Nice post -- thank you, it's a good reminder.

But as the grammar nanny: Data from 2006 ARE, Chuck. Data is a plural word. Data are plural.

Or, perhaps not. But it's my preference to keep data plural and datum singular.

More economic good news:

"In 2007, overall real median family income increased to $50,233, up $600 from 2006. The real median income for intact families -- mother and father in the home -- rose to $78,000, an all-time high."

http://online.wsj.com/article/SB122143692536934297.html

Real world reality check....

@ my first restaurant, a $0.45/hr wage increase would have cost my bottom line $9041.76 per year. Considering I was only making $45,000 +/- at the time, the REALITY of this would be my workers working 1,130 fewer hours during the year, or about 3 man hrs. per day. The downside of this, the workers who are working would have to make up those 3 hours by working harder.

Actions have consequences....not all of them positive

Real world reality check....

at my first restaurant, a $0.45/hr wage increase would have cost my bottom line $9041.76 per year. Considering I was only making $45,000 +/- at the time, the REALITY of this would be my workers working 1,130 fewer hours during the year, or about 3 man hrs. per day. The downside of this, the workers who are working would have to make up those 3 hours by working harder.

Actions have consequences....not all of them positive

Oh, please. Citing a study by Arthur Laffer -- the guy who scribbled a chart on the back of a napkin and convinced the loony fringe that tax cuts pay for themselves.

Please, don't make me laff.

The important stat is that median income for working families fell between 2000 to 2007 by about $2000. www.epi.org/content.cfm/webfeatures_snapshots_20080827

Sure, there was an uptick from 2006, at the tail end of the weakest post-recession "recovery" on record.

That's small consolation for America's vanishing middle class.

You forgot to mention:

Unemployment Rates (Seasonally Adjusted) ............... Aug 2008... Aug 2007 Oregon........... 6.5%....... 5.3% United States.... 6.1%....... 4.7%

Oregon Job Growth Nonfarm Payroll Employment: Change From Jul 2008: -4,300 Change From Aug 2007: -3,900

from (Oregon Employment Dapartment): qualityinfo.org/olmisj/OlmisZine

Thanks JK

Why are we pussyfooting around with $8 minimum wages? If we made it $25 an hour, we would solve the problem of the working poor. The lowest wage among us would be about $50K.

I don't know why progressives are satisfied with such measly progress.

"Let's not pretend that wage increases can't be offset by revenue increases."

Exactly! Same goes for increased costs in other areas such as utilities and foodstuffs. I would bet you that the dollar increase in those areas has been far more than increases in labor costs due to mininum wage changes. That is definitely the case in our family small business. Natural gas expenses alone have risen by about 40%. We have to raise our prices every year, but our margins reamina the same and our gross profits increase.

Wages are an easy target for rising costs, but if everyone plays fair the increases are no different than other rising costs.

Gee Kari,

Why did you have to spoil that guys argument with a silly little arithmetic exercise?

• Pedro -

Kari

Let's see, where to begin....

Commodity A up 100% in the past year Commodity B up 60% in the past year Utilities up 35% in the past year Insurance up Rent up Now, payroll up

Only one problem, sales are down 25% YTD due to our wonderful economy. If you want me to pass along all of my price increase to the customer and then add more for higher payroll, my question to you is.........

How much are you willing to pay for a pizza?

Dave, Laff all you want. Did you even read the article?!? Your link = my link because they cite the same data!

Laff says - "incomes fell sharply in the U.S. after the dot-com bubble burst in 2000 (and still haven't fully recovered)" Sound familiar?

He takes is a step further and includes a commonly known facts - divorces greatly impact a person's wealth/income.

"The real median income for intact families -- mother and father in the home -- rose to $78,000, an all-time high.

Note - an all time high.

Based on your comment that tax cuts pay for themselves I take it you don't understand the Laffer Curve. Your statement is only half right. Tax cuts won't pay for themselves if they are on the bottom half of the curve.

The lack of understanding of economics in this country is astounding. Students I run across from overseas with various forms of political ideologies have a better economic understanding than people here in the US.

