How an increase in the minimum wage can mean a pay-cut for employees

by Rod Williams- Evidence suggests that raising the minimum wage has negative consequences.  One is, that it is inflationary. When the minimum wage requires that a company began paying the lowest-paid employee $15 an hour and that employee had been earning $10 an hour, that employee not only gets a boost in pay but so does the employee who supervises that employee.  If the supervisor had been earning $15 and now the people he supervises make $15, he must be given a raise, also. And so on up the line.

In some instances, the extra cost of production can be absorbed by the company, or partially absorbed, but in most cases, and especially in the case of businesses with low-profit margins such as fast food, the cost of the good or service must be increased. Increased wages and the increased cost of goods and services is inflationary. 

Another result of increases in the minimum wage is an increase in unemployment.  In a time when employers are having a hard time finding employees, this may not be noticeable, but when the economy shifts and work is again harder to find, the unemployed will have a harder time finding a job.  

One way companies respond to minimum wage laws is by increasing automation.  Automation occurs anyway, but some automation that may never have occurred, or may have occurred much slower will accelerate with an increase in the minimum wage.  Some entry-level jobs will simply disappear.

We know that minimum wage laws make it harder for people to climb out of poverty.  Working in fast food or many other minimum wage jobs may not be a desirable career, but it is those entry-level jobs that teach one how to work, assume responsibility, and gain skills for the next, hopefully, better-paying job.  Minimum wage laws have the effect of cutting the bottom rung off of the latter. 

Now, researchers from the Harvard Business School have found that the minimum wage, in some instances, maybe many instances, may not even actually increase an employee's total compensation.  The below article explains how this is so. 

Research: When a Higher Minimum Wage Leads to Lower Compensation 

by Qiuping Yu, Shawn Mankad, and Masha Shunko, Harvard Business Review, June 10, 2021-

... Part of what makes it so tricky to quantify the impact of minimum wage policies is that they can influence firms’ behavior in a variety of complex, interrelated ways. In addition to changing employment rates, studies suggest that firms may strategically respond to minimum wage increases by changing their approaches in other areas, ... 

Based on this analysis, we found that increasing the minimum wage had no statistically significant impact on the total number of labor hours employed at a given store. In other words, stores hired workers to work for the same overall number of hours regardless of whether minimum wage increased.

However, our data suggests that the way in which those hours were allocated among workers did change. For every $1 increase in the minimum wage, we found that the total number of workers scheduled to work each week increased by 27.7%, while the average number of hours each worker worked per week decrease by 20.8%. For an average store in California, these changes translated into four extra workers per week and five fewer hours per worker per week — which meant that the total wage compensation of an average minimum wage worker in a California store actually fell by 13.6%.

This decrease in the average number of hours worked not only reduced total wages, but also impacted eligibility for benefits.

Top Stories

Why, if you are not worried about inflation, you are not paying attention. Selected reading.

Why You Should Worry about Inflation 

Kevin D. Williamson , National Review-  The short-term reason to worry about inflation is the obvious one: higher prices. We are in a very risky spot for higher prices right now, because of three mutually reinforcing factors: monetary stimulus (“quantitative easing”), fiscal stimulus (trillions in spending prompted by the coronavirus emergency), and — sometimes overlooked in the policy debate — the interruption of the actual production of goods and services during the epidemic, exacerbated by supply-chain disruptions and higher costs for some raw materials resulting in part from Donald Trump’s misguided trade war with the nefarious, scheming Canadians (among others). 

... the long-term reason to worry about inflation. When the Fed drives up interest rates to slow down inflation, it generally raises borrowing costs throughout the credit markets — including, ultimately, the cost of financing our national debt. Debt service will cost the U.S. government about $380 billion this year, accounting for 8 percent of all federal spending. For perspective, that is about what is spent on undergraduate instruction at all of the nation’s public colleges and universities combined. It’s a big chunk of change — and it’s big with interest rates that are very, very low by historical standards. If the cost of financing the debt goes up, it could easily blow a Pentagon-sized hole in the federal budget. Money that gets spent on debt service is money that isn’t available for other things, whether that’s the ordinary heavy expenditure for Social Security and Medicare or emergency measures in the face of some unknown future crisis. The more you owe, the fewer options you have.

