Last week, CNN reported that since Target promised to lift its lowest wage to $15 an hour by the end of next year, employees are saying they are worse off as the incremental raises have kicked in. Someone should have warned them that would happen.
When Target announced in 2017 that it was going to increase its minimum wage, “the move won praise from labor advocates and put pressure on other companies to also move to $15,” says CNN.
It is now $13 an hour. And it’s causing problems for Target staff members.
CNN spoke to 23 current and former Target employees in recent months and what it found should not astonish but confirm what we know.
“Some store workers say the wage increases are not helping because their hours are falling, making it difficult to keep their health insurance and in some cases to pay their bills,” says CNN.
One employee interviewed said “I got that dollar raise but I’m getting $200 less in my paycheck.” She started last fall working about 40 hours a week. But now, says the network, she’s working fewer than 20 some weeks and has “no idea how I’m going to pay rent or buy food.”
Another said she was averaging 35 to 40 hours a week, thought she was going to soon qualify for health insurance benefits, then quit in May when her hours were cut to 15 a week.
CNN reported that the Target employees “who say their hours have dropped have been given a variety of reasons why by their supervisors, including that there were not hours available or that their managers couldn’t fit additional hours in their budgets.” Well, of course. Was another outcome expected?
A little-third grade math goes a long way. If a company adds $1 an hour to every hour its wage employees work, whether it’s done voluntarily or through government force, its payroll has to expand. If the larger payroll is unaffordable, then something has to be cut — hours, jobs, or both.
“The negative economic tradeoffs for minimum wage workers” after minimum wage hikes, “unfortunately, cancel out most of the paycheck gains,” says a recently published Competitive Enterprise Institute report,
Other disadvantages include “fewer job openings, longer job searches, reduced hours, stricter policies for arriving late or leaving early, increased automation, higher insurance co-pays, less vacation and personal time, reduced or eliminated on-the-job perks (and), reduced employee discounts,” according to the report, as well as greater outsourcing, rising youth unemployment, and fewer minority workers hired.
Economists have been warning policymakers for decades of the downsides of minimum wage laws. The lessons are out there today, from Seattle, to San Francisco, to New York, to Sen. Bernie Sanders’ presidential campaign staff. But policymakers never listen once they get it into their heads that minimum wage increases are good politics.
Higher wages work for some business models. Both Chick-fil-A and In-N-Out pay better than their competitors. In return, they have the hardest workers, the most dedicated, service-oriented work forces, and it boosts their brand, which expands the bottom line. Each decided to outbid their rivals for the best employees through superior compensation packages without orders from central planners in government or pressure from busybody agitators. They made clear-headed business decisions.
Those companies are the exceptions. Most companies have to live within the rules. They’re not capricious rules but laws based on hundreds of years of observations of economic behavior. When politicians think they can repeal these rules, trouble always follows.
— Written by J. Frank Bullitt
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