Obamacare and the Laws of Supply and Demand

Posted by PITHOCRATES - September 30th, 2013

Economics 101

A Scarce Thing has a Higher Price because Everyone that Wants One can’t Have One

Economics is the study of the use of scarce resources.  Scarce resources that have alternative uses.  For example, we can use corn for human food.  Animal feed.  We can make bourbon from it.  And we can even use it for fuel to power our cars.  So there are alternative uses for corn.

And corn is scarce.  There is not an unlimited supply of it.  During the drought the United States suffered in 2012 farmers brought in a greatly reduced corn harvest.  Which caused corn prices to rise.  Per the laws of supply and demand.  If demand remains relatively constant while the supply falls the price of corn rises.  Why?

Scarce things always have a higher price.  A painting by Vincent van Gogh has a very high price because each painting is a one of a kind.  And only one person can own it.  So those who want to own it bid against each other.  And the person who places the greatest value on the painting will get the painting.  Because they will pay more for it than anyone else.  Whereas no one would pay for a cartoon in a newspaper.  Because they are not scarce.  As they appear in every newspaper.  Newspapers we throw away or put in the recycling tub every week.  Something that would never happen with a Vincent van Gogh painting.

Price Controls fail because People won’t Change their Purchasing Habits when Buying Scarce Resources

Government spending exploded during the late Sixties and early Seventies.  Paid for with printed money.  A lot of it.  Igniting inflation.  Causing a great outflow of gold from the country.  And with inflation spiking prices soared.  Rising prices reduced the purchasing power of American paychecks.  Add in an oil shock and the people were reeling.  Demanding relief from the government.

With the price of gasoline going through the stratosphere President Nixon stepped in to fix that problem.  Or so he thought.  First he decoupled the dollar from gold.  So they could print more dollars.  Causing even more inflation.  And even higher prices.  Then to solve the high prices Nixon implemented price controls.  Setting a maximum price for gasoline.  Among other things.  Sounds nice.  Wouldn’t you like to see gas prices held down to a maximum price so it consumed less of your paycheck?  But there is only one problem when you do this.    People won’t change their purchasing habits when it comes to buying scarce resources.

Why is this a problem?  Because the oil shock caused a reduction in supply.  With the same amount of gas purchasing with a reduced supply the supply will run out.  Which is what happened.  Gas stations ran out of gas.  Which they addressed with gas rationing.  Which led to long gas lines at gas stations.  With people pushing their cars to the pump as they ran out of gas in line.

Obamacare will Fail because no matter how Good the Intentions you cannot Change the Laws of Supply and Demand

Obamacare is increasing the demand for health care.  By providing health care for millions who didn’t have health insurance before.  So demand is increasing while supply remains the same.  There is only one problem with this.  With more people consuming the supply of health care resources those health care resources will run out.  Leading to rationing.  And longer wait-times for health care resources.  Just like gasoline in the Seventies.

One of the stated goals of Obamacare was to lower health care costs.  But what happens when you increase demand while supply remains relatively constant?  Prices rise.  Because more people are bidding up the price of those scarce resources.  Obamacare may try to limit what doctors and hospitals can charge like they do in Medicare, but everything feeding into the health care industry will feel that demand.  And raise their prices.  Which will trickle down to the doctors and hospitals.  And if they can’t pass on those higher prices to whoever pays their bills they will have to cut costs.  Which means fewer doctors, fewer nurses, fewer technicians and fewer tests and procedures.  Which means rationing.  And longer wait-times for scarce health care resources.

President Obama may say he’s going to provide health care to more people while cutting health care costs but the laws of supply and demand say otherwise.  In fact the laws of supply and demand say Obamacare will do the exact opposite.  So whatever rosy picture they paint no one will be linking arms and singing Kumbaya.  Unless they like paying higher taxes, waiting longer and traveling farther to see a doctor.  Which is what is happening in the United Kingdom.  And in Canada.  Which is why Obamacare will fail. Because no matter how good the intentions you cannot change the laws of supply and demand.

