The Minimum Wage Costs Jobs – Amazon’s Whole Foods Cuts Hours For Higher Wage

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A major contention abut the minimum wage is that it doesn’t particularly do anyone any good. Sure, people gain more pay per hour worked. But they then get their hours cut. Some get their hours cut to zero. On the very simple indeed basis that we humans tend to use or buy less of something the more expensive it becomes. So, raise wages and we’ll buy less labour.

As appears to be happening here with Amazon and Whole Foods. Famously, Amazon decided to pay a $15 minimum wage to everyone who worked for the company. Whole Foods, the supermarket chain, was and is a part of Amazon. Thus all those supermarket workers now gain a $15 minimum.

Well, how excellent. So, we can now see what it would be like with that national $15 minimum that the Fight for $15 has been going on about. And the result isn’t pretty:

But since the wage increase, Whole Food employees have told the Guardian that they have experienced widespread cuts that have reduced schedule shifts across many stores, often negating wage gains for employees. “My hours went from 30 to 20 a week,” said one Whole Foods employee in Illinois. Workers interviewed for this story were reluctant to speak on the record for fear of retaliation. The Illinois-based worker explained that once the $15 minimum wage was enacted, part-time employee hours at their store were cut from an average of 30 to 21 hours a week, and full-time employees saw average hours reduced from 37.5 hours to 34.5 hours.

Of course, all those who argue in favour of the minimum wage rise insist that such a thing will never happen. No one will cut hours just because more has to be paid for each hour. Obviously, that’s wrong in theory but here we’ve the evidence that it’s wrong in reality.

So, minimum wage rises cost jobs, cost hours for workers. Just as all us right wing neoliberal types have been shouting for years. And the apologies are going to come in thick and fast now, aren’t they?

Sure….

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Matt Ryan
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Matt Ryan

But AMZN is different because Bezos is greedy and wants all the money for himself.

PeterBurgess
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PeterBurgess

There is a major problem in the modern economy … massive inequality … and a popular response to this is the idea of increasing the minimum wage. I have never been enthusiastic about this approach because many of the companies paying minimum wage are also earning minimal profits. That is not true of Amazon as a whole, of course, but probably exists in various parts of their brick and mortar subsidiary Whole Foods. I am sure that Amazon has pretty detailed profit performance analysis for all its units, and these managers are going to have to respond to an hourly… Read more »

Quentin Vole
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Quentin Vole

Lots of people like to claim that inequality is a major problem, but I’ve never been able to understand how the ability of a premier league striker to buy a new Ferrari every month makes anyone else’s life any worse. Perhaps you can explain it to me?

PeterBurgess
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PeterBurgess

At some level there is a constant amount of economic money in circulation. When someone gets paid a huge amount, this money comes from somewhere and in the case of the highly remunerated premier league striker is is coming from either the owners of the franchise or the fans of the franchise. Most of the very wealthy people on the planet are wealthy in large part because they created a profitable company … and profits come from the price of the product less the costs to make the product … and in many cases the product price was excessively high… Read more »

thammond
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thammond

Not even remotely true. Facebook? Easyjet? Sky Sports? Microsoft even. It is scale that drives wealth creation and scale that drives footballers wages – not that long ago 40,000 watched them play, now its 4 million. 100 times more people paying means 100 times more money for you – for the same work.

PeterBurgess
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PeterBurgess

This is a logical response … but this is only a small part of the larger socio-enviro-economic system. What you are describing is a valid explanation of how concentration of economic wealth comes about. Where does the 100 times more money come from? … it comes from the 4 million that are now watching … not directly perhaps but through the advertising and consumption of more and more stuff. Understanding the complete system is not easy … but everything comes from somewhere.

Quentin Vole
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Quentin Vole

If you’ve created a comedy account, it’s a bloody good one. If you seriously believe any of that nonsense, I suggest you buy a GCSE economics textbook and read chapter one.

