Minimum wage hikes, and the inevitable job losses that result from them, are a consistent topic of conversation for us…here are just a couple of recent examples:
Seattle Min Wage Hikes Crushing The Poor: 6,700 Jobs Lost, Annual Wages Down $1,500 – UofW Study
Study Finds Higher Min. Wages Bring Crushing Job Losses For Female And Minority Workers
Harvard ‘Shock’ Study: Each $1 Minimum Wage Hike Causes 4-10% Increase In Restaurant Failures
Of course, no amount of empirical evidence (or common sense for that matter) will ever be sufficient to convince left-leaning politicians that basic economic concepts governing the relationship between supply and demand also apply to the market for labor. No, in the mind of politicians, every business ever created is an evil corporation owned exclusively by “millionaire, billionaire, private jet owners” who earn infinite profits and will casually accept whatever minimum wage hikes or tax increases are thrown at them…
That said, here in the real world, competition prevents corporations from earning excess profits (at least for an extended period of time anyway) and businesses respond to higher labor costs through capital investments designed to reduce labor (think ordering kiosks at McDonald’s) and/or other cost cutting initiatives.
In fact, for the latest example of the unintended consequences of higher minimum wages, one has to look no further than a pair of Tim Horton’s franchises in Ontario, Canada. Faced with a 21% hike in minimum wages starting January 1st, with hourly rates going to $14 from $11.60, owners of the two restaurants said they had no choice but to cut employee benefits and eliminate paid breaks to offset their higher costs. Per the Financial Post:
Employees at the Tim Hortons locations owned by the children of the co-founders of the franchise say they have reduced employee benefits and cut back paid breaks to help offset Ontario’s $2.40 jump in hourly minimum wage.
Jeri Horton-Joyce and Ron Joyce Jr. wrote a letter to employees at their two Tim Hortons restaurants in Cobourg, Ont., that those who want to continue receiving dental and health benefits will have to pay a portion of the plan’s costs themselves. Those working at the restaurant for more than five years will have to pay half, while those working from more than six months to five years will pay 75 per cent.
Employee breaks will also no longer be compensated, the letter dated December 2017 read. For example, those working nine-hour shifts will be paid for eight hours and 20 minutes, while those on three-hour blocks will be paid for two hours and 45 minutes.
“We apologize for these changes,” the letter, widely circulated on social media, read. “Once the costs of the future are better known we may bring back some or all of the benefits we have had to remove.”
The alternative would be for the franchises to simply raise prices to offset their higher cost structure, which they did not, demonstrating how little confidence in pricing power businesses have despite the constant media cheerleading about the “coordinated global recovery.”
Discussions about economic stability aside, such efforts only seem to further undermine the relative profitability of small businesses versus larger national chains and drive lower volumes as fewer people can afford to eat out.
The minimum wage hike and other new franchisee costs, like vacation pay, have put Tim Hortons franchisees in “a difficult situation,” said a statement from the GWNFA’s board of directors.
The GWNFA, whose membership hit half of all Canadian Tim Hortons franchisees last October, said its goal is to mitigate job losses.
But without help from their parent company in lowering food costs, raising prices and reducing couponing, the association said franchisees have been forced to take steps to protect their business.
“While other competitors have received concessions from their franchisors, unfortunately our chain has not,” the GWNFA said. “Many of our store owners are left no alternative but to implement cost-saving measures in order to survive.”
Conclusion: Keep up the good “Fight for $15”, Bernie; it seems to be working really well.
Soros Newest Investor Of Tesla Bonds
Tesla looks to have a new bond holder and it’s none other than George Soros. Whatever this mean, Soros has also taken a stake in Crypto-Currencies .
Zerohedge Reports: Amid Elon Musk’s darkest hour in late March – as his stocks and bonds tumbled in price – it seems there was at least one other billionaire willing to buy the ‘blood on the street’.
According to the latest 13Fs, George Soros’ investment firm took a $35 million stake in Tesla’s convertible bonds during the first three months of the year.
As a reminder, convertibles are hybrid securities, either bonds or preferred stock, that can be exchanged for a predetermined number of common shares. That effectively lets an investor participate in stock-price changes, but with the yield and greater security of a fixed-income instrument.
The March 2019 Converts bounced handsomely off those lows – tracking the stock’s divergent bounce – but in recent days has fallen back towards the lows, catching down to the straight bonds record low price.
“Racial Bias Education Day” To Close Down Starbucks Nationwide
Starbucks is going to the illogical extreme by taking an entire day to put their employees through what they call “Racial Bias Education Day”. Coming after a viral videos showed two men being arrested in a Starbucks in Philadelphia. Starbucks almost instantly gave into calls to do ‘something’ but will this really fix anything in a culture where ‘racism’ is more of a political talking point than an actual substantive conversation or debate.
CNBC Reports: Starbucks said Tuesday it will be closing all of its company-owned restaurants in the U.S. during the afternoon of May 29 to conduct a racial-bias education program.
“I’ve spent the last few days in Philadelphia with my leadership team listening to the community, learning what we did wrong and the steps we need to take to fix it,” Kevin Johnson, CEO of Starbucks, said in a statement Tuesday. “While this is not limited to Starbucks, we’re committed to being a part of the solution. Closing our stores for racial bias training is just one step in a journey that requires dedication from every level of our company and partnerships in our local communities.”
Soros Now Investing In Crypto-Currencies
After a historic drop in cryptocurrency prices in the first quarter, one which deflated much of the euphoria that surrounded the sector in late 2017 and the start of this year, the space is about to get exciting again because none other than 87-year-old billionaire George Soros is reportedly preparing to trade cryptocurrencies as prices plunge.
According to Bloomberg, Adam Fisher -who oversees macro investing at New York-based Soros Fund Management – has received internal approval to trade virtual coins in the last few months, “though he has yet to make a wager.”
The question, of course, is whether Bloomberg’s leak is accurate, and if indeed Soros is only now getting started in the space or if he has quietly loaded up already.
What is ironic, is that just three months ago when speaking at the World Economic Forum in Davos, Soros said digital coins cannot function as actual currencies because of their volatility, “but he didn’t predict the hard tumble that some observers had forecast at the time.”
“As long as you have dictatorships on the rise you will have a different ending, because the rulers in those countries will turn to Bitcoin to build a nest egg abroad,” Soros, 87, said on Jan. 25.
With Bitcoin tumbling below $7000 recently…