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When UN Diplomats aren’t busy Solving the World’s Problems they’re getting busy with Strippers

Posted by PITHOCRATES - September 29th, 2013

Week in Review

The United States takes a lot of crap around the world.  Despite their being the world’s policeman.  And hosting the United Nations in New York City.  Where tin-pot dictators and autocratic thugs can get a world forum to denounce the United States.  Telling us how horrible life in America is.  How we lost our values.  Are too materialistic.  Too greedy.  Putting profits ahead of people.  And are so barbaric that we treat our women like second class citizens.  Unlike these enlightened rulers abroad.  Yet when they come to New York City to make the world a better place where do they go?  Here (see Midtown strip club booming during UN week posted 9/28/2013 on Page Six).

Midtown jiggle joint Flashdancers has seen a lot of action thanks to the United Nations General Assembly.

“The place has been so packed with diplomats, they’ve had to turn away people at the door,” says a source.

Yeah, the UN takes care of important business whenever they meet in general assembly.  They’re resolving the crisis in Syria.  Getting those chemical weapons locked down safely.  And preventing the slaughter of Syrian civilians.  And we’re resolving the Iranian nuclear impasse.  Working hard to keep a nuclear bomb from falling into the hands of terrorists.  As Iran is a sponsor of terrorism.  So they’re taking care of important business up at the UN.  That is, when they’re not busy stuffing money down strippers’ g-strings.

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Solving the Illegal Immigration Problem with Machines

Posted by PITHOCRATES - September 29th, 2013

Week in Review

We have an illegal immigration problem because of California’s agriculture industry.  Illegals come to pick our crops because we won’t do it for what they will do it for.  Now we’re talking about a pathway to citizenship.  Because we won’t pick our own crops.  Of course once they are legal citizens they probably won’t pick our crops for what they once did.  Because they will no longer have to hide and endure low wages lest they fear deportation.  So what then?  Well, probably something like this (see Japanese Agriculture Firm Develops Strawberry Picking Robot posted 9/28/2013 on Science, Space & Robots).

A strawberry picking robot has been developed by Shibuya Seiki Co., a developer of agriculture machinery. The Japan Times reports that new robot was on display this past week at the Auto-ID and Communication Expo, which is held at the Tokyo Big Sight convention center.

The robot is 2-meters tall. It can identify fresh strawberries and pick them from plants. The robot uses digital cameras to determine the color of the strawberry and an algorithm to decide whether or not it is ripe enough to pick. Cameras are also used to help the robot get in the proper position to pick the strawberry. Picked strawberries are slowly placed in a tray after being picked.

Here’s our answer to illegal immigration.  Use machines to do what Americans refuse to do.  Thereby eliminating the need for migrant labor. Which would really change the political discourse.  And cause a big problem for liberals who want a pathway to citizenship to create new Democrat voters.  That big problem?  Machines don’t vote.

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Electric Car Sales are so Bad that Nissan is giving away Free Rapid Charges

Posted by PITHOCRATES - September 29th, 2013

Week in Review

The electric car was going to save the planet.  By getting gasoline-burning cars off the road.  Something the environmentalists and global warming enthusiasts have long wanted.  The only problem is no one but them wants this.  And there’s probably a large percentage of them that don’t want this, too (see Nissan Channels Tesla, Offers Free Leaf Charging in Texas by Alan Ohnsman posted 9/26/2013 on Bloomberg).

Nissan Motor Co. (7201), the most prolific electric-car maker, plans to offer free rapid charges for its battery-powered Leaf hatchback for new customers in Texas, experimenting with a strategy pioneered by Tesla Motors Inc…

Nissan, along with alliance partner Renault SA (RNO), has become the world’s largest seller of autos powered solely by electricity. A pricing reduction this year and low-cost lease deals have helped U.S. Leaf sales more than triple through August to a record 14,123 units…

“For the right person, near these charge stations, it could be a good thing and have some appeal,” Nerad said. “But it’s still striking me that in most instances, an electric car will mainly be a second or third vehicle for most people, because of the range limitations and how long it takes to charge them.”

