Patterico's Pontifications

5/2/2015

Seattle Pizzeria Will Close Due to Higher Minimum Wage

Filed under: General — Patterico @ 5:51 pm

Shocker:

It may be one of the first casualties of Seattle’s new minimum wage law. The owner of Z Pizza says she’s being forced to close her doors, because she can’t afford the higher labor costs.

Devin Jeran was happy to get a raise, when Seattle’s minimum wage went up to $11 an hour at the beginning of the month.

“I definitely recognize that having more money is important,” he says, “especially in a city as expensive as this one.”

Sorry, Devin.

Unfortunately, he’ll only enjoy that bigger paycheck for a few more months. In August, his boss is shutting down Z Pizza and putting him and his 11 co-workers out of work.

“Fortunately she keeps us in the loop, she didn’t just tell us last minute.”

Ritu Shah Burnham doesn’t want to go out of business, but says she can’t afford the city’s mandated wage hikes.

“I’ve let one person go since April 1, I’ve cut hours since April 1, I’ve taken them myself because I don’t pay myself,” she says. “I’ve also raised my prices a little bit, there’s no other way to do it.”

Small businesses in the city have up to six more years to phase in the new $15 an hour minimum wage. But Shah Burnham says even though she only has one store with 12 employees, she’s considered part of the Z Pizza franchise — a large business. So she has to give raises within the next two years.

“I know that I would have stayed here if I had 7 years, just like everyone else, if I had an even playing field,” she says. “The discrimination I’m feeling right now against my small business makes me not want to stay and do anything in Seattle.”

The organizations who pushed a higher minimum wage, upon being informed of this, gave this thoughtful reply:

We reached out to 15 Now Seattle, the organization that pushed for the higher minimum wage. Director Jess Spear hadn’t heard about Z Pizza’s decision to close. So she wouldn’t comment specifically on that, only saying: “Restaurants open and close all the time, for various reasons.”

In brief? They don’t care.

Jeran wonders about all the rallies that were supposed to be about making life better for people like him.

“If that’s the truth, I don’t think that’s very apparent. People like me are finding themselves in a tougher situation than ever.”

Hard to believe that government monkeying around with the economy could harm the lives of lower-paid workers, isn’t it?

If you answered “not really,” then you have been paying attention.

54 Responses to “Seattle Pizzeria Will Close Due to Higher Minimum Wage”

  1. This sort of thing goes on all the time, and is almost never reported.

    Patterico (9c670f)

  2. i think twice before going to minimum wager places to eat

    there’s no way a lot of them aren’t skimping on food quality

    i trust chik fil a though cause i know they would never serve me gross expired food because jesus

    happyfeet (831175)

  3. actually though now that tourism season is here my chik fil a always has a line

    so i go here a lot it reminds me of oki dog cause of how orange and kinda ghetto it is

    it’s cash only but I’m getting used to that

    a lot of stuff here is cash only

    but what’s AWESOME is you can go to Budacki’s too Mr. Patterico! They opened up one in LA!

    How kooky is that?

    it’s a wee small tiny whirl after all huh

    happyfeet (831175)

  4. The road to Hell is paved with gubmint interference.

    Beasts of England (6b2e6a)

  5. I support the $100 an hour minimum wage. I don’t see any reason this hasn’t happened!

    Dejectedhead (b6399b)

  6. I support the $100 an hour minimum wage. I don’t see any reason this hasn’t happened!

    Exactly.

    Indeed, why not $1000/hr.?

    Patterico (9c670f)

  7. A relevant quote:

    “For the same reason that there were breadlines in the Soviet Union: Central planning that allocated goods by fiat to favored groups rather than price signals.”
    Shikha Dalmia, Reason Magazine
    -crisi

    Andrew Russell (e09dd3)

  8. That’s just it, isn’t it. The left realizes that $100 per hour would be a disaster, but somehow thinks that they can beat supply and demand incrementally. A fool’s errand.