PeterBurgess
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PeterBurgess

I have to admit I learned more from engineering studies than from my economic studies. I rarely get called out for my humor … so for that I thank you. Economics 101 is a good start … but Keynes is a useful follow up. He understood that the economy was a ‘system’ and what I have been trying to do is to understand how the money profit economy interacts with people and society (quality if life) and nature and the environment. Have you seen the Phillip’s Machine … an analog device that modeled the UK economy … it was built… Read more »

PeterBurgess
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PeterBurgess

I have to admit I learned more from engineering studies than from my economic studies. I rarely get called out for my humor … so for that I thank you. Economics 101 is a good start … but Keynes is a useful follow up. He understood that the economy was a ‘system’ and what I have been trying to do is to understand how the money profit economy interacts with people and society (quality if life) and nature and the environment. Have you seen the Phillip’s Machine … an analog device that modeled the UK economy … it was built… Read more »

Chester Draws
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Chester Draws

You think money supply is limited? Ha, ha. That’s your credibility shot then. How how did it grow to the modern amount?

In any case, if I can buy more with my share than I could before, I’d still be better off if someone’s wealth arises by reducing my costs.

PeterBurgess
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PeterBurgess

You make a good point. The banking system was bailed out by the creation of a massive amount of new money that saved the system … but it is an open question as to what exactly happened. Luckily people as a whole did not lose their trust in money and its value (actually price) stayed at a reasonably high level even though the quantity increased significantly and the real economy stayed more of less the same. As to your cost of living going down while your quality of life has been going up … bravo. I agree … I have… Read more »

Andrew Carey
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Andrew Carey

should be held to account
Is that a personal moral view which means that you’re fine with it being voluntary on employers, or are you arguing that it needs to be compulsory, which means that employers get taken to court if they do not comply?

PeterBurgess
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PeterBurgess

For about the last 150 years the corporate community has been self-reporting their performance to attract investors. Initially they were completely free to lie and eventually the authorities mandated that there should be ‘audit’ of their financial reporting so that they were no longer free to iie with impunity. A possible solution that is increasingly possible with ubiquitous technology is for society to report on the behavior of the corporate world in a well structured manner. Companies know that reputation matters, and they do PR to make sure that is what we see … but the technology tools are emerging… Read more »

BarksintheCountry
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BarksintheCountry

So, no answer to the original question then?

PeterBurgess
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PeterBurgess

Sorry you thought I was dodging the question. I was trying to answer the question in a more nuanced manner. There is a school of thought that wants the government and law to be the solution to corporate behavior. I see this as a last resort because it is usually far too slow, expensive and cumbersome. On the other hand, if data can be used to change consumer behavior, companies respond extremely fast when they are in danger of losing their customers … at any rate, that has been my experience. I hope this helps.

BlokeInTejas
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BlokeInTejas

To do what you suggest requires the ability to measure the value-add of all the employees involved. How do you do that, and in what way are your metrics better than and different from the ones the companies already use?

thammond
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thammond

The whole point of an economy is consumption, not jobs and pay. Making everything as cheaply as possible benefits workers far more than trying to play with what they “should” be paid. And trying to deal with “inequality” through consumer choice is just bizarre – all businesses require a small number of skillled managers but the skills and thus pay of their workers varies massively. Try BP and Tesco for example. A CEOs jobs is the same at both but a reservoir engineer is not a shelf-stacker.

Better to make everybody as rich as possible than as equal as possible.

PeterBurgess
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PeterBurgess

I agree with a lot of what you say … certainly the core purpose of the economy is quality of life and more consumption is a very big part of delivering better quality of life. This correlation is very strong as the population moves from poor to reasonably prosperous … but this correlation does not continue as people move from reasonably prosperous to really wealthy. Back in the 1980s I wrote an essay where I pointed out that the biggest cost in the modern economy was profit … and I think this observation has been borne out in practice. Material… Read more »

Esteban
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Esteban

Why is inequality a “major problem”? Envy? Because – reasons?

Jonathan Harston
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Jonathan Harston

Just a gut feeling from local history research, but it seems to related to modern propensity for rich people to isolate themselves from the plebs. In the past the rich local solicitor would live a couple of doors down from the railway worker and the shop keeper, and they’d all meet up at Church and the local social/political club. Nowadays, there is more geographical dispersal based on income, the rich move away from the poor.