Media clips
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Ten states that passed minimum wage hikes will see those go into effect at the start of 2018, with some 3.9 million workers affected, according to a report by a left-leaning think tank. California’s $0.50 increase to $11 an hour will have the broadest impact, raising the pay of more than 2 million workers, the Economic Policy Institute said in a report released earlier this month. Maine’s $1 bump to $10 an hour is the highest increase.
Reuters December 28, 2017 -
“I think it is simply a statement of fact that Secretary Acosta and the people in the political side of the Labor Department who pushed that rule, which was a wonderful Christmas present to the National Restaurant Association, didn’t want the public to understand what kind of transfer we’re talking about,” David Weil, the WHD chief from 2014-2017, told me. Weil called an outside analysis from the Economic Policy Institute finding that the new regulation would transfer $5.8 billion a year from workers to employers a “very reasonable and conservative estimate.”
Bloomberg BNA December 27, 2017 -
In 2015 and 2016, $2 billion came back to workers in 39 states, in the form of recovered wages. But many advocates say that falls far short of solving a problem that costs up to $50 billion a year. “Workers continue to lose staggering amounts in wages every year,” said Celine McNicholas, one of the authors of a report from the Economic Policy Institute, a left-leaning think tank. That underpayment, which advocates call wage theft, also has ripple effects through the larger economy by keeping money out of the hands of consumers. “Low-wage workers are particularly susceptible to wage theft. Those are the same folks who would be likely to spend that income,” McNicholas said. (whole story)
CBS News Moneywatch December 27, 2017 -
The left-leaning Economic Policy Institute think tank estimated in a report last week that the 18 states that will boost their respective minimum wages in 2018 will effectively require employers to distribute more than $5 billion in additional pay to 4.5 million workers. (EPI cited throughout)
U.S. News and World Report December 27, 2017 -
Employers are “trying to hide the fact that it’s a huge windfall to restaurant owners,” said Heidi Shierholz, senior economist and director of policy for the Economic Policy Institute, a left-leaning think tank based in Washington, D.C. Ms. Shierholz, who served as chief economist for the Labor Department during the Obama administration, pointed to previous studies that have shown employers frequently pocket tips illegally. “It opens up a new avenue for wage theft,” she said. This month, she estimated the proposed rule would allow employers to pocket $5.8 billion in tips — about 16 percent of all those earned by tipped workers in 2016, according to her analysis of reported tips on tax returns.Pittsburgh Post Gazette December 26, 2017 -
Starting in 2018, 18 states will increase their minimum wage. EPI says that will provide over $5 billion in additional wages to 4.5 million workers, with increases ranging from $0.35 in Michigan to $1.00 in Maine. This is a trend to watch, because minimum wage increases can help boost average earnings data at the margin. And since low-income earners have a high propensity to consume – translated from econo-speak, they spend more of each dollar they earn – high floors can also matter for consumer spending. More on that here.
Bloomberg December 26, 2017 -
The left-leaning Economic Policy Institute estimates that the new rule would allow employers to seize about $5.8 billion in tips a year, taking an average of about $1,000 of every server’s income. Whether that money winds up in the back of the house or the owners’ back pockets will depend entirely on the owner’s integrity.
St. Louis Post Dispatch December 24, 2017 -
More broadly, while economic evidence suggests that cutting taxes on corporations does lead to some trickle-down benefits for workers, it also suggests that the sums are smaller than the White House has projected and would likely take some time to show up in paychecks. “These raises have zero economic connection with the tax cuts,” said Josh Bivens, an economist at the Economic Policy Institute, a left-of-center think tank. “We know this because the theory linking cuts to wage gains requires other mechanisms to fire first—mainly the rise in capital investment and productivity growth,” which would “permanently reset salaries at higher levels, not get firms to bestow one-time bonuses.” Businesses would need to use their additional funds to invest in machinery, equipment, and research and development, making their workers more productive, and then paying those workers for that additional productivity, in other words. Of course, these companies could claim they are issuing payouts now in anticipation of that chain of events, but the real process would take some time. (Josh quoted throughout)
The Atlantic December 22, 2017 -
How big of a deal is this? Maddeningly, the Labor Department didn’t estimate the economic impact, as it is required to do (and a legal challenge on those grounds could well stop this). The department said that it lacked the data to compute how much money would be involved, though it did calculate that there are “up to 1,298,231 tipped workers in 206,770 full-service restaurants, and 40,095 drinking places” around the country. The left-leaning Economic Policy Institute helpfully crunched some numbers; it estimates, loosely, that restaurant owners could pocket $5.8 billion a year under the proposed change, or 16% of the estimated $36.4 billion in tips. The group did not estimate how much of the tips would get redistributed from servers to kitchen workers, but the amount of the transfer would likely be significant in an industry notable for low pay, long hours and existing problems with wage theft.
Los Angeles Times December 21, 2017 -
“What the last few decades have shown us is that corporations are quicker to pull the trigger on layoffs, less likely to pay workers as much and less likely to contribute taxes,” said Josh Bivens, research director at the Economic Policy Institute, a left-leaning think tank. “I don’t think they got mean overnight. But changes in external conditions — globalization and the assault on unions — meant that they could claim a bigger piece of the pie.”
The Washington Post December 18, 2017