Daily Archives: 17 March 2015

A Number of People Predicted This

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The first stage of the Seattle-mandated $15/hr minimum wage, to $11/hr, takes effect next month, but already Seattle’s low wage workers are feeling the pain of their pay “raise.”

…the city is experiencing a rising trend in restaurant closures.

The closings have occurred across the city, from Grub in the upscale Queen Anne Hill neighborhood, to Little Uncle in gritty Pioneer Square, to the Boat Street Cafe on Western Avenue near the waterfront.

The shut-downs have idled dozens of low-wage workers, the very people advocates say the wage law is supposed to help. Instead of delivering the promised “living wage” of $15 an hour, economic realities created by the new law have dropped the hourly wage for these workers to zero.

After all,

About 36% of restaurant earnings go to paying labor costs.

Restaurants operate on thin margins, though, with average profits of 4% or less….

The Seattle Eater offered a more itemized breakout [emphasis added]:

Bottom line, labor can only be a function of sales. If a busy restaurant at lunch serves 150 eaters during the lunch hour, and each person spends $15, the restaurant just grossed $2,250. If labor comprises significantly more than 30%, the restaurant won’t be in business for long. So that allows $675 total for labor for the day, and before the employer taxes we pay that allows $550 or so. At $15 an hour, that allows 36 labor hours, which means four people can work a full day. This assumes that everyone is making the new minimum. Now look around in a busy restaurant serving 150 people—do you see more than 4 employees? Of course you do.

The 16.2% increase in labor cost that first stage represents over Seattle’s current $9.47/hr minimum wage represents a total cost increase of nearly 6%—turning that 4% profit margin into a loss. Even taking Brendan McGill’s (Chef/Owner, Hitchcock, Hitchcock Deli and the gentleman quoted just above by the Seattle Eater) estimate of 30% labor costs, that spike in the minimum wage coming in a week or so works out to just under a 5% increase in total costs, still wiping out that 4% margin. No wonder restaurants are closing.

The question remains: are the targeted low-wage folks better off for being out of an $11-$15/hr job than they are for having a $9.47/hr job? Really?

Another question: how many other low-wage industries besides the food services one are getting hammered by this minimum wage law?

A final thought: maybe next, to cover Seattle’s minimum wage requirement, Seattle will impose a minimum business profit requirement on Seattle’s taxpayers.

 

…including AEI‘s Mark Perry, to whom h/t

VA Obstruction

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…a program rolled out to give certain veterans the option of government-funded private care is experiencing serious bumps: according to reports, only 27,000 vets have taken advantage of the Choice Card program since it was launched in November.

Recall:

Technically, to be eligible to see a non-VA doctor, a veteran must be at least 40 miles away from the nearest VA hospital, or have waited at least 30 days for an appointment.

Which is bad enough, but it’s a clear rule, one that even bureaucrats can understand.

Air Force veteran Pat Baughman, for example, told Fox News he lives about 50 miles away from the nearest VA hospital in Bay Springs, MS—approximately a one-hour drive. But when Baughman called the Choice Card phone number last November, he was told to drive more than three hours away to a hospital in Natchez, MS.

“It didn’t make sense at all. I told them that’s longer than what I’m driving now. So they said they’d get back with me,” Baughman said, adding he received a call the next day and was told to drive to another location instead—two hours away.

And

One area of confusion is that according to the rules, a veteran must be 40 miles away from the nearest VA—”as the crow flies.”

Of course, the VA’s rules writers know that roads—especially rural ones—don’t follow straight paths.

And there’s Paul Walker, a veteran living in Minnesota and fighting cancer.

[H]e was turned down for private care for cancer treatment because there was a VA clinic within 20 miles of his home—but the closest VA hospital which offers the treatment he needs reportedly is more than 50 miles away.

“I tried using it and I got flatly turned down,” said Walker, who told the network that at the clinic, “all they do is dental work there and eye work and some basic kinds of different minor things…but I have cancer stage 4.”

And Congressman Tim Huelskamp (R, KS), with 63 counties and no VA hospital in his district:

I got an email by a veteran who drives 340 miles one way for cardiology.

These don’t appear to be isolated cases: that low number of signups, for instance. VA’s bureaucrats surely know these weaknesses in their rules and in their implementation of their rules; plainly these failures are the result of VA bureaucratic foot-dragging.

I’ve said it before: it’s time to disband the VA and convert what would have been its budget into vouchers for our veterans.