The 2013 Leaf, built at Nissan’s Smyrna, Tennessee, plant, averages 75 miles (121 kilometers) per charge. Repowering the car’s depleted lithium-ion battery pack takes about four hours from a 240-volt charger. EVgo’s direct-current fast chargers can repower the battery to 80 percent in 30 minutes, Brockman said.

The auto companies sell about 16 million annually.  That makes electric cars sales approximately 0.132% of all cars sold.   So no one is buying them.  Because of that poor range.  And long charge times.  This is why they’re giving away rapid charges.  Because the electric car is great and more people should drive them.  As long as it’s other people that drive them.  As most of us don’t want to sweat bullets wondering if we’re going to make it home before the battery runs out.

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President Obama’s opposition to the Keystone XL Pipeline puts more Oil on Trains like the one in Lac-Mégantic

Posted by PITHOCRATES - September 29th, 2013

Week in Review

Oil fuels the modern economy.  We use it everywhere.  And can’t live without it.  Even those people who hate it sipping their coffee while they surf the Internet and engage in social media in their favorite coffee shop.  None of which they could do if it were not for oil.  The coffee they drink crossed the ocean on a ship burning diesel refined from oil.  The smartphone they use contains plastic.  Made from oil.  And these smartphones crossed the ocean on a ship burning diesel before they could use them.  The cars in the drive-thru at the coffee shops are burning gasoline refined from oil.  The freight trains and trucks burn diesel that deliver the goods these coffee shops sell.

Oil makes everything better in our lives.  Without oil life expectancy would plummet.  As hospitals wouldn’t have any life-saving equipment made from plastic.  Ambulances couldn’t speed patients to the hospital.  And there would be no backup generators during a power outage.  As there would be no backup power available at our wastewater treatment plants.  Or at our freshwater pumping stations.  We would return to the 19th century.  Using steam and water power in our factories.  Horses in our cities.  Doing our business in an outhouse.  And drawing our water from a well.  Except for the rich, of course.  Who would be able to enjoy these luxuries.  Luxuries that most of us take for granted today.

Oil is so important in our lives that we should be doing everything within our power to make it as inexpensive and plentiful as possible.  Like building the Keystone XL pipeline.  So we can transport oil safely in large quantities.  Reducing the cost of transportation.  Thus lowering the price at the pump.  Which would also prevent things like this from happening (see What’s in rail tankers and why can’t we know? posted 9/27/2013 on CBC News).

Nearly three months after the  Lac-Mégantic disaster, rail safety remains at the top of the national agenda with a meeting of federal and provincial transport ministers this week focusing on the question of what is in tanker cars and why provinces and municipalities can’t get that information.​

After the conclusion of the meeting in Winnipeg, Manitoba’s transportation minister said the legacy of the Lac-Mégantic disaster in July must be safer rail system across Canada.

Steve Ashton said there is an urgent need to look comprehensively at rail safety at a time when more oil is being shipped by rail and the Lac Mégantic disaster is fresh in the public mind.

This is what happens when the environmentalists get their way.  And President Obama secures their support.  And their money.  President Obama opposes the Keystone XL pipeline.  And other pipelines where he can.  Because his liberal base hates oil.  Even though the lives they enjoy would not be possible without oil.  So their opposition to oil and pipelines forces oil onto trains.  That travel through our cities.  Sometimes derail.  And explode.  Killing 47 in Lac-Mégantic.  And destroying a part of that city.

With continued opposition to the Keystone XL pipeline more oil will travel by train.  More trains will derail.  And explode.  But the Democrats will secure the support of their liberal base.  And the environmentalists can claim a victory in the war against oil.  While they enjoy their coffee and smartphones in their favorite coffee shop.  That only oil makes possible.