.... a big chunk of our national debt has to be refinanced on a relatively short timeline — months and years, not decades.

Biden and the Fed Are Creating an Inflation Crisis

by BOB LUDDY, The American Spectator - ...Treasury Secretary Janet Yellen asserts that inflation is transitory and shortages are temporary. More than 300 American manufacturers have asked the Biden administration to end disruptive tariffs to ease shortages and reduce costs. Galvanized steel has doubled in price and is only sold on allocation, resulting in severe shortages. Steel in the EU is 40 percent lower in cost, which provides a huge advantage to our EU competitors. The HVAC industry is experiencing the worst inflation since the mid-1970s. Housing is experiencing shortages and inflation. ... gas prices have increased 50 percent in just a few months...

 Powell’s Fed initially contracted the Fed balance sheet but reversed course and began to buy government and other securities at the rate of $150 billion per month. The balance sheet has expanded from $4 to $7.4 trillion. The impact of these purchases is to destroy market pricing of interest rates. Short-term interest rates are near zero, which denies savers any return and forces speculative investments, undermining orderly, rational markets. The worst Fed policy is their promotion of 2 percent inflation, which undermines the buying power of the lowest-income workers. This policy is cruel and stupid. Once inflation begins, it’s difficult to arrest. Paul Volcker tamed inflation in the ’80s, but very high interest rates crushed economic growth.

Fed forecasts higher inflation while sustaining record stimulus  By Jim Tyson, CFO Dive- 

Brace yourself, here’s why inflation could create a ‘giant wealth transfer’ from lenders to borrowers

By Jillian Berman, Market Watch- Higher prices for rental cars, airplane tickets and uncooked beef roasts have economists and consumers wondering whether we’re living through the start of an inflationary period. 

 It remains to be seen whether these price hikes are just a temporary blip resulting from a pandemic-era mismatch of supply and demand or an indication of inflation, an uptick in prices that continues month after month across a broad array of goods and services. If the latter holds true, at least one demographic could benefit from the trend: anyone, including consumers and governments, that holds fixed-rate debt.

“Inflation could be this giant wealth transfer,” from lenders to borrowers, said Kent Smetters, the faculty director of the Penn Wharton Budget Model, which analyzes public policy proposals’ impact on the budget and economy. “A lot of the lenders are people with wealth and a lot of the borrowers are people without wealth. It’s the lenders who are going to take a bit of a bath, and the borrowers are going to get a discount on what they have to repay.” 

Here’s how that might work: Analysis: 

Economists eye surging money supply as inflation fears mount

June 17 (Reuters) - Some economists are warning that surging money supply may exacerbate a rise in U.S. inflation, which is already accelerating at its fastest rate in more than a decade. 

Money supply - which measures outstanding currency and liquid assets - rose 12% year-over-year in April, according to The Center for Financial Stability's Divisia M4 index including Treasuries. The measure has been running between 22% and 31% each month since April 2020, fueled by unprecedented economic stimulus from the Federal Reserve and U.S. government. 

That compares with annual growth of around 3-7% that was common from 2015 to early 2020. “This money supply growth is just so much faster than anything we’ve seen,” ....

No inflation worries at the Fed 

The Wall Street Journal, By The Editorial Board - Let’s try one of those multiple choice questions we all hated on SAT tests. Question: Which of the following doesn’t fit with the others? ...  If you answered D), you aren’t a member of the Federal Open Market Committee (FOMC), which on Wednesday reaffirmed its pedal-to-the-metal monetary policy despite a booming economy and rising inflation that even the Fed anticipates will be 3% this year. … The one hint of change is that seven of the Fed forecasters predicted a rate increase in 2022. But that is only up to 0.25% (two members) or 0.5% (five). The median estimate is still no rate hikes through 2022 and only up to 0.6% in 2023.

