San Juan Mountains

San Juan Mountains
San Juan Mountains: Grenadier Range

Wednesday, November 16, 2016

Colorado's Minimum Wage Law Comes Home To Roost

The mentally ill and State worshiping people who made the conscious decision to vote in the last election cycle have created a new law that I will be forced to comply with in the near future.  Yes, its true, Colorado's minimum wage has just been set at $12/hour starting January 1st of 2017.  Actually, it will escalate to that point in a couple of years but the first increase begins January 1st.  Throughout the campaign in support of the new law the folks who believed it was a good idea continually informed me that it would not have any negative impacts upon business, employment or economic growth.  All I heard from them was that even business people thought it was a good idea.  At that time I posted an article to this blog arguing that business people who want to pay their employees a higher than free market wage are free to do so but I, as an owner of a janitorial firm, should not be forced to do so against my will and as a matter of state statute.  I don't force anyone to work for me and those who work for me are paid precisely what we voluntarily agree they will be paid.  Government did not need to get involved, but it did, and now you have to suffer the consequences.  Why do I say "you" have to suffer the consequences when it is my bottom line that is going to be harmed?  Let me tell you why.
An article in Sunday's Denver Post, written by Aldo Svaldi, said, "While businesses who backed the higher wage say they think it could be good for their employees and their business, many are doing a calculation that involves finding the right balance between passing on higher costs to customers, adjusting staffing and work hours, and looking for other cost savings."  Did you get that?  Now that the law has passed, and all employers who have minimum wage workers are going to be required to give them a 44% increase (current wage is $8.31), it is not hard to see why the workers are happy.  What is less obvious is what employers will now have to do.  As the article stated, business owners are now being forced to decide between raising the prices for their goods and services, cutting back on the hours they pay for labor or reducing their current workforce (or not expanding it).  These results were entirely predictable but generally ignored in the rhetoric that floated about prior to the election.
The Colorado Restaurant Association took a survey of its members of which 220 of them responded.  Here are the results of that survey, according to the article in the newspaper:
  • 90% will pass on the cost of higher wages in price increases for customers.
  • 70% are going to cut employee hours.
  • 70% are going to cut the number of employees.
  • 60% are going to suspend expansion plans.
  • 20% are going out of business at the end of this year.
Aldo, who clearly knows nothing about economics, wrote, "In an ideal world, businesses would just incorporate higher labor costs into the prices they charge customers, with no defections or loss in sales."  What imaginary world does Aldo live in?  Why, in his imaginary '"ideal" world would consumers make the voluntary decision to pay more for something when they do not have to?   According to Aldo consumers should believe it is their responsibility to pay the wages of laborers who work for the companies they buy things from.  Why should that be?  Indeed, if Aldo's ideal world really existed there would be no need for a minimum wage law at all because consumers would happily and voluntarily routinely pay more for something so the people employed in making that thing could make lots and lots of money.
When the majority of Colorado voters who made the immoral decision to vote on this issue decided that they had the moral and civil right to determine how much a person should be paid in a private transaction it was guaranteed that negative economic consequences would follow.  Those negative consequences are now here.  Consumers of goods and services, including my customers, will now be forced to pay more for the same service.  Those who refuse to do so will fire their service providers.  I have no idea how many customers I am going to lose or exactly how harmful this new law is going to be for my business.  Who knows, I might end up going out of business as well.  Employees, who thought they were getting a good deal, will now find that they will be working less hours.  People who now want to work for the new higher wage will find no jobs waiting for them as employers like myself make the rational and economically necessary decision to not hire any additional workers.  I have shelved all plans for hiring new people until I see just how bad things are going to be.  Like most other employers, plans for expansion are  now on hold.
Although ignorant voters claimed that unemployment would not rise with a higher minimum wage, the fact that 20% of restaurant owners are planning on closing their doors for good when the new law takes effect speaks otherwise.  Maybe that figure is a bit high.  Maybe, like me, they are just mad at what has happened.  We evil free market capitalists don't want to give up any of our ill-gotten profits so we quite naturally squawk and complain when a moral law is enacted forcing us to support the noble workers we employee.  Maybe only 10% of the restaurants will go out of business.  I wonder where those newly unemployed folks will find work when other restaurants are not hiring and reducing hours?
Ultimately the citizens of this envy filled and ignorant state will pay the price for the law.  The most common response to the new law is to raise prices and hope for the best.  That is what I will be doing and I already know how my customers are going to respond.  People will complain, as they always do about how prices keep going up, up and up but little do they realize that those who voted for this economically damaging new law are the ones responsible for the increases.  I didn't want to raise my prices but I will go out of business if I do not.  Margins in the janitorial world are quite slim.  It sure would be nice if consumers would take their anger out on themselves and leave innocent businessmen alone.  But we all know that isn't going to happen.  Profit seeking businessmen always take the blame.  Sometimes it is almost enough to make me close the doors, fire all my employees and move to the country where I would try to eke out an existence by subsistence farming.  Humm.....maybe it is my time to try to become a gentleman farmer. 

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