Tuesday, May 26, 2015

Because of the Minimum Wage Hike I Am Moving My Two Companies Out of Los Angeles

The following appeared in the New York Times in a response to Los Angeles Lifts Its Minimum Wage to $15 Per Hour” (front page, May 20)

To the Editor:

I will be moving my two companies out of Los Angeles when the lease is due to renew. I’ve been here since 1966, grew up in L.A., but I cannot make it anymore. When the city compels me to pay employees $15 per hour, it comes out of my pocket. Last year, my employees made more than I, the owner, did. I am still trying to pay off the line of credit that got me through the recession.

I am not a charity. I can’t raise my product prices because of pricing pressure. I can’t reduce my expenses; in fact, salaries are my greatest expense, and $15 per hour increases my expenses and reduces my profit.

Just when small-business owners were clawing out of the recession’s devastation, the L.A. City Council hits us with this. We are the ones who hire people, expand the economy, market our products or services, risk capital for research and development, and buy inventory.

As a result of this decision, L.A. will have a mass exodus of employers from the city, leaving increased unemployment, less tax revenue and increased city debt in its wake.

KEVIN McNAMEE

Woodland Hills, Calif.

(ht Mark Perry)

12 comments:

  1. I had a self admitting Socialist in his 70's (a retired public school teacher) tell me at a dinner function a few years ago(I can't get too specific for the reason he's actually a distant relative now by marriage) in Brentwood at a fairly high end Italian restaurant that more regulations in LA meant nothing as there was always another business that would take the place of one that went out of business due to said regulations....lol

    We then moved on to the next topic after laughed at his theory over dinner.

    Later, I casually mentioned that the US's experiment in central planning, neo-fascism, & socialism was going to eventually end the same way all previous attempts have ended....his wife shrieked across the table "We don't have any socialism here, that's the problem!"...after I again laughed much to their dismay.

    The husband then challenged me:

    "Name a socialist program here in the US."

    Again, I laughed...."I don't have all night...so let me offer an easy one: Social Security"

    His wife literally howled, "That's NOT SOCIALISM!"

    My response: "SOCIAL....security"- there was just silence at the table.

    The husband said, "Well, that's a good program and a good example that Socialism can work." ....I just laughed again and changed the subject while ordering another bottle of the house chianti.

    Both him and his wife carry Master's degree and are retired public school teachers.

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    1. What are public schools if not a socialist program? Am I just confused?

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    2. They are kind of correct about new businesses taking their place.

      In neighborhoods where people have a decent income the increased minimum wages will force independent small businesses to close and they'll be replaced by more corporate chains that can deal with the costs. But in poor neighborhoods nothing takes their place. Empty buildings and store fronts. Eventually a Walmart or some other national chain looking for whatever scraps of growth remain for it might move in if the government sweetens the deal enough.

      I've seen it time and time again. So that's what I predict.

      It's fascism. Corporatism. Socialism of the national kind. It removes the inefficiencies of small businesses. Corporate chains can share resources across hundreds of locations, they have only one entity to regulate, businesses and governments can make one deal that covers multiple stores/restaurants/etc. It's easier and cheaper for everyone. That's how it's been viewed since the 1930s. Collectives, not independent businesses. But they won't advertise these policies this way any longer. It's not fashionable. Something about a big war in the late 30s and 40s giving it a bad name.

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    3. @ Timothy

      "What are public schools if not a socialist program? Am I just confused?"

      I agree with you. However given the fact they were about to become relatives to me I was trying to be diplomatic.

      @ Meeker

      "They are kind of correct about new businesses taking their place.

      In neighborhoods where people have a decent income the increased minimum wages will force independent small businesses to close and they'll be replaced by more corporate chains that can deal with the costs."

      I don't know Meeker, when even McDonalds has a hard time with regulations it seems to suggest that your theory doesn't always hold.(though McDonalds has other issues too)

      Now that being said, I'm sure there's differences that are market specific/dependent. For example, what type of regulations are enacted and on who, etc.

      I'm not ready to say all(or even most) non-franchise small business(in food for example) is "inefficient" and being pushed out of the market due to their inefficiencies...there are plenty of examples of small restaurants in niche markets.

