Look it up. And indications are that QE is not working like it did before. You see, it’s like with a heroin addict. His body developes a tolerance to the drug and he needs a bigger and bigger fix to get the same effect. Same with QE and the economy. But the banks make out like bandits. And the common depositor gets screwed, blued and tatooed.

    The balance sheets are getting played by financial con artists to benefit them and set you up for a fall. Be careful out there.

    Reply this comment
    • John Seiler
      John Seiler 4 December, 2013, 08:23

      But Gross still doesn’t come out for returning to the gold standard.

      Reply this comment
      • LetitCollapse
        LetitCollapse 4 December, 2013, 10:21

        Probably because Bill knows the GS is unworkable since 95% of gold production occurs outside the United States. What would prevent the formation of gold cartels like they’ve done with oil cartels and OPEC? Then the fate of the US monetary system would be controlled by unfriendly foreigners and our sovereignty would go up in smoke.

        The basic problem confronting us in any monetary system of your choice is fraud and extortion. The fiat system we use today would work fine if it wasn’t managed by thugs who have willfully violated their sworn legal obligations to maintain stable prices, promote full employment and give us a sound banking system. At least we (the people) have the power to replace the Fed since it’s home grown (even though modern day Americans are incredibly apathetic and love to be abused by those in power without resistance). We would be powerless over foreign cartels who controlled the gold supply. Bill probably understands that too.

        The solution is to rid the system of extortion and fraud. Not to hand over our sovereignty to foreign nations.

        Bill does fully understands that artificially manipulating the discount rates for an extended periods of time is placing the nation’s economy in grave peril. And it takes a lot of courage for a man in his position to make such a statement. And he should be commended for it. Heck, the mainstream media won’t even be honest about it with us! lol.

        Reply this comment
  7. NTHEOC
    NTHEOC 3 December, 2013, 17:57

    Sweden just made a law that the ceo can only make 12 times the lowest paid employee. Here greed is making us a third world country,Ronnie Regan was wrong, trickle down does NOT work!!!! Over a hundred years ago, when “Barons” were getting rich and their company workers were dying in the streets, there was a call for Unionization! I predict, soon, that will happen again. It will happen when all of you people realize that Companies and Managements don’t care about the workers. They care about the $Dollar$.

    Reply this comment
    • LetitCollapse
      LetitCollapse 3 December, 2013, 19:26

      The public unions are worse than the Wall Street thugs who are working hand in hand with the gov to cook the books. Just as greedy too. The middle class gets squeezed on both ends in America – by the banker goons on WS who control the Fed and by the public union cartels that own the pols.

      But there is hope. A Federal judge ruled today that Detroit qualifies for bankrupcy and can proceed with it’s filing. This means the municipal pensions get a nice haircut. lol. And this will set legal precedent for the same in Los Angeles, Chicago, Philly, etc…

      There’s more than one way to skin a cat. Have a seat in the chair. You want it cut around the ears and tapered in the back??? lol

      Reply this comment
    • Rex the Wonderdog!
      Rex the Wonderdog! 3 December, 2013, 19:44

      Here greed is making us a third world country,
      =
      And it is MOST prevalent with firewhiners, then cops, and then all government trough feeders.

      Greediest slimeballs ever.

      Reply this comment
      • dave bowen
        dave bowen 12 December, 2013, 09:58

        all of whom you would be bitching about if you could not get them when you need them.If you do not like cops,why don/you do the job. NO GUTS?

        Reply this comment
    • John Seiler
      John Seiler 4 December, 2013, 08:22

      Private-sector unionization in the USA is down to 7 percent of the workforce from about 33 percent in 1955. Unions nowadays basically are for government workers, until the government too goes bankrupt.

      CEOs make so much because they have manipulated the government to stifle the competition through hyper-regulation, effectively giving us oligopolies. Get rid of Dodd-Frank, Sarbanes-Oxley, AB 32 (in California), etc., and new firms then will be allowed to sprout up, compete, and keep executive salaries reasonable.

      Reply this comment
  8. Hondo
    Hondo 3 December, 2013, 21:45

    Robert Reich, Salon, and Democracy Now and a couple other radical leftys have been caught paying interns less than the minimum wage. Far less than what Walmart pays. And Democracy Now was encouraging their underpaid interns to go on food stamps.
    The hypocracy of the left is off the scale.
    Hondo….

    Reply this comment
  9. Queeg
    Queeg 4 December, 2013, 10:13

    Never met a liberal that was not a fanatical, unbalanced screamer incapable of discussing their failed Utopia.

    Most them are deep in the snout in government feedbags too!

    So there…..yeah…..there…..twitch!

    Reply this comment
  10. Currita
    Currita 5 December, 2013, 14:41

    Ever wonder what happened to the great civilizations of the past? Seemingly disappeared from the planet. Were next.

    Reply this comment
  11. Richard Rider
    Richard Rider 9 December, 2013, 18:51

    Excellent article, Katy. But here’s a caveat: Call these demonstrations “protests,” but DON’T call them “strikes.”

    A strike is when the employees refuse to work, and leave the job. 98% of these “strikers” at these protests are union activists, paid protesters, misguided baby boomer hippies and some hard core communists.

    But almost none of the protesters WORK for the business being “stuck.” The few that do are protesting during their off hours — dutifully returning to work for their next shift.

    Reply this comment

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