We are bad at math, science, and now economics! India and China will be the new superpowers. Speaking with students from China I am convinced in 50 years the only anti-capitalists in the world will be the DNC.

Johnnie:

I am laffing at your feeble attempt to pass off as "good news" the fact that middle-income families are worse off today than 8 years ago. (Your original post only mentioned the uptick between 2006 and 2007, ignoring the rest).

As for Laffer, he argues that the "statistics reflect a 25-year trend of upward economic mobility." (A funny line if it weren't so wrong).

Fact is, inequality is at historic levels. It is really only those at the very top who have experienced "upward economic mobility." See http://www.cbpp.org/3-27-08tax2.htm

As for the Laffer Curve, I may not understand it, but I do know that the massive Bush tax cuts heavily skewed toward the wealthy produced huge deficits. The economic bounce that followed (not necessarily tied to the cuts) was the weakest on record.

I hope you tell that to your students.

Thanks for passing me an umbrella to deal with a hurricane. If I wanted all this feel good BS to distract me from an economy that is, in many key areas of measure, racking up the worst stats since the Great Depression, I would just watch Good Morning America.

Back in 2004, Don Rumsfeld said the $80B he was asking for (that got so much attention) "is the (Iraq) exit strategy)." Now these dillweeds are throwing around $85 billion of tax dollars on a daily basis to bail out Wall Street racketeers, who walk away with a nice chunk of that money in their pockets.

I particularly like the parade of experts who go on TV to repeat the "stay in for the long term" crap about the market and retirement funds. What a load of crap. If you attribute the run up of the DOW to the easy credit expansion of the last few years, it probably should be down around 9000 - 10000.

Consumer Confidence was up slightly last week, too!

The economic argument behind not having a minimum wage is so glaring that people like Chuck and Kari have to do logical cartwheels to claim that it doesn't reduce overall employment.

A business has revenues and costs. One of those costs is employees. If the cost of employees goes up through pay raises, one of three things happens: 1) the business raises prices - which means that all the rest of us have less disposable income, including other minimum wage job holders. 2) the business cuts its employment costs by reducing the number of employees, or 3) the business loses some of its profits. The demagogic response to this would be "good, they were too high anyway," but that's not the case with a lot of small businesses.

Against these negative economic influences we have the only legitimate counter-vailing argument - that paying employees a decent wage is morally right and will strengthen the social stability of our society.

I'm not discounting these arguments - they are compelling enough for us to have some sort of minimum wage law - but let's not kid ourselves and claim that there are good economic arguments for such laws too.

And, by the way, a large portion of the salary gains from minimum wage laws go not to full-time adults, but to part-time students and family second-wage earners. Not that they're undeserving, but the moral and social arguments behind the law don't have as much force when the discussion turns to them.

MP: Did you pay your workers enough so that your workers or children did not require the Oregon Health Plan, Food Stamps, Food Baskets etc? If not it sounds like you had a Free Lunch on the taxpayer's dime.

$45,000 +/- per year: In fact before 2005 if you personally made that much, then half of all families in the united states made less than you did individually including all of your minimum wage employees. Source: Census.Gov

Fred: Didn't we hear that same argument in defense of slavery? (there's no way we can afford to pay people for their work, our plantation only has a budget for so much....)

There is no evidence your assertion that increasing the minimum wage costs jobs. In fact the evidence is that reasonable increases in wages boost the economy by spurring demand among those who spend most of their income. Source: MediaMatters.org

Ted: in using basic economics:

The price of a product is what consumers in the market will pay for it.

Profit is the price of the product minus the production cost.

If productivity goes up then the production cost goes down thus increasing profits.

Worker productivity has grown faster than worker compensation.Ex: NYT If a business cannot keep their worker's pay in step productivity then the business model is unsustainable and it should be no surprise when they fail.

James V.......how liberal of you to decide how much money is enough for me. I really appreciate your comments. Reminds me of why I am no longer a D, but an I.

As far as my employees go, they were all paid ABOVE market wages for their skill sets.

