February 11

Minimum wage increase costs teenagers jobs in Arizona

6  comments

Economic reality rears its ugly head. Money quote:

Oh, for the days when Arizona’s high school students could roll pizza dough, sweep up sticky floors in theaters or scoop ice cream without worrying about ballot initiatives affecting their earning power.
That’s certainly not the case under the state’s new minimum-wage law that went into effect last month.
Some Valley employers, especially those in the food industry, say payroll budgets have risen so much that they’re cutting hours, instituting hiring freezes and laying off employees.

And this is a state minimum wage increase that is significantly less than the proposed federal one. I suspect that a lot more teenagers will be on the street instead of behind the counter at fast-food places when it takes effect.


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  1. Out of curiosity
    How much is the proposed state minimum wage?
    How much do these types of jobs pay in Arizona?
    Hi Neil–
    It’s all in the article I linked.
    The state minimum wage goes from $5.15 to $6.75.  I assume that most of the entry level, no training, no experience required jobs pay minimum wage.
    The proposed federal minimum wage, which will apply to all the states, is $7.25.
    Best–
    MRE 

  2. I have to admit I am confused a little. Somewhere you posted that the minimum wage increase is going to effect very few people in this country. If so few people will be effected then how could it really hurt? As for the teenagers not finding jobs, who IS going to roll pizza dough, sweep sticky floors and scoop ice cream. Are the owners of these busineses going to roll up their sleeves and do it themselves? I doubt it. It will ultimately reflect in customer’s price of pizza or movies or ice cream. I have been in retail management for about 10 years and have done my share of hiring for minimum wage jobs. Short term is kids and retirees can’t find a summer job but once management realizes they can’t get current employees to pick up the slack they hire at the new wage and raise prices. Now these kids can save a little more for college, get educated and learn to not eat popcorn, pizza and ice cream! Finally, give tax breaks to the SMALL business that has to do the hiring and they might not have to raise prices so much.
    Now, I am in retail sales and management, not high finance or complex economics so there is definately more to it then what I have described above so I could be wrong, but it does sound simple to me. Go ahead and rough me up anyhow, it’s how I learn!
    Thanks and keep up the good work.
    Dave
    Hi Dave–
    I’m not gong to rough you up, I’m going to agree with you. If the government provides tax breaks to the small businesses that hire people at minimum wage there shouldn’t be a problem.
    There are only a small number of people who make the current minimum wage of $5.15, but from what I’ve read, about 15% of the workforce receives wages that fall somewhere between the current $5.15 and the proposed $7.25.  All of these people and their employers will be affected.
    If there are no tax breaks, then the employers will make the minimum-wage employees they already have work a little harder to keep from having to make new hires. Ultimately, the employers will have to buckle and make new hires; then their only option will be to raise prices to cover the higher labor costs. In the case of fast food restaurants, this will mean higher prices for fast food. And since teenagers are large consumers of fast food, the increased wages they get will be spent for higher priced fast food.
    Cheers–
    MRE

  3. Sorry, missed the link. My eyes must be getting old!
    So, a $2.10 @ hour increase. Big percentage change, I must admit. Bound to have an effect on employers.
    This is a link to the UK rates, quite a difference between the rates for 16-17 year olds, and those 22 and over. No point in converting £ to $ as spending power varies between us, really. It’s a tricky subject.
    Hi Neil–
    Interesting that the UK has a different minimum wage depending upon the age of the worker.  Would tend to keep the younger, part-time, school age workers employed.
    Also interesting that the adult minimum wage is equivalent to over $10 per hour US.
    Thanks for the link.
    MRE 

