Monday, June 14, 2021

But good intentions

The Corner summarizes a study comparing the behavior of businesses in California and Texas with regard to minimum wage workers: "Unintended Consequences of a Minimum-Wage Hike."
Interestingly, as the minimum wage crept up in California relative to Texas, stores in the Golden State did not measurably reduce the number of employee hours they paid for. What they did, instead, was to spread those hours around: hire more workers, but have each employee work fewer hours.

What’s the advantage of doing this? Well, as the authors note, “workers have to work at least 20 hours per week on average to be eligible for retirement benefits and work at least 30 hours per week for employer-sponsored health insurance based on the [Affordable Care Act].” They estimate that stores can save roughly a quarter of the cost of the higher wages simply by getting out of contributing to these benefits.
In addition, the reduced hours per employee were more erratic as businesses tried to hold workers below the benefit threshold. 

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