      I think what we can all agree on is that this fascism/corporatism/socialism we are discussing and it's associated regulations is not a long term sustainable model(cue up the discussions about what "long term" means).

      "There is a great deal of ruin in a nation,"-Smith


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    4. McDonald's can afford automation. Capital equipment that can be made overseas if need be. Ma and Pa can't.

      I use the word inefficiencies because that's how I've read it and heard it, how it was presented in the 1930s. The collectivist sees all these small businesses as requiring repetitive effort that is inefficient for society, for the nation. They are aiming to combine overhead to make society, make the nation more efficient. Mergers eliminate repetition of effort of in overhead.

      Niches are despised by collectivists and regulators. They aim for uniform, fungible product. A regulated and enforced mediocrity. Especially in food. They aim to control choice. They'll destroy the ability to serve a niche because to them it doesn't deserve to be served. There's a war on food niches in this country that starts with attacking the small farmers who dare produce non industrial foods.

      That's the shortest version I can do, but yes, we agree.

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    5. On the south side of Chicago, poverty activists complained of the area being a food desert. It turned out that between the locals shoplifting and City of Chicago's regs and Union activity it wasn't worth it to set up even with incentives from the City.

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    6. "That's the shortest version I can do, but yes, we agree."

      lol...that's fine, we'll work our way to super short.

      :)

      "Capital equipment that can be made overseas if need be. Ma and Pa can't. "

      I'm seeing a lot of automation even at the "Ma & Pa" level. Heck, I'm what most would consider small and automation is what saved my business and made it profitable.

      That's the great thing about technology, it's getting more affordable every day. (3d printers, robots, etc.)

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    7. Nick, 3D printing... I really dislike this term. It has a _LONG_ way to go to replace traditional manufacturing. It is really overstated. The best use for these technologies right now and for the immediate future is as an aid for low volume traditional manufacturing. For instance in producing a 'wax' for investment casting or making sand molds for sand-casting.

      Some things get cheaper but specialized automation at the leading edge is always going to be expensive. It takes time for things to become general platforms and come down in price. Ma and Pa have to survive long enough for that process to happen but by then they'll be facing even more issues from government. It could be decades before something happens that makes replacing them a viable risk. It's a race. Technology might win, but it also might not.

      Heath, that's exactly what I am talking about. Cook County is where I live and I've seen the south side and south suburbs hollowed out by costly regulation. Ma and Pa can't make it and the corporate chains have no good reason to expand into the voids in most cases. Sometimes they try and are protested away by various interests. The economic dead zone towards the Indiana border is impressive. Once across the border are some of the small businesses I thought went out of business years ago.

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    8. "Nick, 3D printing... I really dislike this term. It has a _LONG_ way to go to replace traditional manufacturing. It is really overstated. The best use for these technologies right now and for the immediate future is as an aid for low volume traditional manufacturing. For instance in producing a 'wax' for investment casting or making sand molds for sand-casting. "

      I'm not sure who is overstating it, but I am sure that as you point out it has made an impact on prototyping via the replacement of traditional sandcasting but also importantly the printing of plastic prototype parts BEFORE the investing of mold manufacturing for plastic injection. In other words, the capital investment in prototyping has dropped in certain areas due to the technology and made it more viable for the "Ma's and Pa's" to some extend. (granted, we aren't clearly defining "Ma & Pa" fiscally)

      I'm not sure why you dislike the term "3D printing", but obviously it's important to be aware of what the technology can offer, can not, and where it's going in the future.

      I took a tour last summer of 3D Systems here in SC, it was illuminating, so I'm very familiar with the pro, cons, and capabilities/limitations of the technology(both for plastics & metal).

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  2. "Don't let the door hit you on your way out, you Capitalist scum bag!" said the myriad of social democrats in LA.

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  3. What I don't understand is why anyone still does business in California. I have lived in Texas my entire life, and only recently moved to Los Angeles for a job opportunity I couldn't pass up in the space industry. While I like the job, California feels a little bit like a third world country relative to Texas. Even the "rich" people live in poverty relative to people of modest means in other states. There is no way in hell I would start a business here.

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    1. "Even the "rich" people live in poverty relative to people of modest means in other states."

      This is a great observation. You take someone making $100k in SoCal and plop them with that same income in much of SC and you have two entirely different set of living conditions.

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