    Beasts of England (6b2e6a)

  9. Using Nancy Pelosi’s algebra, this will work out really swell. That’s 11 people who may qualify for unemployment benefits, which are said to be a magical elixir . Nancy assured us some time ago that there is a multiplier of over two for every dollar so spent. So if these ex-workers receive $750 a month in benefits (3.85% of the average of their best 2 quarterly earnings, each week) the Seattle economy will experience an increase of almost $16,500 every month.

    But wait, something’s wrong! These 11 people were earning at least $9 an hour before Seattle guaranteed them a “living wage”, and that also works out to 9x11x(2000/12)=$16,500. But if they are unemployed, only half of Nancy’s economic growth hormone will go to them! So now they’re only receiving the equivalent of $4.50 an hour. And they will also have to report in to the State documenting their weekly attempts to find a new job, so they will still be pretty busy.

    And the nice lady who ran this business may find it difficult to sell her equipment and escape the lease. Ah well, the big shots at City Hall can’t hold the hand of every under-capitalized business.

    We’ll know this is an important story when the Seattle Times stumbles upon it.

    bobathome (ef0d3a)

  10. the dirty socialists acknowledge *something* in how they pretty much always phase these things in (look at the “future enacted increases” column)

    but i don’t see much difference between the dirty socialist’s passion for “phasing in” a minimum wage and porky porky jersey trash chris christie’s passion for “phasing in” means testing for social security

    happyfeet (831175)

  11. *dirty socialists’* passion i mean

    happyfeet (831175)

  12. Raise the minumum wage from $7.25 to $15 an hour, watch a bunch of workers go from $7.25 to zero.

    I have very few workers who make minimum wage. The law doesn’t strictly apply to my wait staff, who make most of their living off of tips. My chefs make far more than minimum wage. My bussers/dishwashers?

    I’ll do their jobs before I pay them $15/hour.

    Too bad. If those guys are hard workers and show potential and the desire, we’ll bring them into the food prep arena and teach them how to be chefs. But these mandatory wages eliminate the possibility. I simply can’t afford dishwashers at these prices.

    Steve57 (818fa4)

  13. the damnedest thing of it Mr. 57

    is no matter what they raise it to, they still gonna be making minimum wage

    losers.

    i’m embarrassed for them i really am

    they obviously did not pay attention in class

    happyfeet (831175)

  14. our idiot mayor here in Lost Angels wants to raise the minimum wager here as well…

    and i’m going to do all i can to help make it happen.

    better yet would be a #Failifornia wide raise: if no one can afford to hire illegals, maybe some of them will leave for greener pastures, and the wailing of the leftards as all their favorite restaurants close would be music to my ears.

    since the left won’t listen to reason or believe their own lying eyes, maybe some pain will be educational.

    redc1c4 (4db2c8)

  15. redc1c4,

    The problem with this is that many of the restaurants will fire the Americans and only hire illegals paying them under the table. We already have a huge problem with construction companies being driven out of business by companies that are paying illegals under the table. No workers comp fees, no payroll taxes, no insurance means legitimate companies cannot compete.

    Easy Target (d7a02c)

  16. $100.00/ hr. plus free air for my tires.
    Air is not free anymore.

    mg (31009b)

  17. “The problem with socialism is that, eventually, you run out of other people’s money.”

    It just happened a little bit sooner in Seattle than most other places.

    WarEagle82 (d35bad)

  18. These pizza shop employees will enjoy the same Min-Wage that the sports-gear shop workers in Baltimore are enjoying after having the store looted: ZERO!

    askeptic (efcf22)

  19. then you go after the companies who aren’t reporting withholding on salaries…

    the FTB sent me a letter last week, demanding taxes from 2013, just because i have a Lost Angels business tax certificate, which i am required to maintain, if i *ever* want to make a living at that profession.

    contractor’s are licensed by the state, so, if they aren’t paying withholding taxes on their illegal staff, turn them in to the FTB for under reporting their salaries. chances are the owner is skimming cash as well, and under reporting their own income too.

    #ProblemSolved

    redc1c4 (589173)

  20. they obviously did not pay attention in class

    that’s not it mr feets: getting an education is “acting white”.

    we need to honor their culture, not impose your racist values on them.