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Power Outage stranding Electric Trains show the need for Coal and Oil

Posted by PITHOCRATES - September 29th, 2013

Week in Review

There are few more costly ways to move people than by train.  Running a passenger train is incredibly expensive.  With the biggest cost in maintaining all the infrastructure before point A and point B.  Track, signals, rights-of-way and people.  Lots and lots of people.  To build this infrastructure.  To maintain this infrastructure.  With electric trains requiring the most costly infrastructure of all.  Especially high-speed trains.  These costs are so great that they are greater than their fuel costs.  Unlike the airlines.  That provide a much more cost-efficient way to move people.

Trains are slower than planes.  And they make a lot of stops.  So they appeal to a small group of users.  So few travel by train that it is impossible to charge a ticket price that can pay for this infrastructure that people can afford.  Which is why governments have to subsidize all passenger rail except for maybe two lines.  One Bullet line in Japan.  And one high-speed line in France.  Governments pay for or subsidize pretty much every other passenger train line in the world.  Which they are only more willing to do because those ‘lots and lots of people’ are union workers.  Who support their friends in government.

So governments build passenger rail lines more for political reasons than economic.  For passenger rail is bad economics.  In a highly dense city, though, they may be the only option to move so many people.  But even then the ridership can’t pay for everything.  So it requires massive subsidies.  Worse, by relying on electrified trains so much these rail lines are subject to mass outages.  Unlike diesel electric trains.  Trains that don’t need such a costly infrastructure as electric trains do.  And with a full tank of diesel they can move people even during a large-scale power outage.  Like that currently happening with Con Edison (see Stranded NYC Commuters Ask Why Metro-North’s Power Failed by Mark Chediak & Priya Anand posted 9/27/2013 on Bloomberg).

Less than a year after Consolidated Edison Inc. (ED) left 900,000 customers in the dark during Hurricane Sandy, the utility faces the wrath of stranded commuters over a power failure that has crippled trains from New York to Boston.

Con Edison, based in New York, has warned it may take weeks to restore electricity to the Metro-North Railroad’s busiest line, which serves Connecticut and parts of suburban Westchester County. An electrical fault cut power on a feeder cable while an alternate was out of service for improvements…

The latest high-profile power failure for Con Edison follows Sandy, the worst storm in the company’s history, which brought flooding that left lower Manhattan without power for days. A few months before Sandy, New York Governor Andrew Cuomo, a Democrat, stepped in to resolve an employee lockout by the company that led to protests outside the Upper East Side home of Kevin Burke, the chairman and chief executive officer…

The rail operator is running buses and diesel-powered trains to accommodate no more than a third of the New Haven route’s regular ridership…

The power failure also affected Northeast Corridor passenger-rail service, as Amtrak canceled its Acela Express trains between New York and Boston through Sept. 29.

How about that.  Dirty, filthy, stinky diesel comes to the rescue.  Refined from petroleum oil.  As much as people hate it they can’t live without it.  No matter how hard they try.

This is what you can expect when you wage a war on reliable and inexpensive coal.  Pushing our power provides to become green only raises the cost of electric power generation.  Disconnecting coal-fired power plants from the grid removes more reliable power while replacing it with less reliable power.  And forcing power companies to invest in renewable power reduces their margins.  As they have to maintain their entire electric distribution system even if everyone has a solar power at home.  Because solar power won’t turn on your lights once the sun goes down.  And windmills won’t spin on a calm days.  So while power companies have to maintain their systems as if there is no solar or wind power they can’t bill for that capacity when the people get their power from renewable sources.  So they have little choice but to cut costs.  Leading to conflict with the unions.  And making an aging infrastructure go longer without maintenance.

You can’t have it both ways.  You can’t wage a war on coal and oil without getting costlier and less reliable power.  If you want lower-cost and more reliable power than you use coal and oil.  If you want to pay more for less reliable power then you can’t bitch when the trains stop running.  And the more we move away from coal the more our train will stop running.