  4. I wonder if perhaps you would be willing to send some cash to single mother who’s working 3 jobs to make ends meet.
    I mean after all there’s only 15% of the population living at this level (which if they work the standard American idea of a full time job (40 hours) are still so far below the poverty line the mere idea of escape is beyond them). I would hate for these people to be able to afford health care or actually be able to make their rent and car payments.
    Rich people who feel the need to criticize the governments desire to ease the burden on the poorest people by insisting that the richest pay a little more infuriate me.
    You know who this is going to hit? Walmart. Walmart and other criminally and chronically low paying employers.
    I love your WOE, I hate your view point on this matter.
    I appreciate that you went to school and became a doctor and I have no idea of your background etc. but it is important to remember that not everyone has even the opportunity to go to medical school, college or in some instances even high school and these people have to live to and if *gasp* some teenager has to lose his job for this to happen, well I guess I’ll shed a tear for them next.
    Hi Matt–
    A couple of things. 
    You wrote: “You know who this is going to hit? Walmart. Walmart and other criminally and chronically low paying employers.”
    I doubt seriously that there is a single person working at Walmart who makes minimum wage.  Consequently, I doubt that it will hurt Walmart at all.  If Walmart does employ a lot of people at minimum wage, then there will be an effect.  That effect will be a price increase to cover the increase in labor costs.  The price increase will then adversely affect a multitude of other low-income people, who, primarily, are Walmart shoppers.
    You also wrote: “I love your WOE, I hate your view point on this matter.”
    Why?  I’m not advocating anything, I’m simply pointing out the economic reality of the situation.  It’s the same as pointing out that most people who eat a high-carb diet are going to develop problems because the human genome was developed in a low-carb milieu lasting for millions of years.  I’m sure committed vegans hate my view on this matter, but my view is neither morally right or wrong, it is based on the science of the matter.  It’s the same with economics.  Economics is a social science but it is a science nevertheless.  And it has rules similar to the ‘rules’ of physics that are inviolate.  We can say that airplanes violate the laws of gravity, but they don’t.  The laws of physics keep them flying.  Same with economics.  We can see what appear to be short term violations of economic laws, but ultimately the laws will assert themselves.
    One of the strongest of these laws is that people always act in their own best interest.  You do, I do, the single mother working thee jobs does, we all do.  When governments intervene to perturb relationships that have established equilibrium between people who are all acting in their own best interests, the short term effects appear to be what the government wants.  But, after a little shuffling, a new point of equilibrium is reached, which is usually not what the government wants.
    Let me give you an example in the real world.  In Little Rock, where I lived for over 20 years, the public school system was a disaster.  West Little Rock was affluent and predominantly white; East Little Rock was poor and predominantly black.  There was very little crime in West Little Rock; there was a lot of crime in East Little Rock.  Public schools in West Little Rock were almost all white; public schools in East Little Rock were almost all black.  The government decided to remedy this situation with busing.  They made all the schools in West Little Rock first through third grade only and all the schools in East Little Rock grades fourth through sixth only.  For grades first through third children from East Little Rock were bused to West Little Rock; for grades fourth through sixth children from West Little Rock were bused to East Little Rock.  What happened?  All the parents in West Little Rock kept their children in public schools for grades one through three.  The classrooms were about 70% white and 30% black, which reflected the population mix of the whole of Little Rock.  Starting in the fourth grade, the vast majority of people living in West Little Rock put their children in private schools.  Grades fourth through sixth in the East Little Rock schools were then 90%+ black children. I suppose the government could have ‘made’ the people in West Little Rock bus their children to East Little Rock, but then those parents would have simply moved.  As it was many people who couldn’t afford to put their children in private schools moved to one of the many little cities just outside of Little Rock who didn’t have busing.  In case you’re wondering, we hated the entire Little Rock school system for a number of reasons, so we kept our kids in private schools from kindergarten on.  Our next door neighbors were black and they didn’t like the public school system any better than we did.  They sent their three kids, who were about the same age as ours, to the same private schools that ours went to.

    In my mind the big difference between conservatism (which, by my definition is what used to be called classic liberalism) and liberalism is the different way in which the idea that people always act in their own best interest.  Conservatism (and I’m not talking about the religious right, which I loathe, but true classic, free market conservatism) tries to harness this reality for the public good whereas liberalism tries to fight it and use the powers of government to override it, which, in my opinion, is always going to fail.
    Cheers–
    MRE 

  5. I have to disagree with your definition of Conservatism (from Matt’s comments). You say, “Conservatism tries to harness this reality for the public good.” I think they try to harness this reality for THEIR OWN GOOD. I see it leading to capitalism and greed and a further separation of wealth.
    David, David, David– 
    Of course they do it for their own good.  The single mother in Matt’s comment probably has a car, a computer, a cell phone, and a television–all the fruits of capitalism.  We’re the people that invented these items not rewarded for their efforts, this single mother wouldn’t have any of them because they wouldn’t extist.
    When I say conservatives harness this universal propensity that people have to act in their own self interest, I was speaking of politicians.  When smart people legislate with the realization that people always act in their own best interest, the legislation is usually pretty good.  An example would be giving tax rebates to people who develop businesses in depressed areas.  Businessmen realize that they can end up with more money flowing to the bottom line if they open businesses in these areas, so they do.  The businesses provide jobs the the residents and in general improve the lot of all those living in the surrounding area.  The liberal approach is to force anyone who already has a business in the area to pay more to employees.  The businessman may–if these regs throw him into the red–pack up and leave. Or he raises prices.  If his business is in a poor, underserved area, the people who live there are probably his customers, so they lose. Then the entire area suffers.

    Cheers–
    MRE 

  6. I’ll wait for the statistics at the end of summer. I don’t know why employers always bleat about the minimum wage, when there are so many other factors, like the price of energy. That is going to cause real lay offs, as every aspect of overhead increases.
    Hi LC–
    The price of energy, the weather, price increases of foreign goods, inflation, commodity price fluctuation and other similar hits to overhead are all a part of the normal ebb and flow of an economic system.  The minimum wage increase isn’t–it’s thrust on the businessman by governmental fiat.  That’s why they “bleat” on about it.
    Cheers–
    MRE

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