    O:)

    redc1c4 (589173)

  21. 13. the damnedest thing of it Mr. 57

    is no matter what they raise it to, they still gonna be making minimum wage

    losers.

    i’m embarrassed for them i really am

    they obviously did not pay attention in class

    happyfeet (831175) — 5/2/2015 @ 7:22 pm

    Math is hard, Mr. feets, you must understand.

    Some peeps just don’t mathelize as well as others.

    Steve57 (818fa4)

  22. The Mayor is very astute.

    askeptic (efcf22)

  23. i say it’s an insult to dumb blondes everywhere.

    redc1c4 (34e91b)

  24. I think they ought to triple unemployment payouts, too. It’s just a little tax on those lucky enough to work.

    Kevin M (25bbee)

  25. Also, exempt illegal aliens from minimum wage laws. That’ll teach ’em!

    Kevin M (25bbee)

  26. See also this, about San Francisco’s Borderlands Books, faced with a $12.25 minimum wage law:

    http://borderlands-books.blogspot.com/2015/02/borderlands-books-to-close-in-march.html

    In the end, they were able to stay open, one more year, through crowdfunding (aka free-market socialism). Hard to say what happens after that as the SF minimum wage rises to $15 over the next few years.

    Kevin M (25bbee)

  27. And this, also from SF:

    http://www.nationalreview.com/article/417763/when-minimum-wage-hikes-hit-san-francisco-comic-book-store-ian-tuttle

    Hibbs has considered doing the same but notes two problems: “By saying, ‘Give me money,’ you’re sort of saying you’re not viable.” Furthermore, “There’s a limitation on how much crowdfunding can be done. When you’re the tenth one, I don’t know if it’s going to be easy for you.”

    Hibbs is not inclined to circumvent the market: “Despite being a progressive living in San Francisco, I do believe in capitalism. I’d like to have the market solve this problem.” That applies not just to his plight, but to the question of the minimum wage: “We’re for a living wage, for a minimum wage, in principle. . . . But I think any law that doesn’t look at whether people can pay may not be the best way to go.”

    “Why,” he asks, “can’t two consenting people make arrangements for less than x dollars per hour?”

    The hard education of a progressive. Reminds me of a far left friend who invested in rental property. He wasn’t going to be one of ‘those’ landlords. Then he rented to a junkie and it took him a year to get her out, and $30,000 to undo the damage. I just nodded in commiseration, but inside I was doing a Snoopy dance.

    Kevin M (25bbee)

  28. But wait, something’s wrong! These 11 people were earning at least $9 an hour before Seattle guaranteed them a “living wage”, and that also works out to 9x11x(2000/12)=$16,500. But if they are unemployed, only half of Nancy’s economic growth hormone will go to them! So now they’re only receiving the equivalent of $4.50 an hour. And they will also have to report in to the State documenting their weekly attempts to find a new job, so they will still be pretty busy.

    Not only that, but suddenly there is no longer a pizzeria paying sales tax to the city, there are likely fewer cars paying at city-owned parking meters on that street, the city/county board of health has one fewer proprietor to shake down, and on and on. It’s remarkable that government is so blind to the idea of cutting of their own nose to spite their face.

    JVW (8278a3)

  29. Ivars, a seafood franchise, raised the min wage all the way to $15 right away. They also raised prices to cover the costs. Business in April was very good for them, increase in revenue and in customers. My guess is that it was due to the PR that they made sure went out. What didn’t get mentioned so prominently with the PR was that tipping was being discouraged.
    It also raised menu prices 21 percent. The famous Fish ‘n Chips will run you $20.60 and the Wild Alaska Halibut is now $43.50. The restaurant also wrote on the menu, “Tipping is no longer necessary…we have changed the way we pay our employees.”

    What people may not realize is that Seattle is very much a city of the really wealthy who can spend in the city (if not live in the city) and neighborhoods even in downtown where there are lots of empty storefronts.