Top Stories

THIS IS YOU, ON THE WRONG SIDE OF HISTORY

"Confusing what you think immediately, politically desirable with the Will of History, Evolution, or God is almost certainly an excuse to stop thinking altogether. That doesn’t mean what you want is always wrong. It does mean that it is not necessarily right." From Anthony Sacramone of ISI Books and Modern Age. To read the essay follow this link. 

To be told you are "on the wrong side of history" is just a tactic by a bully to shut you up.  I don't think there is a "side" of history nor a guaranteed outcome. 

Top Stories

Metro Council increases mayor's request and passes $2.6 billion budget

NASHVILLE, Tenn. (WTVF) — Metro Nashville City Council members voted to pass a $2.6 billion budget Tuesday night. What was ultimately passed was a substitute budget by Council member Kyonzté Toombs. It includes much of Mayor Cooper's initial budget proposal as well as multiple additions. 

It includes a nearly $81 million increase in funding for Metro Nashville Public Schools, which would go toward teacher pay raises. The budget will also add more than 100 police officers to the Metro Nashville Police Department, and millions for transportation, affordable housing and neighborhood funding. (link)

Top Stories

AIER's Bastiat Society of Nashville presents, "Is Inflation Coming?"

Dear Rod, 

AIER's Bastiat Society of Nashville invites you to join us on June 23rd at 6:00pm for an in-person event with Thomas Hogan, Senior Research Fellow at AIER. Since the start of 2020, the Federal Reserve has increased the money supply by more than 30%. In April, the Consumer Price Index (CPI) rose by an annualized rate of 4.2%. 

Is this a sign of major inflation to come? How will recent changes in Fed policy affect the economy? 

Join us as Thomas Hogan discusses the Fed's recent actions and what they could mean for inflation and the economy. 

The Bastiat Society of Nashville's speaker series is co-sponsored by The Beacon Center of Tennessee & The Political Economy Research Institute (PERI) (affiliated with Middle Tennessee State University). This co-sponsorship does not necessarily constitute an endorsement of the speakers' positions on the issues discussed. 

Ticket Prices: $0 for Founding Members, $10 for Annual Members, $20 for Non-Members, $0 for Actively enrolled university students who register with a .edu email address. Those who register with a non- .edu email address will be unregistered and asked to purchase tickets at full price. 

Registration Required. Let us know if you're coming.

Register Here

Top Stories

Comment from Mayor John Cooper on Passage of FY2021-22 Metro Budget by Council

Metro Press release, 6/16/2021 - “After a year of crisis, Nashville is finally entering an era of

investment,” said Mayor John Cooper. “And with this budget, we’re laying the foundation to build a city that truly works for everyone with historic investments in our schools, transportation, community safety, and affordable housing.

 “We’re making these essential investments with a tax rate that is more than a dollar less than our average rate over the past quarter century – the third lowest in Metro history. I’m grateful to the Metro Council for working with us to fix and protect our finances, which has made this year’s investment budget possible. Today, there’s no city in America better positioned for the years ahead than Nashville.”

#

Rod's Comment: Mayor Cooper continues to use the argument that our taxes are low because we have a modest tax rated.  Looking at the tax rate is only half of an equation.  One can have high taxes and a low tax rate. Home prices have soared in Nashville. 

For details on the current Metro budget see this link: Citizens' Guide to the Metro Budget. 

Top Stories

Michelle Foreman, President of TRA, sets the record straight regarding trumoil at TRA. Says if Sharon Ford persist in defamation, slander or libel, legal action will follow.

