Monday, January 2, 2012

So Much for 2012 Pastry, Gelato and Salami Workers in San Francisco

The People's Republic of San Francisco has boosted the minimum wage in the city to $10.00 per hour.

This is on top of a 1.5% city payroll tax and the requirement that employers provide nine paid sick days and provide health care. This brings the total cost to over $12.00 per hour.

The confused San Francisco Living Wage Coalition is hailing the new higher minimum wage as though it will help minimum wage workers, when it will in fact result in some minimum wage workers being laid off.

Wages, like all prices, are set by supply and demand. When you raise the price of a product above the market clearing price, the quantity demanded declines. Raising the minimum wage will, if it is above the market wage (and it appears it is in SF), will result in some workers being laid off at the margin.

Indeed, that appears to be exactly what will occur in SF.

SFC reports:
"I hate it," Daniel Scherotter said of the city's highest-in-the-country minimum wage.

He's the chef and owner of Palio D'Asti, an Italian restaurant in the Financial District, and a previous president of the Golden Gate Restaurant Association...

He said he recently cut his kitchen staff by eight workers and no longer makes pastries, gelato or salami in-house, thereby directing his money outside the city for those products.
And it won't boost the standard of living for others in the city, either. Scherotter explains:
"If you want to know why so many chefs are getting into the food truck, taqueria, quick-service game, that's why," he said. "Of course we all love tacos, but the fact is if you're operating on the 19th century model with full-service, that's got problems."...

"Who the hell would hire a teenager for $12 an hour?" he asked.
And there you have it, a perfect example of do-gooder laws hurting everyone. The higher minimum wage will hurt those just attempting to enter the wage force, making many unemployable. Leaving them to do nothing but roam the streets. The business owner isn't happy because he has to waste time finding ways around the onerous wage laws. And the consumer sees his standard of living drop, since fewer will attempt to enter the labor intensive restaurant business.

In other words, a trifecta of trouble, because of  basic economic ignorance in the land of heavy fog.


  1. You can make $600 off the taxpayer pretty easy.
    Why would anyone throw their life away for $10 an hour at some soul-sucking job?

  2. Anon 2:43 for the experience? I might probably be soon in that situation and I am willing to be one or two years in a very low paying job for my academic achievements if it lands me a good job later. I dont think nobody will be exploiting me.

  3. Minimum wage hurts teens disproportionately, which translates later on to less experience which gets people stuck in low paying jobs. Read the report yourself:

    Minimum wage workers make up a tiny portion of all earners. Of those, a large part is teenagers. Plus, minimum wage earners are not heads of household.

    If you want to help the poor, you'll have to find another issue to demagogue

  4. >I dont think nobody will be exploiting me.

    That means you think someone will be exploiting you.
    Is that what you meant?

  5. I do well contracting my skills, but I've always wanted to run my own studio (CGI animation), directing what I'd like to see out there instead of taking on assignments where others have fallen behind schedule and need an outside producer. It pays well because I'm taking advantage of immediate needs where someone will pay out top dollar to make a problem go away. A specialty that animation shops in the East can not realistically handle.

    When I've looked it into the matter previously, expanding by taking on loans and hiring personnel given the regulatory burden and added cost makes absolutely no sense in regard to my bottom line. Of course, my example you would never see in any stats that deal with unemployment, but I have to wonder how many people out there are like me. Thirty years ago, twenty years ago, there is no doubt I would be an employer instead of an independent contractor.

    Anonymous said...

    You can make $600 off the taxpayer pretty easy.
    Why would anyone throw their life away for $10 an hour at some soul-sucking job?

    Souls are a convenience allotted only to the decadent and the idle (bums and clergy). Be Baudelaire on your own dime.

  6. I am sure Krugman is all for a minimum wage of $20. After all, it would help with animal spirits/a space war/stimulus/spending/housing/etc.

  7. What is also not discussed but goes on when you raise the minimum wage is usually an adjusting of all hourly wages by the amount of the increase. So a business isn't just dealing with an increase of the wages of its lowest paid employees but possibly all of its hourly workforce. That can lead to all sorts of unintended consequences. Of course, Obama's latest economic advisor, Alan B. Krueger, would argue that increasing the minimum wage increases employment. Wait a minute -- he did! LOL

  8. Krugman is for minimum wage of $40 because he is not worth anything in the free market where he will end up when the NYT goes bankrupt. He could become wealthy as an arms dealer selling munitions to space aliens...Great work if you can get it.