    So fancy fish places can do fine, but neighborhood pizza places not.

    seeRpea (81fcfe)

  30. If Borderlands is getting funding via GoFundMe they may soon find themselves in a bind. Threatening to close and create a bunch of unemployed people could be called “hateful” by some (possibly the unemployed-in-waiting themselves) or the public claim of “contribute or these people lose their jobs” might be called extortion in some circles… and either would not make the cut with the GoFundMe recently adjusted policy.

    This whole “living wage” thing is going to be very interesting.

    Maybe Borderlands should move down the street to Daly City or South SF and try their flavor of economic engineering.

    Gramps, the original (9e1415)

  31. Also look to see a lot fewer teenagers in Seattle getting work experience during the summer or after school. For teenagers 15 and under, the minimum wage will be raised to $12.75; for those 16 and over, it will be $15, same as for adults.

    I wonder how many teenagers with no experience will be hired by Seattle employers at those wages. My guess would be fewer than were hired when the minimum wage was lower.

    Joshua (06c7fb)

  32. For teenagers 15 and under, the minimum wage will be raised to $12.75; for those 16 and over, it will be $15, same as for adults.

    My word, if you have to pay public pool lifeguards $15 per hour you would have to charge $8 a head for admission. I would love to see how that goes over in the ghetto sections where kids don’t have a lot of other options to while away the summer hours.

    JVW (8278a3)

  33. I dunno about that comic book store. With comics running 4 and 5 dollars each, they seem pretty pricy already. Especially when you consider that every comic book ever published has been digitally scanned and is available for free if you know where to look. It will all fit on a 3TB drive, I’m told.

    Kevin M (25bbee)

  34. Small businesses close! Unexpectedly!

    Tanny O'Haley (c674c7)

  35. the comments at the article are hysterical…

    *IF* you’re the cynical sort, who finds willful stupidity darkly amusing.

    redc1c4 (b340a6)

  36. A little knowledge is said to be a dangerous thing. Your knowledge of economics certainly qualifies.

    Minimum wages do cost jobs, hurt businesses, slow economic growth – in the long term cumulative effect. It is very seldom an immediate effect, or the policy would have been abandoned long ago. And the Seattle case is no different: your claims are demonstrably untrue, at least to this date.

    Fewer restaurants have gone out of business in Seattle in the months since the new rate started than in the same period in 2014 – and both numbers are in single digits. In the restaurant business in a city that size, that’s a very good place to be.

    Restaurants are dealing with this wage hike in different ways. Some raise prices, some cut employee perks, some keep fewer workers in off-peak hours, some substitute service surcharges in lieu of tips and keep the money. Some use a combination. Some are doing so well they can just absorb it. In a place as full of hipsters as Seattle, a higher percentage of vegetarian dishes are sold, which are higher profit meals.

    The point being it is not correct to assume the general rule applies immediately in every case. It does not – and in fact a straight-line across-the-board proportional correlation is very rare. You make this mistake because you have little actual economics knowledge, and much of what you think you know isn’t complete.

    You have ONE restaurant closing attributed to the wage now, since the four first named by a conservative website have all been debunked by the Seattle Times (three are just relocating, one actually expanding, none blame the wage hike, none admit ever even mentioning it as a factor). A little research might help.

    When people make these false claims, they hurt the side of free markets. Liberals can point to the restaurant business in Seattle, your bogus claims of dire times, and use that to push the same bad policy in other areas. “The Right said restaurants would close in Seattle, but …” Please don’t help us like this, it’s killing our side.

    Estragon (ada867)

  37. Everything Estragon said (including her screen name) is bat shit crazy.

    papertiger (c2d6da)

  38. Everything Estragon said (including the screen name) is bat guano crazy.

    papertiger (c2d6da)

  39. I feel like I’m watching a benevolent giant, having been shot with and survived with little apparent injury by hundreds of arrows is finally starting to succumb and stagger by the relentless onslaught. And because he has showed little injury for so long, as he stumbles now people refuse to believe that the arrows they have slung for so long are the cause; no, it must be that he has some inherent weakness, some flaw in his very makeup, hence the were right to force him to change by use of those very arrows. And when he finally does fall, they will all say in unison, “See, we were right.”