To: Fellow TRA members 

From: Michelle Foreman, TRA President 

Date: June 14, 2021 

Re: Corrections to misinformation 

Michelle Foreman

Various friends have informed me that there are Facebook pages from which I have been blocked, as well as emails and text messages, that are posting incorrect and slanderous information about me and my leadership with the TRA. These friends have encouraged me to address this and provide the correct information because the incorrect information is being perceived as fact. 

People’s emotional responses are understandable. If I myself were to read the communications, and the subsequent comments, in all likelihood I too would be concerned on behalf of Sharon Ford. I have learned that being offended is a choice. With this understanding, I choose not to be offended. However, after the correct information is provided, along with the documentation, please understand that if such slanderous comment continues to be made, proper steps must be taken to protect myself and my reputation. 

George Washington said, “Truth will ultimately prevail where there are pains taken to bring it to light”. In the spirit of this statement, I offer the following information. 

During the past several years, the TRA had been “on the ropes” per se, and membership had dwindled to the point that the NFRA (the parent organization) was poised to revoke the TRA Charter due to the lack of membership. Attendance at TRA meetings, at times, was less than 5 people and membership had plummeted to less than 40 members. Former TRA members willingly stated why they did not renew their membership and allowed their membership to elapse, and the common denominator seemed to point back to the leadership of then-President Sharon Ford. These members expressed they had been disrespected by Ms. Ford in the way she interacted with them on several occasions, and they had no confidence in her leadership (see below for a letter from a former TRA member expressing such sentiment). 

Before I assumed the position of President, TRA had lost virtually all of its membership. There was no money to donate to worthy candidates. Sadly, the TRA had lost credibility and influence within Middle Tennessee. Ms. Ford was unable to effectively serve in the capacity of President due to personal and financial reasons, and to her credit, she recognized the TRA’s and her dire situation. 

Ms. Ford came to me personally and asked me if I was willing to step into the role of President of the TRA because she believed in my leadership. She sent out a letter to TRA supporters and Board members, that she resigned. In this letter she stated: 

This serves as my official resignation effective January 31, 2020”. “Two months ago, I asked Michelle Foreman to join the TRA Board and she agreed. Michelle demonstrated her willingness and capabilities to the cause in her past two campaigns and will be a good fit. Robert Qualls and Charlene Damron have been board members for over a decade, so I leave the TRA in good hands with these three patriots.

Prior to this letter, on January 4, 2020, I was elected to serve as First Vice-President of the TRA. Subsequent to Ms. Ford’s resignation effective January 31, 2020, and per TRA bylaws, ARTICLE X, SECTION 10.01, which states “in the event of a vacancy in the office of President occurring between annual Conventions, the First Vice President shall become President for the remainder of his predecessor’s term”, I became TRA President. This was also reiterated in an email from Ms. Ford to Robert Qualls, Charlene Damron, and me, in which she stated, “as First VP you [Michelle] automatically become president and we won’t have to wait until next year’s election”. 

Under the 2019 updated TRA Chapter Bylaws by then-President Sharon Ford, I assumed the position of President of the TRA Chapter. I am honored to have the opportunity to serve as president of the TRA. I was convinced then, and even more so today, that there is a core loyal membership along with those who are joining us, who will help restore the TRA to its purpose and full potential. 

However, I must confess that there were those who expressed concern that once the TRA membership was rebuilt, the bank account replenished, and the website updated, that Ms. Ford would attempt to take back control of TRA, at any cost, based on their experiences with Ms. Ford. My response was that I did not think that would happen, and I defended those assertions against Ms. Ford. Sadly, I was far from correct. 

As I stepped into my new role with the TRA, with the help of some good and dedicated people, I developed a game plan to help move the TRA forward. 

The following was a perplexing surprise of the events that followed after I assumed the position: 

1. Ms. Ford would not give me or Stacy Ries Snyder, our fellow TRA member and website volunteer, access to the then-existing TRA website (tennesseerepublicanassembly.org). We were quite surprised to learn that the TRA domain had been purchased by a private individual, and Ms. Ford refused to share the passwords to access the website’s administration panel. The access information that she did send to us did not work. Ms. Ford would not turn over access to the payment processing system PIRYX, therefore preventing an accounting as to who, and who was not, a TRA member. Further, Ms. Ford pointed out, the website was outdated with no one to maintain it, and it desperately needed a refresh. 