Since you think 45K is more than enough for me, maybe you could volunteer to work 20 hours for me so I don't have to work 70 hr per week. How about you assume some of my debt load so that I can mitigate my risk of being an entrepreneur. Let me know how to contact you so you can start volunteering............

"How much are you willing to pay for a pizza?"

That answer is easy for us pizza lovers. Give me a quality pizza at a fair price and I will buy it.

In my neighborhood, I have a choices ranging from a "hot-to-go" pepperoni pizza for 5 bucks and not wait for it, or I can get a very delicious pizza with the toppings I want for around 12 bucks more at a local pizzeria. Unless I am really in a hurry that night, I will choose the 17 dollar pizza over the 5 dollar one. If I really want a good pizza experience I'll drive all the way from North Portland to Lake Oswego and pick up a $20 pizza (with a half-gallon of gas as an additional cost)

All three options seem to do a booming business, so price is not an issue. Value is.

Cheese! It's only 10:30 and you made me hungry for pizza!

"As far as my employees go, they were all paid ABOVE market wages for their skill sets."

Which begs the question: Then why does the minimum wage increase even affect you? If you are paying above market wages, then you are, by definition, paying more than the minimum wage.

Look, I have felt some of your pain as a retail business owner who has to compete with the big box stores. I cannot compete on price but have a loyal customer base

I have to also work as an employee so I can get health insurance. Thus I have to have employees work for me while I work for someone else. They earn minimum wage and don't get many other benefits. For me increase in minimum wage is just a blip on the financial statement. Energy costs are what is really hitting me hard (and I don't even have to keep pizza ovens going).

Show my a business owner who doesn't put 70 hours a week and I'll show you a soon-to-be former business owner. Long hours are in the "contract".

I wish you well, but don't put the blame of business problems to what you have to pay your employees. Its a level playing field at any minimum wage point, unless you are competing with someone who is cheating the system.

One more parting shot (ok, it may not be parting)

As of today I have lost around 20% of my retirement portfolio. If it doesn't recover in three years, I'll haver to work another year beyond retirement age to make up for it.

Who is to blame? Certainly not minimum wage workers. Why argue about minimum wages when the real decrease to our standard of living can be put squarely at the door of warmongers and "maximum wage earners" who take away far, far more than they deserve, far more than they can spend, even after running a company into the ground.

Let's not use minimum wage earners as our whipping boys for an economy that is tanking. Not only is that unfair, it is mean-spirited toward those who are at the bottom rung of the working class.

Hypocrite McCain blames the mess on greed and profiteering - the very group that supports him. Look at McCain spokeswoman, Carly Fiorina, who took away $21 Million in cash after overseeing HP's business failures.

So "Bill Jones" is using this to sign off on his posts?

Thanks

JK

Kinda looks as though someone has a new pseudonym.

RichW said:but don't put the blame of business problems to what you have to pay your employees.

Actually, I never did. My original post merely was intended to show that there are consequences to actions. When an employer of minimum wage workers, which I was at the time of my example, has to bear the burden of never ending price increases, sooner or later, something has to give. You can't always raise prices or cut the quality of ingredients. Sometimes, the easiest thing to cut is labor, which was the point of the post.

Jimmy - Source: Hillary Clinton

On the brighter side of economic news:

Since non-conservative Bush has nationalized that insurance giant AIG, the US Taxpayer is now the principal sponsor of the football team Manchester United!

Move aside Dallas Cowboys, Manchester United is now literally America's Team!

One would figure nationalizing an insurance giant would be cause for celebration here. This puts Obama very close to nationalize health care. Because of Bush, Obama is an executive order away from National healthcare! No debating needed. How very progressive!

Fred:

It seems to me that you're correct in asserting that the minimum wage "has no significant effect on low-income employment." Studies to bear that out (http://www.epi.org/content.cfm/bp178). That's one of the points that Mr. Sheketoff makes in his original posts, that job creation in the Oregon restaurant industry hasn't been affected.

I may be wrong (my apologies if I am), but you seem to suggest that we ought to go for an expansion of the EITC over a good minimum wage. Why not have both? (http://www.epi.org/content.cfm/webfeatures_viewpoints_minwg_eic)

Economic Doomsday. Politicians were asked whether or not they were in favor of the AIG bailout today.

