More Minimum Wage Games March 15, 2014
I am in New York City again, and the hard copy New York Sunday Times was delivered to my room. As usual there is interesting stuff in it, despite some of their editorial policies. In particular there are two articles that, to me are connected, though nobody at the Times seems to have drawn the connection. The first one is on millennials, people born in the 80s or later, being trapped in an endless karma cycle of internships and not being able to move out of it into full time jobs. The other is about the economics of the Oregon-Idaho border and the differing minimum wages on both sides. It is interesting that no one has drawn the connection that the proliferation of free [unpaid] internships might be related to the existence of a minimum wage. It is legal to pay these interns nothing. It is legal to pay them the minimum wage, and there are some paid internships that do so. But it is of course a crime to pay people anything between zero and the minimum wage.
The observations about the Oregon-Idaho border were interesting too. Mazeltov to Carly Lynch, who was able to get a job on the Oregon side at the higher minimum wage there; but she has to cover five tables now instead of three, and the dishwasher [I couldn’t tell if the dishwasher was an employee or a machine] was shut down. And there are evidently enough jobs even at this higher wage to pull employees across the river and force Main Street Automotive, in Payette, Idaho, to raise its wages to compete. But we also hear from Todd Heinz, who owns a chain of coffee houses called Jolts and Juice, two of which are in Oregon and one on the Idaho side. The article said he “raised the price for coffee, smoothies and beer to compensate.” Heinz is quoted as saying,
It feels like a wash. . . . It is not the consumer that whines, because most businesses will pass their increase on to the consumer through higher prices. The business doesn’t win, because they are forced to increase their prices to maintain proper margins to keep their doors open. . . . The employee doesn’t win, because they are the consumer.
What Heinz does not take into account is the cost of health care, of tuition, and of housing, which, as we are fond of saying at Blue Kennel, are controlled by different factors than the cost of other businesses. And an increased wage probably helps people on those fronts. But what I also didn’t hear from Heinz is: Are there people he told that they can work in his Idaho store but not in his Oregon stores? Are there people who must now commute in the reverse direction? I say this because I happen to know the owner of two fast food franchises, one in Eastern Washington and the other in Northern Idaho. They have a store in Spokane and a store in Post Falls, Idaho. And they could give you names of young people that they are willing to employ in Post Falls that they will not employ in Spokane, because of the productivity [or lack thereof] of their labor. They actually have a ministry of sorts in the lives of these young people, which presumably includes teaching them not to live on a diet of Sonic Burgers and fries! [They have not opened up in the university town complex of Pullman-Moscow, which also straddles the Washington-Idaho line and has a major public university on both sides of the line. I’ll bet there are some interesting situations that arise in that area!]
Of course, one difference between the Spokane-Post Falls situation and the Ontario-Payette situation is that Oregon has an income tax but no sales tax, while Washington State has no income tax but its other taxes are so high that it has not become a tax haven, while Idaho has both, but not very high. There are people who have settled in Vancouver, Washington, a suburb of Portland that, being outside Oregon, sprawls freely unlike the Oregon portions of Portland, contained by their growth limit, and do most of their shopping in Portland!
All this is why, as I recently declared, I will not support any minimum wage raise that applies to people under the age of 26. I have already wandered into heresy by being willing to support a raise for those over 26, and that is trouble enough; but I don’t yet see any proposals advanced that apply only to people over the age of 26.