Wednesday, April 1, 2015

Now here's news fit to print!

The New York Times publishes an article actually based on on sound economics--by Adam Davidson of NPR (another wonder!);
It might seem intuitive that when there is an increase in the supply of workers, the ones who were here already will make less money or lose their jobs. Immigrants don’t just increase the supply of labor, though; they simultaneously increase demand for it, using the wages they earn to rent apartments, eat food, get haircuts, buy cellphones. That means there are more jobs building apartments, selling food, giving haircuts and dispatching the trucks that move those phones. Immigrants increase the size of the overall population, which means they increase the size of the economy. Logically, if immigrants were “stealing” jobs, so would every young person leaving school and entering the job market; countries should become poorer as they get larger. In reality, of course, the opposite happens.
We've bolded a sentence in the above, because it's an argument we've had the opportunity to use against anti-immigrationists ourselves, from time to time. If the job-taking argument was correct there would have been a labor market crisis almost every June, when baby boomers graduated from school (without being offset by retiring grandparents, which was the historical case). Instead, the boomers increased both the supply and demand for (usually low-skilled) labor.

The only time we did see problems (persistently high unemployment amongst youth) was when the minimum wage law prevented the markets from clearing. Something that's likely to appear again in selected geographic locations. Though, the marketplace is resilient, and employers aren't chessmen sitting on a board, unable to move on their own, as the Seattle Eater had to somewhat grudgingly concede;
Will the ordinance cause restaurants to eliminate tipping? That's unclear as of yet, though in recent months and years, a number of San Francisco's most expensive restaurants have prepared for that city's rising minimum by instituting service charges.....  Waiters, whose bottom rate of pay is the same as cooks, can collect tips, while cooks cannot.
Restaurateurs can get around those tipping regulations by instituting a service charge which it can redistribute to all employees, not just to waiters, runners, and bussers.
How the waiters--who already make well above the minimum wage, thanks to market forces--will respond should be interesting.

1 comment:

  1. has it wrong. Restaurants will not be eliminating tipping. They predict that the customers will stop tipping, knowing that the servers will already have a "living" wage.

    The restaurants are changing a mostly voluntary payment into a required one, just in case.