Biden: We should try to correct the problems that caused this. And what's caused this? The profligate tax cuts to the very, very wealthy that John wants to continue. What's caused this is the failure to have regulation so that, in fact — John talks about these CEOs getting these big bailout packages. Well, why didn't he support the legislation we have been proposing that says that if you're going to declare bankruptcy, you've got to throw the CEO in the mix as well as everybody else? Why didn't he support the proposals that we have to allow in bankruptcy a federal bankruptcy judge to renegotiate the principal of your mortgage? Why didn't he do something to help the middle-class people who are hurting very badly? Is their government and it's this government's policies that have caused them to get in great trouble.

PALIN: “Dissapointed that taxpayers are called upon to bailout another one,” she said. “Certainly AIG though with the construction bonds that they’re holding and with the insurance that they are holding very, very impactful to Americans so you know the shot that has been called by the Feds its understandable but very, very disappointing that taxpayers are called upon for another one.”

And something incoherent from OBAMA: “The fact that we have reached a point where the Federal Reserve felt it had to take this unprecedented step with the American Insurance Group is the final verdict on the failed economic philosophy of the last eight years," Obama said. "While we do not know all the details of this arrangement, the Fed must ensure that the plan protects the families that count on insurance. It should bolster our economy's ability to create good-paying jobs and help working Americans pay their bills and save their money. It must not bail out the shareholders or management of AIG.

“Despite his eleventh hour conversion to the language of reform, Senator McCain has subscribed to this philosophy for twenty-six years in Washington and the events of this week have rendered it a colossal failure," Obama continued. "It is time for a new economic strategy, guided by the principle that America prospers when all Americans prosper, where common-sense rules of the road ensure that competition is fair, open, and honest. That is the strategy I will pursue as President, and I will bring the change we need to restore confidence in our financial markets and strength to our economy,”

Also, Obama's campaign sent out his statement this morning on the Fed's bailout of the AIG where it misidentified the American International Group, calling it the "American Insurance Group."

Who's the dunce?

Team Obama is searching for their political enemy and they have yet to figure you they are their worst enemy.

Kari says: Let's not pretend that wage increases can't be offset by revenue increases.

... And revenue increases come from price increases. And price increases give us CPI increases. And CPI increases give us minimum wage increases.

Repeat a few times and we'll all be rich earning minimum wage.

joel dan walls: So "Bill Jones" is using this to sign off on his posts?

Thanks

JK

Kinda looks as though someone has a new pseudonym. Not really: Please Note: Our blog host, TypePad, is experiencing trouble with an overactive spam filter.

Thanks JK

"Repeat a few times and we'll all be rich earning minimum wage."

yeah, those good ole day when I could buy a gallon of milk for a buck on my 12k/year salary. Hmmm... milk is three time the price now but my salary has increased much more than that.

Garage Wine; Thats called the result of productivity increases. Something you forgot to factor into your thinking. In fact isn't that what traditional Capitalism is all about - making an investment to create better productivity?

Fred: My source at mediamatters.org was actually an article titled: Minimum Wage Increase: Debunking Conservative Misinformation, http://mediamatters.org/items/200701100004

However just because many people cite an article does not make it true. (everyone else is doing it, is not an excuse to jump off a bridge) I didn't know that media matters is funded by minimum wage workers. I google scholared and couldn't find any evidence of that claim.

MP: i did not mean to suggest that you were making too much money. I do however find it ironic when you imply that people who are making minimum wage do not deserve raises that maintain the buying power of their original negotiated salary.

I am however confused by your statements that you paid minimum wages and that you also payed above-market wages for your workers' skill sets. I suppose you could be illegally employing undocumented workers thereby making minimum wage above-market.

"Since you think 45K is more than enough for me, maybe you could volunteer to work 20 hours for me so I don't have to work 70 hr per week. How about you assume some of my debt load so that I can mitigate my risk of being an entrepreneur. Let me know how to contact you so you can start volunteering............"

