Unz argues that higher wages should wean some workers off social welfare programs, ending "a hidden government subsidy to low-wage businesses, allowing them to shift the burden of their low-wage employees over to the taxpayer."
A new Congressional Budget Office report on a proposal to raise the federal minimum wage to $10.10 bolstered his case. It predicted the increase would cause the loss of 500,000 jobs but boost the earnings of 16.5 million workers -- and lift some 900,000 Americans above the poverty level. Unz argues that taxpayers and workers do better under a higher minimum wage even if a half-million workers lose their low-paying jobs.
Problem: Voters could pass the Unz initiative, which mandates a much bigger pay hike, and Sacramento still could raise welfare spending.
Dorn warned that long term, the "substitution effect" would eliminate jobs as employers look to automation to replace low-skilled workers. That's certainly been happening in the retail biz, where online sales have moved into once-safe bricks-and-mortar turf.
Gap Senior Vice President Keith Herbert told me that as Gap brand stores institute a "reserve-in-store" program to lure online customers to stores, where they might buy more items, Gap management is asking its associates "to do much more" than in the past.
Was Gap responding to the political environment?
Herbert insisted: "This is not a political stand. As an organization, we always look at what's the right thing for our business."
It cannot hurt Gap sales that consumers know that the retailer pays its workers more than the minimum.
Be it noted: Gap has no plan to raise the wage floor for San Francisco workers.
How will the story play out? Will Republicans argue that the Gap announcement shows that the White House can raise incomes better with the bully pulpit than through legislation? Will Democrats feel emboldened by this private-sector victory and use it to argue that employers can absorb a mandate that drives up the cost of hiring new workers?
I'm not sure where I fall on this one. But right now, even though the CBO predicts 500,000 jobs will go away, it works better for the Dems.
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