John Locke Update / Research Newsletter

Diner discounts and fast-food wage hikes

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The plight of the low-wage fast-food worker has been a focus of some political activism lately. The ostensible goal is drumming up support for significantly raising the minimum wage. Sympathy for workers should not, however, lead one into supporting causes that merely seem to address the problem while actually making it worse.

This newsletter recently devoted a series of columns (here, here, and here) to the unintended negative effects of a minimum wage increase on the very ones it is supposed to help most. A reminder: these negative effects are one of the issues about which there is greatest agreement among economists.

John Hood’s Daily Journal article this week discussed important additions to the economic research literature on the minimum wage. Some of it snuffed out a novel theory that recent findings have overturned the oft-ratified finding of a negative effect by the minimum wage on employment, especially of the least-skilled workers, teens, and new entrants. Another estimated that the effect of raising the minimum wage from $7.25 to $10.10 per hour (which is far from the activists’ call for $15/hr.) would kill between 7,312 to 46,100 jobs in North Carolina alone.

Economists Jeffrey Clemens and Michael Wither of the University of California, San Diego, just published a new working paper at the National Bureau of Economic Research that estimates that the 30 percent increase in the average effective minimum wage over the late 2000s "reduced the national employment-to-population ratio — the share of adults with any kind of job — by 0.7 percentage point" between December 2006 and December 2012. In other words, the minimum-wage increases were responsible for 14 percent of the national decline in employment-to-population ratio.

Clemens and Wither also found that binding minimum wage increases had:

  • "significant, negative effects on the employment and income growth of targeted workers. Lost income reflects contributions from employment declines, increased probabilities of working without pay (i.e., an ‘internship’ effect), and lost wage growth associated with reductions in experience accumulation"
  • "significantly reduced the likelihood that low-skilled workers rose to what we characterize as lower middle class earnings. This curtailment of transitions into lower middle class earnings began to emerge roughly one year following initial declines in low wage employment. Reductions in upward mobility thus appear to follow reductions in access to opportunities for accumulating work experience."

Clemens and Withers’s insight into the ongoing effects of lost opportunities is important. Work itself is valuable. Lack of even a low-wage opportunity translates into lost work experience, lost advancement opportunities, and a snowball effect of lost earnings.

Discount dining for gratitude’s sake: what kind of idiot would have a problem with that? Oh.

In other news, readers may recall the bizarre lawsuit threat against Mary’s Gourmet Diner in Winston-Salem earlier this year. The "Freedom from Religion Foundation" out of Wisconsin found out from grateful patrons writing on Facebook that the restaurant occasionally handed out a 15 percent discount to "Customers who pray, meditate, or simply say ‘thank you’ before eating."

Somehow this organization decided the discount violated the Civil Rights Act and sent letters threatening to sue the diner. I kid you not. At the time I wrote that

I happen to think Mary’s could win the lawsuit, but I also think the restaurant can’t afford to pay for the legal fight, and I suspect the attention-seeking foundation made the same calculation and realized it could claim an easy PR victory. … This is why we can’t have nice things.

This week, however, "The Daily Show" tainted some of the foundation’s easy PR victory, and did so in the most enjoyable way possible: by letting foundation co-president Dan Barker defend it. Jordan Klepper of "The Daily Show" also talked with restaurant owner Mary Haglund and some of her patrons.

You can watch the segment at the bottom of WXII-12’s article here. Be warned, there is some "Daily Show"-type offensive language used.

For those who can’t watch, here is a brief sampling from the segment:

Barker: Mary’s Gourmet Diner is very significant. Under the law, Selma [Alabama] and a 15 percent discount are the same thing.

Klepper: Selma, Birmingham, … Mary’s Gourmet Diner.

===

Haglund: One of the things we set out to do was to make everyone feel welcome. We just felt it was an act of rewarding people for being grateful. We never thought of it as discriminatory at all.

===

Klepper (narration): Martin Luther King went to Selma, and Dan Barker definitely went to Mary’s.

Barker: I don’t think anyone from Freedom from Religion went to Mary’s.

Klepper: You didn’t go down there?

Barker: Actually, it came to our attention through social media.

Klepper: On the Internet?

Barker: On the Internet.

Klepper: You’re trolling the Internet?

===

Klepper (narration): OK, but there were actual atheists who ate at Mary’s, and they were dehumanized.

Atheist 1: I don’t feel like I’ve been discriminated against.

Klepper: What do you mean?

Atheist 1: I’ve gotten the discount.

Klepper: What did you do to do that — you broke your core beliefs and believed in God?

Atheist 1: No, I just said ‘thank you’ to the chef.

Atheist 2: I get other discounts. I get one for the symphony for being a subscriber.

Klepper: Why all the hullabaloo?

Atheist 2: I think they’re just being ****s.

===

Barker: If you want to label someone who fights for civil rights and the First Amendment a ****, you’re welcome to do that. But obviously we’re getting this discount for praying. That was the problem.

Haglund: That’s not true. I mean, it doesn’t have to be a prayer; it could be a moment of quiet introspection —

Klepper: Let me get this straight —

Haglund: It’s a moment — breath.

Klepper: If I want a discount, I could do this [takes a deep, introspective breath]?

Haglund: Yes.

Klepper: You’re ****ing me.

===

Barker: I have too much integrity as a rational person to pretend that I’m talking to a ghost in the sky. I’m not.

Klepper: You have that much integrity but you’ll bitch about 25 cents extra for eggs?

Barker: Yes, because it’s the principle of it.

Klepper (narration): And Dan stuck to his principles, having one of his lawyers actually send a threatening letter to Mary’s Gourmet Diner, telling her she was in violation of the Civil Rights Ac — [laughs] are you kidding me?

Klepper: Look, I’m an atheist. All right? I get it. We need somebody fighting the good fight. Is this a good fight?

Barker: You can say this is more unfair or less unfair, but it’s still unfair. Take, for example, genocide. Suppose you exterminated a whole group of people, 20,000, they’re all killed out. But suppose someone else exterminated 20 million people. One is small by comparison, but they’re the same crime.

Klepper: Why’d you bring up genocide?

Barker: If I say the word ‘genocide,’ are you thinking of a number?

Klepper: No, I’m thinking, weren’t we talking about Mary’s Gourmet Diner?

To date, however, the nice little discount — however analogous to genocide it must be — hasn’t been restored.

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Jon Sanders studies regulatory policy, a veritable kudzu of invasive government and unintended consequences. As Director of Regulatory Studies at the John Locke Foundation, Jon gets into the weeds in all kinds of policy areas, including electricity, occupational licensing, hydraulic… ...

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