Now I get it: David Novstrup is quitting the Senate now because he wants to wait six years for the apparent lack of short-term impacts of the minimum-wage increase that he tried to undo to be caught up with by potential long-term impacts on employment:
Our results suggesting a long-run disemployment effect that is five times larger than the short-run effect is based on an economic model and is not directly measured in the data. However, the key mechanism behind the model is supported by empirical evidence. In particular, we find an increase in restaurant exit and entry within two years of minimum-wage hikes and suggestive evidence that the spike in entry occurs primarily from chain restaurants that are relatively more capital intensive than the rest of the fast food industry. Therefore, we believe that that much of the recent research suggesting that minimum-wage hikes barely reduce the number of jobs in the short run should be taken with caution. The longer-run disemployment effects are potentially large [Daniel Aaronson, Eric French, and Isaac Sorkin, “The Long-Run Employment Effects of the Minimum Wage: A Putty-Clay Perspective,” CEPR: Vox, 2016.03.19].
Aaronson, French, and Sorkin extrapolate a lot of hypothesis solely from restaurant industry exit and entry data and duly salt their article with a lot of caution and potentially. David will need more evidence than this model-based argument if he wants to take his Senate seat back in six years, but the article at least gives him a direction to look for economic impacts of higher minimum wages.
Anytime government increases the cost of doing business, a small percentage of business owners will say, “Screw it. It’s not worth the hassle anymore.” All the rules and regulations are why I am a one-man show who refuses to hire. Too much cost, too much paperwork, and virtually no stress which leads to a much healthier life.
well, when you think about it, hiring a human being to make you more money or ease your work stress is a lot to ask. if you can’t afford to pay what they are worth, your business plan needs refinement.
you can pay minimum wage and not worry how the kid is gonna get home after a short meal time shift which will require the working parent to make some transport arrangement anytime of the day you want to save on labor/schedule costs.
With farm income down I assure you that there is somewhat less people going to the café. There was a distinct rise in people going to the café in rural towns when the price of corn went to seven dollars. The people who bought out the local café in the town I went to high school the year before the price of corn went to seven dollars paid for it in one year. So now if farmers go a little less, you should compare restaurant closings in neighboring states that did not get a minimum wage increase to the amount of restaurant closings here before realizing any reduction at all. If the raise in the minimum wage was a natural move because inflation made it affordable, then there was no real bad effect at all.
So, Daryl, you’re not a job creator?
Roger, you remind us that parsing out the real impact of the minimum wage increase in South Dakota will require some serious economic analysis… which I fear no one in South Dakota will do.
I have a couple things about minimum wage increase. When my daughter was in college in Sioux Falls; she worked part-time at a higher-end restaurant. (I won’t name names; because they ALL do this). She was paid $1.25 an hour casual labor and they expected her to make up the difference in tips. I have never eaten in that restaurant since. Farmers: they have never had it so good. Even with prices down, they cannot lose. Here’s why. They can depreciate down their machinery and write it off in increments every year till it’s depreciated out and then buy new. At the end of the year, if the taxes look gruesome, they can buy equipment or livestock to offset their income and deny taxes. Agriculture is the biggest government subsidized business in the country. They have preventative planting; they have price supports; they have disaster payments in case of crop failures or disasters by weather; they have CRP or CREP where they can idle land and get paid for wildlife promotion and hunting rights for not planting row crops; just to name a few. They can send their kids to college cheaper than most; because they can show marginal income on their IRS tax returns and their kids can get more financial aid. They buy 50-70,000 dollar club cab pick-ups and can write off the gas that drives them. Most everything is a farm-business expense. If they don’t eat out at the cafe’s; it’s because they spend their money on other things. The person that gets minimum-wages; has very little opportunity for deductions; such as these.
This is truly the stupidest thing I Have read yet!
Really! So how about the gasoline tax increase causing fewer people traveling in and through South Dakota.
Or the increase in teacher pay reducing the number of students.
Or the state fees (taxes) causing auto sales to drop and reduced fishing and hunting in our great state.
Wow!! Is there any hope for this state?????
Hey, Donal, that’s a good reminder about the gasoline tax. Have we seen any negative impacts from that increase, enacted just about one year ago?
And while I’m thinking of it, have we seen any more potholes filled?
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