“A new California law will require that most food-service workers get paid at least $20 per hour starting next year.
But hundreds of pizza delivery drivers in the Los Angeles area are about to discover Thomas Sowell’s famous adage that the true minimum wage is zero.
Pizza Hut announced Wednesday that it would lay off about 1,200 delivery drivers in Los Angeles, Orange, and Riverside counties, CBS News reported. Pizza Hut franchises are outsourcing delivery to third-party apps like GrubHub and UberEats as a cost-saving measure in advance of the new law taking effect.”
“President Joe Biden’s administration is currently considering new regulations that will deny middle-class and upper-middle-class Americans crucial child care services, specifically hampering their ability to welcome au pairs into their families. Biden has proposed further regulating the federal au pair program, which will disproportionately burden highly skilled working mothers, maybe even to the point of driving more of them out of the workforce.
For me, this issue is personal. Like millions of families in the summer of 2020, my family faced a childcare crisis due to the COVID-19 pandemic. The daycare our two young boys attended, aged one and three at the time, closed its doors, and our temporary nanny found another job. Fortunately, my wife and I were both healthy and able to work from home. But caring for two young children while working proved challenging.
We tried to find a solution and re-enrolled our boys in daycare, but it closed down for days at a time due to COVID cases. As a result, my wife and I had to take turns working and taking care of the children. I’d work during the morning and early afternoon, she’d work in the late afternoon and night. It was unsustainable.
Desperate, we finally considered hiring an au pair, a step we had never seriously considered before. The idea of having a stranger live with us seemed off-putting. We were not used to having help at home. We associated such arrangements with the super-rich who could afford butlers, maids, and private jets. But the pandemic left us no choice and convinced us to take the plunge.
We are so glad we did.
We contacted an au pair agency and began interviewing au pairs within days. Due to COVID-related border closures enacted by the Trump administration, new au pairs weren’t coming to the United States, but those already here could switch families. After multiple interviews and in-person meetings, we decided we wanted to hire Neevoliah, who was originally from South Africa and had been with another family in San Francisco. She joined our family in early fall 2020.”
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“Hiring an au pair was the second-best decision we’ve made regarding our children (the best was having them). But the Biden administration’s proposed regulatory changes could end this program for us and thousands of other middle-class families.”
“B 1228 applies to fast-food chains with at least 60 locations nationwide — except for those that make and sell their own bread. The bill’s landmark change is a minimum wage hike to $20 per hour, almost $5 higher than the Golden State’s minimum wage of $15.50.
It would also see the establishment of a Fast Food Council to set wages and make recommendations for working conditions. The council has the power to increase the new minimum wage each year through 2029 up to 3.5% or the average change in the Consumer Price Index for urban wage earners, whichever is lower.
One key part of the bill has been removed since its proposal. Previously, AB 1228 would have made fast-food corporations jointly liable if franchisees committed labor violations, which the NOA believes could have led to “frivolous lawsuits against franchisees” that would then force the larger corporate head offices to exert more control over local operations.”
“The early wage access industry has emerged because so many Americans aren’t paid enough, and they aren’t paid quickly enough. There’s frequently a lag of several days between when employees complete their work and when they get paid, making many workers reach for early pay apps.
The US still largely lacks the ability to make instant, real-time payments between bank accounts — a technology that’s widely available in many other countries — which means it can take longer for workers to get paid. Slow bank payments “have very significant wealth effects for low-wage workers,” said Elena Botella, author of Delinquent: Inside America’s Debt Machine. Fintech companies have stepped in to fill that void with early wage apps, offering workers faster access to their earnings for steep fees.”
“wages aren’t as fluid as, say, gas prices, which seem to jump up or down in an instant. There are reasons for this. Gas prices are easily observed and easily changed, and people will happily switch stations to save a few cents per gallon. Labor markets aren’t like this at all. Switching jobs takes time and effort, and many workers are reluctant to give up the devil they know for the devil they don’t. Employers capitalize on this situation by adjusting wages slowly, if at all.”
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“High inflation, combined with slow wage adjustment, drives purchasing power down. And this is true not just for the US. Canada’s post-Covid pay has followed the same trajectory as ours, and it is not alone.”
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“To climb out of this hole, real wages will have to start growing again. The good news is that they already have. Annual real wage changes turned positive in February; month-on-month changes turned positive late last year. In this respect, we are doing well. Most European economies still haven’t seen real wage growth.
Furthermore, this hole is shallower than it may seem. Since late 2020, real wage reductions have cost households a little less than $1 trillion. That is a lot, without a doubt, but it is less than half of what households received in Covid-related transfers — stimulus payments, expanded unemployment insurance, child care credits, and the like — which amounted to $2 trillion. That puts them well ahead of where they were in March 2020, which is why people report that their own finances are doing just fine, even while they trash the state of the economy.”
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“What we need to free ourselves from is the preconception that low unemployment alone makes a good labor market. Where we actually are is simple to understand. Dollar wages adjust slowly to price increases. Inflation has raised prices a lot, reducing purchasing power. As a result, the public is not happy about the economy.”
“For existing operators, they find that automation had real costs. Operators in a city that transitioned to mechanical switching were substantially less likely to have any job 10 years later than operators in cities that were slower to automate; those that did find work tended to find worse, lower-paying jobs.
But Feigenbaum and Gross also examine the results for young white women coming of age during automation, who just a few years earlier would’ve been ideal candidates for telephone operator jobs. Remarkably, they find little or no negative effects at all: they were just as likely to find work as they would have been before, and job openings in fields like secretarial work and restaurants increased even as telephone operation was automated away. Some of those jobs (like restaurant work) paid less, but others were competitive with telephone operation.
This is just one case, and economists have a long way to go in understanding how automation affects workers — a question that is more important than ever with the rapid progress in AI. But telephone operation appears like a mostly heartening example. Even though a job that once employed 2 percent of all working women was automated away, new workers entering the labor market were not significantly worse off.”
“The United States doesn’t make it easy for talented foreigners to permanently settle in the country, even if they work in critical fields and stay in legal status. For workers on H-1B visas, a nonimmigrant classification reserved for highly skilled, highly specialized laborers, it can take years to adjust to a green card. For Indian nationals, it can take decades.”
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“”America hasn’t streamlined its immigration system in over two decades,” says Sam Peak, a senior policy analyst at Americans for Prosperity. “Canadian policy makers continue to find new ways to take advantage of that.””