If i thought you were overpaid, then why would i volunteer to do your work for free? Much less take on your debt? It wouldn't be fair to the honest businesses who actually want to pay the people who work for them.

Additionally, your work-week might be shorter if you kept computer browsing at work strictly business related.

,b>james V said:I do however find it ironic when you imply that people who are making minimum wage do not deserve raises

Still not sure where I said that. All I said was that there are consequences to never ending price increases for small businesses.

james V said:I am however confused by your statements that you paid minimum wages and that you also payed above-market wages for your workers' skill sets.

My original statement referenced my first restaurant, after I added several others, I started sharing my profits with the employees by increasing their wages to above market rates.

james V said:I suppose you could be illegally employing undocumented workers

Actually, I was one of the few restaurant owners in Phoenix that supported the mandatory use of EVerify. I used it before it was required.

mp,

Sure. There are always consequences in any economic change. We should endeavor to see those changes have a net positive effect for society. Some people might get hurt, others simply inconvenienced but the value of a change is whether or not progress is made. There is plenty of evidence that appropriate minimum wage increase result in a net positive effect in our economy. Your employees might even be able to afford to buy your products. No differnert than any other economic stimulus. We do similar things to help business owners as well, from SBA free advice and loans, to tax codes that stimulate/subsidize small business operations.

As business owners we are in control of the strategies and tactics that make our venture a success or failure. I consider this stated increase in the minimum wage to be lost in the noise compared to all the other increased costs I am facing. The answer is simply to put on my big boy pants and deal with all of them. Either that or get out of the business.

You probably paid your workers "above market rates" out of an enlightened self-interest. Better paid employees generally are more loyal and productive. This is not much different in concept than raising the minium wage.

All that talk of pizza yesterday made me hungry all day and I ended up getting a $25 gourmet pizza on the way home. Ahh... the power of suggestion trumps economic concerns. That is the American way!

RichW

I sure hope that $25 went to an independent operator rather than a chain. With the increase in minimum wages, they need all the help they can get.

MP: I will agree with your point that there are consequences to increasing production costs for small businesses. However 30 years of republican trade & fiscal policies have created an economy where small businesses & wage earners have taken the biggest hit.

Kudos on using the E-verify system.

I think the whole financial meltdown will have a greater effect on restaurant goers than the minimum wage increase.

"I sure hope that $25 went to an independent operator rather than a chain. With the increase in minimum wages, they need all the help they can get."

It sure did. Not only is it a local business, but one who helps our neignborhood by sponsoring community events. The interesting observation I made is that with all the economic woes in the news that day, the place was filled with 20/30-somethings having a great time. It took 10 minutes just to get to the counter to place my take-out order. This is a business that just started about 2 years ago and they consistently doing a booming business. There are probably 6 other pizza outlets within a mile of them, but they are the most expensive.

My point in all this is that, as a business, they found a niche and appear to be very successful. I don't really know their staff wages but just from the maturity of the servers, I would bet that they are not minimum wage earners.

As you well know, the restaurant business is like negotiating around land mines and one false step can kill the business. Yet people do succeed independantly in the high-priced food service niche. I would also surmise that the minimum wage hike affects those chain operations more than the independant operators.

In my retail business, which has minimal energy demands compared to a restaurant, the following cause much more pressure on my bottom line than does this hike in minimum wage: Energy costs (electricity and natural gas) up 35% in one year. Insurance costs up 17% in one year. Product cost up 14% in one year (my vendors say it is due to increased tranportation cost). Rent up 8% in one year.

Ironically, the two business costs that are the most popular "demons" that people rail against - government (taxes/fees) and mandated wage increases - have had only a very small impact on my expenses. At least the wage increases stay in my community and go to the people who are in the most need.

RichW

I hear you on cost increases. Before I sold my restaurants in Arizona, we were projecting a hit to our bottom line of $120,000 this year just on increased cheese costs alone. That represented 50% of our previous years profits. It isn't easy being a small business owner right now is it.

I wish you and your business much success. I think I am going to sit on the sidelines for a few months before I jump back into the fray. Best of luck......