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Canada has Record Number of Doctors but Canadians still have Trouble Finding a Doctor

Posted by PITHOCRATES - September 28th, 2013

Week in Review

Obamacare is coming.  The path to single-payer/national health care.  Which we’ll have once Obamacare kills the private health insurance business.  By forcing insurers to cover so much that they have to raise their premiums beyond what people can afford.  As people stop buying insurance they will have to raise their premiums further still due to fewer people in the insurance pool.  Which, of course, will force more people out of the pool as they simply won’t be able to afford insurance anymore.  Eventually the insurance companies will not be able to insure enough people to remain in business.  Leaving only the government.  And then the left has their single-payer/national health care.

So what will that be like?  Well, we probably won’t be able to keep our doctors.  Like President Obama promised us we could.  No.  Socialized medicine does not encourage people to go through the hell of medical school to become a doctor.  So there will be fewer doctors.  Requiring higher caseloads per doctor.  Prompting many to retire.  And then it will be more like it is in Canada (see Canadian doctor total at record high posted 9/26/2013 on CBC News).

Canada had a record 75,142 doctors last year and they earned $328,000 gross on average, according to two new reports…

But the numbers alone don’t present the full picture. It’s important to ask not just how many doctors are needed, but where are they most needed and in what specialties, said Geoff Ballinger, CIHI’s manager of physician information.

Kristin Speth, 35, of Toronto, has been looking for a regular doctor since she moved from Alberta four years ago. She’s had headaches since childhood and has been going to walk-in clinics but is frustrated with the experience.

She’s tried the provincial service to find a doctor but keeps getting notices saying there are no leads.

“It is extremely frustrating,” said Speth.

“It’s just so hard to find someone who will just stay longer than the one year that I need for my physical. They just don’t stick around or you know, you can’t find anyone who is taking new patients.”

Canada’s population is around 35 million.  So there’s about one doctor per every 468 Canadians.  The US population is around 314 million with about 691,000 doctors (in 2010).  That’s about one doctor per every 454 Americans.  So the Canadians have more doctors per capita than they do in the US.  But currently finding a doctor in the United States is not as difficult as it is in Canada.  Well, until Obamacare, that is.  After which Americans will be as exasperated as their Canadian neighbors.  Because they already have what Obamacare will give us.  Single-payer.  And doctor shortages.  Even though they have more doctors per capita than we do.  But apparently their ‘single-payer’ workloads are so heavy they just can’t—or won’t— take on new patients.   Something to look forward to under Obamacare.

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And the Votes are in—The Consensus is that Global Warming is Real despite the Lack of Global Warming

Posted by PITHOCRATES - September 28th, 2013

Week in Review

Climate scientists have voted.  And the ‘yeas’ outnumbered the ‘nays’.  So there is catastrophic global warming coming our way (see Climate Change: Now It’s Over To Politicians by Thomas Moore posted 9/27/2013 on Sky News).

Nearly 900 scientists helped to write the one million words in the latest report from the Intergovernmental Panel on Climate Change.

And 110 governments went through it line by line.

All the more remarkable that the panel has reached a consensus. That makes it hard to ignore.

One million words?  Who’s going to read this?  Who will be able to understand it?  Other than the climate scientists that wrote it?  Who no doubt wrote so the layperson can’t understand it.  So they can laugh with all-knowing condescension and say, “This is too complex for you to understand.  It is so complex that only smart people like us climate scientists can understand it.  Don’t embarrass yourself by trying to.  Just accept what we say on faith.  Like in a religion.”

Consensus?  There is no consensus in science.  There is no voting in science.  And nothing is ever settled.  One scientific theory holds until a better one comes along to challenge it.  And disproves the old theory.  With empirical evidence.  Or proving it in a laboratory.  Can you imagine if the pharmaceutical companies voted to come to a consensus on what new drugs were safe for people to take?  No.  That would never happen.  For there is no consensus in the pharmaceutical industry.  Because there is no consensus in science.

