The Objective Reality of Raising the Minimum Wage

People laughed at Pizza Punch owners John Puckett and John Soranno two years ago when they raised their minimum wage to $10 an hour for entry level employees and $13 for management. Predictions of their demise were heard from the usual sources. Of course, that didn't happen. 

Instead, their company is doing quite well. In fact, they've opened two more restaurants bringing the total to 10 now in the Twin /Cities area. Puckett said the higher wages did not cause Punch to increase prices. He also said it “has had a big impact culturally in the company.” He said that retention of employees is up, which helps them save money on hiring and training. He estimates the average worker in the front — cashiers and waiters who are often students — work about three years, while the kitchen workers average five years of employment, which is very high for this transitory industry. “Our retention is light years ahead of most restaurants,” Puckett said.

“We just weren’t getting the quality of applicant before. Now we have a lot more applications that we don’t have jobs for. If you pay people more, I think you can demand more. When we did this, we got everybody together and said, we need to blow people away with our service.” Asked about those strange, angry calls when he increased raises, Puckett laughed.

“The cynics didn’t win,” he said.

Yet this is just one example in one state. It's also a micro examination. To find a macro example, one need look now further than Seattle which, one year ago, mandated a $15 an hour minimum wage. Those same critics claimed that unemployment would skyrocket as businesses would not be able to retain employees. When the law was passed, Seattle's unemployment rate was 4.4 percent. Today it's 3.7 percent.

I think their prediction on this Labor Day 2015 was not correct:)

The Labor Participation Myth

The Republican talking point about labor participation was recently torpedoed by Factcheck.org. Among the facts...

Sen. Lindsey Graham said the labor participation rate “is at an all-time low.” That’s not accurate. It was lower between 1948 and 1978. 

Republican National Committee Chairman Reince Priebus blamed the shrinking participation rate on “the Obama economy,” but economists say most of the decline, which has been happening for more than a decade, is due to demographics, including the trend of baby boomers reaching retirement age and deciding to no longer work.

More specifically...

1) The aging of baby boomers. A lower percentage of older Americans choose to work than those who are middle-aged. And so as baby boomers approach retirement age, it lowers the labor force participation rate. 

2) A decline in working women. The labor force participation rate for men has been declining since the 1950s. But for a couple decades, a rapid rise in working women more than offset that dip. Women’s labor force participation exploded from nearly 34 percent in 1950 to its peak of 60 percent in 1999. But since then, women’s participation rate has been “displaying a pattern of slow decline.” 

3) More young people are going to college. As BLS noted, “Because students are less likely to participate in the labor force, increases in school attendance at the secondary and college levels and, especially, increases in school attendance during the summer, significantly reduce the labor force participation rate of youths.” 

So no matter who was president, and independent of the health of the economy, BLS projected in 2006 that labor force participation rates were going to go down.

As usual, conservatives feel that they are entitled to their own facts:)