2. As a result, our volunteer Ms. Snyder, had to develop a completely new website which became the Tennesseerepublicanassembly.com. The Board knew about the undertaking and the issues that surrounded the need for a new website. Ms. Snyder donated her time and talent to build this new website, which is now the property of TRA. Ms. Snyder did not charge for her services, and my husband and I were able to offset the cost with a $285.00 donation of our own, so the initial cost of $434.81 for the website was reduced to $149.81. This new site includes a payment processing system (it was a separate charge associated with the old TRA website). With the new payment processing system, we have a full accounting and history of who pays membership dues. 

3. Numerous requests have been sent to Ms. Ford to please “park” the old website, as she had previously agreed to do, in writing. Ms. Ford’s lack of cooperation has caused and continues to cause, confusion and frustration. The old website has not been maintained since 2018, no longer accepts membership payments, and has caused many individuals to reach out and complain about the perceived lack of organization and professionalism. 

4. Membership has been difficult to adequately determine, as Ms. Ford has withheld access to the payment processing system. Withholding this access from the new president, and then the new treasurer, played a significant role in forcing the creation of TRA’s new website. Thankfully, as stated prior, this new site is equipped with a proper accounting system built in so that we can make sure members who have paid are properly accounted for. 

5.  Ms. Ford withheld access to the updated TRA bylaws until the election convention was called earlier this year. We learned the bylaws had been updated several times while Ms. Ford was president of TRA. The last revision was made in 2019 by the previous Board led by then-President Sharon Ford. There have been no further revisions made since 2019. Any and all allegations that I have made changes to the bylaws are totally incorrect. There have been no changes to the bylaws since I, Michelle Foreman, have been president of the TRA. The updated version had not been published to the old site and remained outdated for approximately three years. Upon receiving the updated bylaws, it was determined that the election convention was to be held during the months of June-August, and so the date was reset. As a result, this created unnecessary confusion as to when the convention was to be held. Please note, the updated bylaws have been published on the new website. Again, false allegations and accusations that have been made about me personally overstepping my power to change the bylaws to my favor to win an election at any cost are simply incorrect. 

At our last Board meeting, information was disclosed before the Board regarding highly improper actions and serious breaches by Ms. Ford. One of our Board members, who is an attorney, stated that we have the fiduciary responsibility to address these issues. It is my hope and the hope of several Board members that Ms. Ford, and her associates who take part with her in inappropriate conduct, will choose to resign from the TRA membership and agree to cease and desist from disparaging the organization or its members and desist from propagating false and defamatory allegations. 

This entire ordeal has truly saddened me. I expected the transition of leadership to be smooth and without complications, as Ms. Ford indicated it would be in her communication with me and the TRA membership in her letter. It is particularly sad because these issues have been completely avoidable and unnecessary. I take no pleasure in taking the pains to bring the truth to light, but under the circumstances and misinformation circulating on social media, I have no other alternative and use this platform to defend myself and my character. This is only a partial rendering of truthful information, and it is substantiated by documentation. 

I will follow Candace Owens’ example, and defend myself against any future defamation, including slander or libel. Let us move forward with the hope that the handling of matters is with pure and proper motives, always. 

Sincerely,

Michelle Foreman, TRA President 

Below is a letter from a former TRA member.

Top Stories

Senator Mark Green's 3rd Annual Red, White & Blues

For Tickets, follow this link.

Top Stories

Tennessee ranked 10th best on taxpayers’ return on investment

The Center Square- Tennessee finished 10th in a new study by the WalletHub website on whether residents of the 50 states are getting the most bang for the buck for their tax dollars. 

