12 November 2015

Killing jobs – let me count the ways


There is some kind of weird disconnect among Democrats when it comes to jobs and growing the economy. On the one hand we hear daily from presidential candidates Hillary Clinton and Bernie Sanders about income inequality and the need for a much stronger economy with higher employment and rising wages. On the other hand there are all-too-many examples of states and cities run by Democrats where the exact opposite policy solutions are being enacted with predictably negative results.

In New York State, a New York Times report about exploitative conditions at nail salons (since exposed for poor reporting and facts not in evidence), led Gov. Andrew Cuomo to demand and then sign new legislation forcing minimum wage requirements, new safety and health regulations, and licensing requirements for all nail salon workers, as well as establishing a task force for investigating worker exploitation and forcing business owners to take out bonds for alleged unpaid wages. Those costs are almost certainly going to be passed along to customers, not to mention the outcry from the mostly-immigrant salon owners claiming the bonds are going to hurt their operations.

Indeed, the cost to consumers and the negative impact on business operators due to increased regulations such as licensing requirements is a growing concern. First, licensing has mushroomed since 1950, when just 5 percent of occupations required a license. Today the figure is nearly one in three. The problem is so obvious in fact, the Obama administration worried about it in a recent Council of Economic Advisors report. “By one estimate, licensing restrictions cost millions of jobs nationwide and raise consumer expenses by over one hundred billion dollars,” reasoned the administration’s experts.

The rush to regulate hurts both workers and employers. “For people just starting out with a new business in this industry, it’s going to be hard,” explained Harlem nail-salon owner Candice Idehen, who also described the new rules as “nerve-wracking.”

Major retailers, food franchises and restaurants have been hard hit, meanwhile, in the 26 states where minimum wage hikes have been enacted since January 2014. The impact of these minimum wage mandates varies depending on the market where it is enacted and the level of the increase. According to Georgetown professor Harry Holzer increasing the minimum wage to $15 is a problem of degree. “In job markets where young or less-educated workers already have difficulty finding jobs and gaining important work experience,” he writes, “such [$15 per hour] mandates will likely make it much harder.” The youth unemployment rate of 12 percent is already twice the national average. Youth unemployment rate among minorities is even higher.

Business groups argue that the negative consequences will be felt even with lower incremental increases. In 2014, the California chapter of the National Federation of Independent Business (NFIB)estimated that “the state’s 2013 legislation raising California’s minimum wage rate to $9 per hour in 2014 and $10 by 2016 would shrink the state’s economy by $5.7 billion in the next 10 years and would cost the state roughly 68,000 jobs.”

Seattle has seen job losses in the restaurant industry because of the Emerald City’s new minimum wage hike. “The loss of 1,000 restaurant jobs in May following the minimum wage increase in April was the largest one month job decline since a 1,300 drop in January 2009,” explains AEI’s Mark J. Perry.

At the same time some cities have enacted paid family leave and sick leave laws, at the behest of the Labor Department, that employers and business associations are suing to get reversed.

Irene Zotis, owner of Modern Cafe on Pittsburgh’s North Side, said advocates of city’s new paid sick leave mandate are hurting her and her employees. “I’m really tired of government trying to screw the little person over,” she said.

Funny that, protecting the “little people” is the reason Sanders and Clinton keep saying they want to get elected.

Abby W. Schachter is a Pittsburgh-based writer. Her forthcoming book is No Child Left Alone: Getting the Government out of Parenting (Encounter, 2016).