    Very, very sad.

    NeoCon_1 (c19e09)

  40. Estragon @37 – Your point might be valid IF the law had actually gone fully into effect. However, that is not the case.

    Large employers will have the wage hikes phased in over two years, while small businesses have five years. The first wage hike (to $11.00) only went into effect 4/1, making it impossible to measure the “restaurants [that] have gone out of business in Seattle in the months since the new rate started”. Since it is only 5/3, I don’t really think that there is actually any valid data available about how many small businesses have gone out of business since the new mandate has been in place. Care to back up your claims with something other than propaganda? I also wonder why restaurants are the only business that pays minimum wage that you cite. You do realize that there many businesses that have some portion of their workforce making minimum wage, right? Retail, construction, landscaping, personal services, seasonal employment at tourist attractions; the list goes on and on. Why only mention one sector?

    http://www.seattle.gov/Documents/Departments/CivilRights/mwo-large_employers-english.pdf
    http://www.seattle.gov/Documents/Departments/CivilRights/mwo-small_employers-english.pdf

    prowlerguy (3af7ff)

  41. We also need to remember that this story is like a direct response to the Seattle Times “gatcha” attack on a series of Forbes articles that listed several high profile eateries that were closing in advance of the 4/1 deadline. The ST then intrepidly tracked down those owners and got them to say that no, the new artificially increased labor costs had nothing to do with their decision, and the ST then loudly trumpeted this revelation, with the claim that there was NO proof that the new law was cost ANY jobs at all. In fact, the claim has been made in other articles that it has actually IMPROVED employment statistics. So in context, this report is simply a case of proving that the ST’s claim that “As it stands now, the claim that these restaurants closed over the minimum-wage issue is false.” is no longer true, if it ever truly was.

    The original rebuttal:
    http://www.seattletimes.com/seattle-news/politics/truth-needle-is-15-wage-dooming-seattle-restaurants-owners-say-no/

    prowlerguy (3af7ff)

  42. hipster seattle
    drink coffee burn your city
    and burn baby burn

    Colonel Haiku (2601c0)

  43. your claims are demonstrably untrue, at least to this date.

    This is standard rhetoric at HuffPo, at least without the qualifier. The city of SeaTac is used as an example all theme. It is around the airport and most businesses are patronized by travelers, many of whom have expense accounts.

    Obama hired the economist who wrote that minimum wage hikes don’t affect employment. His study has been debunked multiple times.

    It is necessary to deny reality in order to get anywhere in leftist circles. Krueger shows how to get ahead in a Socialist administration.

    Mike K (90dfdc)

  44. Here is what I do not get.

    A wage is the price one has to pay in exchange for a service.

    Why should not the living wage rationale be applied to the prices of all goods and services? Why not set minimum prices for all goods and services, so that the seller can live off the money received?

    If such a rationale should not be applied for the sale of oil, or carrots, or DVD’s, what makes wages different from other prices such that those who sell labor must have a minimum price in order to live off the money receive, but sellers of oil, carrots, or DVD’s should not be guaranteed a minimum price so that they could live off the money received?

    Michael Ejercito (d9a893)

  45. Oh my gosh! The Seattle Times has looked into this and discovered that utopia is breaking out all over? Thanks estragon. I’m relieved that this is a false alarm. The Times is so comforting. Perhaps I should try reading a copy once again.

    But wait! Prowlerguy is right, the implementation of the minimum wage is gradual, and we’ve only gotten a small taste (32 days and counting) of what’s going to happen. So how could the Times be so convinced they’re correct? I think I’ll stick with my decision to ignore that miserable rag … but I do miss it when I’m cleaning my salmon. And while I’m one the subject, I wonder if Seattle residents are required to place their fish and crab guts in their “clean green” like old pizza boxes and other food waste? It will certainly smell unsanitary! But I suppose that will just add authenticity to the Seattle experience.