The analysis, which noted that the taxpayer return on investment (ROI) is not uniform across the country, assigned each state a rank for total taxes paid per capita and an overall government services rank. From that information, WalletHub ranked each state on how efficient it was in spending state taxpayer revenue.

Tennessee was ranked fourth on taxes paid per capita and 41st on the quality of its government services. The government services rank was based on efficiency of public services provided in the areas of health, education, safety, economy, and infrastructure and pollution, according to WalletHub. 

Though federal income taxes are consistent nationwide, some states receive more federal funds than others, and COVID-19 financial relief varies sharply among the states, the study concluded.

Top Stories

Tennessee drops from top 10 in Rich States, Poor States economic outlook

By Jason Schaumburg | The Center Square May 12, 2021-  Tennessee's economic outlook ranks 12th in the U.S. in the American Legislative Exchange Council Center for State Fiscal Reform's 2021 Rich States, Poor States competitive index. 

The report uses 15 equally weighted policy variables to rank the economic competitiveness of states, including various tax rates, regulatory burdens and labor policies. The index also ranks each state in economic performance by examining data over the past 10 years in cumulative GDP growth, cumulative domestic migration and nonfarm employment growth. 

Tennessee's 12th-place ranking in economic outlook for 2021 was four spots below its ranking in 2020. In the 15 policy variables used to determine economic outlook, Tennessee ranked in the top 10 for top marginal personal tax rate (first), personal income tax progressivity (second), property tax burden (third), no estate/inheritance tax levied (first), minimum wage (first at $7.25 an hour), average workers' compensation costs (10th), being a right-to-work state and tax expenditure limits (second). The state ranked 13th in economic performance, finishing 16th in cumulative GDP growth, eighth in cumulative domestic migration and 12th in nonfarm employment growth. 

The American Legislative Exchange Council is the largest nonpartisan, voluntary membership organization of state legislators in the United States. It is governed by state legislators who comprise the Board of Directors and is advised by the Private Enterprise Advisory Council, a group of private, foundation and think tank members.

Top Stories

Congratulations Michelle Foreman on being elected Chairman of the TRA. Drama continues as losers allege a stolen election and theft of funds.

... allegation of a "stolen election?" (surprise, surprise).

The 2021 officers of the Tennessee Republican Assembly

by Rod Williams, 6/13/2021 - Republicans love circular firing squads. Sometimes it seems Republicans like fighting each other more than they like fighting Democrats.  It is not too surprising that an organization that thinks they are the only ones right would have dissension in their rank.  It seems the more certain a movement is that they have a monopoly on the truth, the more bitter the internal division.  The communist movement was young when they split between Leninist and Trotskyites. Fundamentalist churches often split or expel apostates. 

Michel Foreman was elected Chairman of the Tennessee Republican Assembly yesterday. That same day a Facebook page went up calling itself "TRA 2021 Leftists Coup." I am posting excerpts from that Facebook page below. This unbelievably nasty.  There are allegations of a stolen election, theft of funds, and other shenanigans.

Is it not interesting that the elected leaders of a group that prides itself on being to the right of the Republican Party are now being called "leftist?" Michelle Foreman, a leftist? I had no idea.  I got over being called "RINO," "liberal," and "neo-con" a long time ago.  I have been called "traitor," but I don't think I have earned the label "leftist."  Well, not yet.  Some of this is not only nasty but just juvenile. 

This makes me glad I was expelled from the organization years ago.  When recently I was invited to again become a member, I am glad I did not pursue it.  This is not the kind of organization with which I want to be associated. I wish Michelle the best but I don't know why she is taking on this fight.  If it were me, I would not bother. I would let TRA remain Sharon Ford's playpen and put my energies elsewhere. 

For more of this diatribe, follow this link. For more on this sordid affair, see my post, Drama at the Tennessee Republican Assembly. Michelle Foreman vs Dan Meredith for Chairman. To see reports from the official TRA Facebook page follow this link. 

Top Stories