Sceptics argue that global surface temperatures haven’t risen since 1998 and that the scientific models are wrong.

But the scientists say this is only a temporary pause. Ocean currents have absorbed some of the extra heat, but at some point they will reverse.

If their scientific models can actually predict climate why didn’t they predict that the ocean currents would absorb global warming?  Why didn’t they predict this pause?  Before this pause they were warning us about the exact same things they’re warning us about now.  So were their models wrong back then?  Or were the climate scientists hiding this cooling from us?  If so, why?  Why would they lie about global warming?

There’s no doubt that investment in green energy means higher fuel prices. But delaying action on carbon emissions will only mean greater cost later: flood barriers to hold back the rivers and sea, more expensive insurance and higher food bills.

And there’s your answer.  Who are the climate alarmists?  Republicans?  Conservatives?  No.  They’re liberals.  They’re the ones who have forced all of these environmental regulations on us.  Making our lives more costly.  As they expanded the size of government to regulate our businesses.  And us.  While throwing loan guarantees and grants to their friends and campaign donors in the liberal, green energy industry.  For climate science is not science.  It’s politics.

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Tariffs raised the Price of Honey while failing to keep Chinese Honey out of America

Posted by PITHOCRATES - September 28th, 2013

Week in Review

The typical argument for tariffs is that they will save American jobs.  But the cost of the tariffs added on to the products costs us a lot more than the wages of the jobs they save.  Because there are more consumers than producers.  So tariffs help a small percentage of the population while hurting a much larger percentage of the population.

Also, the cost difference between the more costly domestic produced goods and the much lower priced imported goods invites crime.  Because if you can get that lower-priced import and sell it at the higher tariff price you can make a lot of money.  So much money that some people can’t resist breaking the law (see The Honey Launderers: Uncovering the Largest Food Fraud in U.S. History by Susan Berfield, Bloomberg Businessweek, posted 9/23/2013 on Yahoo! Finance).

Americans consume more honey than anyone else in the world, nearly 400 million pounds every year. About half of that is used by food companies in cereals, bread, cookies, and all sorts of other processed food. Some 60 percent of the honey is imported from Argentina, Brazil, Canada, and other trading partners. Almost none comes from China. After U.S. beekeepers accused Chinese companies of selling their honey at artificially low prices, the government imposed import duties in 2001 that as much as tripled the price of Chinese honey. Since then, little enters from China legally.

In September 2010… ALW perpetuate a sprawling $80 million food fraud, the largest in U.S. history… to illegally import Chinese honey…

…E-mails mention falsifying reports from a German lab, creating fake documents for U.S. customs agents, finding new ways to pass Chinese honey through other countries, and setting up a Chinese company that would be eligible to apply for lower tariffs…

ALW relied on a network of brokers from China and Taiwan, who shipped honey from China to India, Malaysia, Indonesia, Russia, South Korea, Mongolia, Thailand, Taiwan, and the Philippines. The 50-gallon drums would be relabeled in these countries and sent on to the U.S. Often the honey was filtered to remove the pollen, which could help identify its origin. Some of the honey was adulterated with rice sugar, molasses, or fructose syrup.

Another argument for tariffs is that they keep inferior and dangerous goods out of the country.   Like this Chinese honey adulterated with ”rice sugar, molasses, or fructose syrup.”  So the tariffs didn’t do much to keep this inferior good out of the country.  It just made people pay three-times as much for this inferior product.  While making the Chinese and American honey industry richer.

Tariffs never help consumers.  They only help the businesses granted tariff protection.  And criminals.  While the consumers have to pay more for less.  Just so a small percentage of the population can keep their high-paying jobs.  Or sell their honey at three-times the market price.

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California raises their Minimum Wage, condemning some to Remain in Dead-End Entry-Level Jobs Forever

Posted by PITHOCRATES - September 28th, 2013

Week in Review

Those who don’t understand economics always want to raise the minimum wage.  Because they think it will help unskilled workers.  But it actually hurts unskilled workers.  For a couple of reasons.  It will increase the cost of business.  Especially for small business owners who survive on thin margins.  If they have a few minimum wage workers an increase in the minimum wage may force the owner to lay off one of them.  Or more.  It is often that or working at a loss.