    I can say for certain that our occasional trips to Seattle will no longer feature a Salmon dinner at Ivar’s ($43.60!), and, in fact, what used to be “occasional” will become “extremely rare”, which will have other consequences for Seattle businesses. But we’re just a couple of right wing loons, and I won’t extrapolate that to anyone else, particularly to those who live in the city. Come to think of it, a guy making $15/hour could take a date to Ivar’s and it would only cost him a day’s wages … remember, he pays withholding and social security out of that total, and Ivar’s is going to charge a 9% (actually a bit more) sales tax. Why, he’d still have a few bucks to pay for an hour’s parking while he enjoys his meal.

    One largely overlooked aspect of this whole fiasco is that the SeaTac law that started this whole thing applied only to non-unionized workers. Perhaps Seattle will get the hint and “correct” their law to apply only to those who have failed to join a union.

    I look to Seattle to become a focal point for weed stores and tattoo parlors. Welcome to utopia.

    bobathome (ef0d3a)

  46. Seattle has also had recent contact with minimum wage workers as I am sure these rioters got minimum wage from the funders.

    Mike K (90dfdc)

  47. Milton Friedman on minimum wage.

    https://www.google.com/#q=milton+friedman+minimum+wage

    Tanny O'Haley (c674c7)

  48. Is commenter Estragon the same Estragon that had a far-left blog by that name back in the 90’s or early 2000’s? As I recall, it was light on substance and heavy on talking points and propaganda.

    pst314 (ae6bd1)

  49. The Sea-Tac did not effect all business, just a small sector that is basically dedicated to serving the airport. How small? The city estimates 400 residents. Did those 400 come out ahead? Probably not, as most of them lost perks such as free parking and lunches.

    The Seattle min wage is a bit different. applies to just about all businesses and will hit small companies that use employment contractors hard. The question of how many are going to close down due to the min wage is not going to be easy to answer, even harder will be the question of how many store fronts are going to stay empty due to the high cost of employing in 2 years.

    A lot depends on the type of business. If it caters to the local neighborhood, it will have trouble maintaining present employment. If it can draw in the wealthy who care much less about prices, then it can pass on the costs. ie: Ivars. Just don’t be surprised when you go to a Baskin-Robbins in Rainier Valley and you find only one employee and a 15 minute wait.

    seeRpea (81fcfe)

  50. Honestly, are we stuck in the 19th century?

    Milton Friedman’s concept of “The Negative Income Tax” absolutely won the debate in preference over the concept of the minimum wage. Given that the voters WANT to support people who can’t earn a “living wage” , the best way to support them is not to interpose between employers and employees but to have voters (taxpayers) pay the difference, out of a different pocket. If the “living wage” is $15 dollars per hour and an employer finds an employee only worth 8 dollars per hour, the taxpayer, at the end of the year, pays 2000 hours at 7 dollars per hour wage differential back to the poor worker as a “negative income tax”. The worker still benefits from working, the employer benefits from having a worker, and the voter gets stuck with the bill for the policy he supports. Win / Win / Win.

    Implemented by Congress as the Earned Income Tax Credit. Done deal. Settled Law. Game over, debate won, why-are-you-questioning-the-Nobel-Prize-Winner, what-are-you-some-kind-of-reactionary-denialist?, dead parrot, ended story, move on to the next issue, SETTLED.

    Why are we still talking about a proposal from the 1850’s? Who is the progressive and who exactly is the reactionary in this discussion?

    Anybody advocating a minimum wage, or a rise in the minimum wage, WITHOUT at least acknowledging the Earned Income Tax Credit, or better claiming the EITC has, somehow, started failing, is too ignorant, dishonest, or old-school reactionary Marxist to bother with.

    Note too that Friedman tried to sell FDR on the Negative Income Tax concept, and kept at it until succeeding under Republican President Nixon. Nixon was the progressive, in this case. FDR, and now Obama three-halves of a century out of date, are the “conservative”, reactionary, rear guard, mired-in-the-mistakes-of-the-past idiots.

    PERHAPS there is a case to be made that the voters don’t want to pick up the direct costs of the EITC, Negative Tax. Or that the concept has failed. Fine. Have that debate. But don’t pretend we haven’t had it. Or settled it.

    Pouncer (ed0078)

  51. but there is a major problem with the ‘living wage’ concept. Go back to the article of the OP. What does the soon to be un-employed person say?

    “I definitely recognize that having more money is important,” he says, “especially in a city as expensive as this one.”

    Seattle is a very expensive city to live in and has been for just about forever. Getting things here is expensive as there are no major cities within 700 miles (Portland OR is much smaller than you think). When the Cascade Mountains get snowed in for more than 3 days, grocery shelves become empty. Boeing left for Chicago due to logistics more than anything else.

    But what about a place like Cherry Hill NJ? Close to several major cities and major distribution sites, its cost of living is (or at least should be) less than Seattle’s. Why should Cherry Hill taxpayers subsidize the cost of living for Seattle’ites? Bad enough that NJ taxpayers are subsidizing the water costs of WA.

    Also don’t forget one other thing – higher min wages means more taxes withheld.

    seeRpea (81fcfe)

  52. I remember when I was in my 20s I got a raise and my paycheck was actually less because of higher taxes. I held on and got more raises and eventually my take home pay got larger.

    Tanny O'Haley (c674c7)

  53. redc1c4 #19
    then you go after the companies who aren’t reporting withholding on salaries…
    the FTB sent me a letter last week, demanding taxes from 2013, just because i have a Lost Angels business tax certificate, which i am required to maintain, if i *ever* want to make a living at that profession.
    contractor’s are licensed by the state, so, if they aren’t paying withholding taxes on their illegal staff, turn them in to the FTB for under reporting their salaries. chances are the owner is skimming cash as well, and under reporting their own income too.

    #ProblemSolved

    redc1c4 (589173) — 5/2/2015 @ 8:38 pm

    Businesses run by illegals are smart enough to never appear on paper anywhere except at the bank.
    They price themselves at around 20% below the legal companies cost of labor.
    Where I live, a $15HR employee would have to be billed out at $30HR plus profit or the owner of the business is going to lose money.
    Obamacare will soon add another $2.40HR plus the overhead costs to administrate that $2.40HR.

    A smart illegal in the construction business sees the costs of labor raised on legitimate businesses and follows up by raising his/her labor price too. In the Obama care instance, the illegal only needs to raise his/her prices $2HR to stay 20% below market rate, but is pocketing that entire $2HR for providing no benefit, same goes for SS, WComp, Liability, yada yada, pays guys $15HR cash and pockets $17HR per man cash. Charges $32 for his own time as principal. A modest sized illegal run landscape/maintenance company here is around 5-6 guys, so a $100HR profit for the owner is in reach.

    History shows that when goverments over regulate markets, the response is to create a larger under the table market. Corruption, bribery increase. The people who follow the rules are the losers. Government loses because millions of $15HR persons are not paying into SS, and the other with holding programs. Every HR at $15HR gross pay that is paid underground costs SSA $1.68HR or $3,494.40 per person a year in lost income. Multiply that by million(s) of underground economy workers 1M X $3,494.40 is $3,494,400,000 per year in lost SSA revenue.

    A high VAT isn’t the answer either because that invites people to bootleg everything from cigarettes and booze to small appliances and office machinery and whatever…
    A high flat tax won’t work if millions opt into the underground labor force.

    The key to getting back closer to our hosts purer vision on the efficiency of markets is to make taxes and regulations less and less burdensome to the point where it is more trouble to cheat than it would be to pay the tax. Government should then cost less (fewer butts in the cubicles).
    I’d advocate an immediate reduction in corporate taxes to a point where Apple brings its money home and keep that rate. I’d also go for a flat 14% plus SS which would be about 20%
    Then I’d let states fight it out with lower tax states vs higher tax rate states for businesses.
    I’d keep some level of minimum wage, because I don’t want unions to flourish. My instinct would be that if we allow each worker to determine their own wage, it would be easy for the SEIU to say: “Hey there low wage earner, sign up with us and we can get you an immediate raise…” so I am in favor of a floor on hourly pay because I despise the modern American union

    steveg (fed1c9)


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