Another way minimum wage workers get hurt by a higher minimum wage is that it will keep them in a minimum wage job.  Where they never will earn much.  Causing them to struggle throughout their life.  You see, minimum wage jobs are entry level jobs.  Unskilled jobs for the unskilled.  So they can get some working skills when they have little to offer an employer.  Which is why historically high school kids and college students work these jobs.  Gaining useful job skills to apply to a future career.  Where they will earn a lot more.  Allowing them to raise a family.  It’s why people go to college.  To earn more money.  As they didn’t expect to get a ‘living wage’ without this higher education.

So raising the minimum wage is not in the best interest for minimum wage workers.  Unless they want to remain in dead-end jobs for the rest of their life.  After all, these jobs are often referred to contemptuously as ‘hamburger-flipper jobs’.  But state governments are always willing to keep people in these ‘hamburger-flipper jobs’.  Why?  For the votes.  Which is why California is raising their minimum wage (see California raises minimum wage to $10 by Melanie Hicken posted 9/25/2013 on CNNMoney).

The state’s minimum wage will gradually rise from $8 to $10, under the law signed by Governor Jerry Brown Wednesday morning. The hourly rate will increase to $9 on July 1, 2014 and to $10 on Jan. 1, 2016…

More than 90% of minimum-wage workers in the state are over the age of 20, while nearly 2.4 million of the state’s children live in a household with a parent who earns minimum wage, according to the statement. The pay bump would boost a full-time worker’s income by about $4,000 to around $20,000 a year.

The next time you go to a McDonald’s count the people working there.  There are a lot people.  Sometimes 8 or more.  Let’s look at that additional $4,000 in a worker’s income.  Which if you add taxes and other employee expenses let’s say it costs the employer $6,000 per worker.  If there are 5 employees that’s an additional $30,000.  Most McDonald’s are franchises.  Basically small business for one single small business owner who pays a whopping franchise fee.  For the privilege of having to do no marketing to get people to walk through their door.

Let’s assume an owner clears $100,000 in profits for his or her own salary.  And works 80 hours a week to earn that.  So his or her spouse can be a stay-at-home parent for their children.  Who bought the business so the two of them didn’t have to work.  Each earning $50,000 to make the house payment in a nice neighborhood with an excellent school system.  With the raise in the minimum wage this business owner will take a $30,000 pay cut.  Making it difficult to pay his or her bills.  Which will force them to lay off some workers and work more hours.  Or close the restaurant.  So they can get a job.  The spouse, too.  So they can afford to stay in the house they worked so hard to afford.  And keep their kids in the school they worked so hard to put them in.  Turning their kids over to daycare as they become working, part-time parents.

Business owners are not all getting rich.  More businesses fail than succeed.  Some make a lot of money.  Some lose a lot of money.  While every month is a struggle to meet their cash-flow needs.  And increases in the minimum wage won’t make this any easier.  It will just increase their costs.  Making it harder for them to stay in business.  And if they go out of business then that higher minimum-wage won’t help those minimum-wage workers.

Of course the question that just begs to be asked here is this.  Why is it that so many families have to rely on entry-level jobs to raise their families?  Is it because the Californian educational system failed them and they’re unable to go on to college?  Is it because the taxes and regulatory costs in California are so onerous that it is hindering job creation in better paying industries?  Or is it because people are so sexually active in high school that they’re having babies before they have an established career?  Or is it because they choose to remain in these hamburger-flipper jobs because the minimum wage plus a generous welfare state is enough to make life comfortable?  This is the more important problem to resolve.  What is putting these people in these dead-end hamburger-flipper jobs to begin with?  For these people would be far better off advancing out of these entry-level jobs than staying in them forever.

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