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Shale oil turned North Dakota from one of the poorest US states into the second most prosperous state in a decade
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The chart above shows North Dakota’s annual oil production in millions of barrels vs. its annual ranking for per-capita real GDP among US states from 1997 to 2014 and helps capture graphically the importance of shale oil to the Peace Garden State’s amazing economic turnaround over the last decade. Consider the following:
- In 2000, North Dakota was the 8th least economically prosperous US state, ranking No. 43 in the country for per-capita real GDP that year (see red line in chart above, BEA data here), with GDP per person ($35,203 in 2009 dollars) that was more than 21% below the national average ($44,745). In that year, North Dakota was a relatively minor oil-producing state, ranking ninth among the US states for oil production with fewer than 33 million barrels of annual production (see blue bars in chart, data here) and output that represented only 1.5% of total US oil output.
- Even as recently as 2007, North Dakota was still close to being among the poorest one-third of US states, ranking No. 32 for per capita real GDP, with economic output per resident ($44,212 in 2009 dollars) that was more than 10% below the national average that year of $49,155. The Peace Garden State was still a relatively minor oil-producing state in 2007, ranking No. 8 among the states in oil output and producing a little more than 2.4% of the US total that year.
- Starting around 2007, private oil drillers started successfully drilling for shale oil in North Dakota, thanks to advances in drilling and extraction technologies that allowed “petropreneurs” to finally tap into oceans of previously inaccessible unconventional oil in the Bakken oil fields in the western part of the state. Between 2007 and 2010, oil production in North Dakota more than doubled, and the state surpassed Wyoming, New Mexico, Oklahoma and Louisiana during that period to become America’s fourth largest oil-producing state by 2010. The state’s shale oil boom boosted the state’s per-capita real GDP above the national average in 2009 for the first time since the 1970s. In just the three years between 2007 and 2010, North Dakota moved up 20 places in state rankings for per-capita real GDP, from No. 32 in 2007 to No. 12 in 2010.
- After more than doubling from 2007 to 2010, annual oil production in the Peace Garden State more than doubled again in the two-year period from 2010 to 2012 (from 113 million to 243 million barrels), and the state was producing more than 10% of all US crude oil by 2012. North Dakota was producing so much shale oil in the Bakken, that it surpassed both Alaska and California to become the nation’s second-largest oil-producing state in 2012, behind only Texas. Also by 2012, the energy-driven stimulus to the state’s economy moved North Dakota to the No. 2 spot in the country for per-capita real GDP at $64,150 behind only Alaska at $70,437, and 33% above the national average of $48,264.
- In 2013, North Dakota’s real GDP per capita fell by 2%, and its ranking fell to No. 4 among US states for real GDP per capita at $62,750. But last year, North Dakota led the country with the largest increase in real state GDP (6.3%), and the state’s real GDP per capita rebounded to $65,225 setting a new state record, and moved the Peace Garden State back up to the No. 2 ranking among the country’s states for per-capita output, just behind No.1 Alaska at $66,160.
MP: For North Dakota to rise from being America’s 8th least economically prosperous state in 2000 by per capita GDP to become the nation’s 2nd most economically prosperous state in a little more than a decade (in 2012 and again in 2014), has to be one of the most impressive economic success stories in recent US history, and maybe in a generation or more.
And the main ingredient in North Dakota’s amazing economic success story? Shale oil, which set off an energy boom in the US that was unimaginable just a decade ago. Well, at least it was “unimaginable” by politicians and bureaucrats in the nation’s capital who set energy policy and try to pick winners and losers, and use taxpayer money to subsidize politically favored energy sources. And it was also “unimaginable” to many of the big oil companies who had given up on finding new gas and oil sources in America, especially in shale rock formations. But thankfully, the shale boom was very imaginable a decade ago to a small fringe group of “industry outsiders” and “petropreneurs” like Harold Hamm, whose grit and determination set off an energy revolution that helped turn one of America’s poorest states into an “economic miracle state.” North Dakota’s status as the US state with the second highest level of economic output per person for two of the last three years is just one more of many important energy-based milestones for the Peace Garden State. Carpe oleum.
Bonus: The map below was prepared and graciously provided to me by Becky Adams, a geological specialist at Denver-based Lario Oil & Gas Company, and shows the cumulative shale oil production (through Q1 of 2015) from wells in the Bakken area of North Dakota and Montana. Note that based on the data in chart above, there have been more than 1.5 billion barrels of oil produced in North Dakota in approximately the last decade between 2004 and 2014 and about 1.2 billion barrels of that total was produced in the Bakken area of the state featured below. The larger the green circle the greater the cumulative oil production from a given Bakken shale oil well, from new wells that have produced fewer than 250,000 barrels (small green circles) to larger and older wells that have produced 1 million barrels (large green circle — not a lot of those yet, but a lot that have produced at the next level down – 500,000 to 1 million barrels).
Here’s a story about government abuse of power that’s so incredible and scary, you almost can’t believe it
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There’s a very disturbing two-part series by Lenore Skenazy on Reason’s “Hit and Run Blog,” here are links to those articles and some excerpts:
One afternoon this past April, a Florida mom and dad I’ll call Cindy and Fred could not get home in time to let their 11-year-old son into the house. The boy didn’t have a key, so he played basketball in the yard. He was alone for 90 minutes. A neighbor called the cops, and when the parents arrived—having been delayed by traffic and rain—they were arrested for negligence.
They were put in handcuffs, strip searched, fingerprinted, and held overnight in jail.
It would be a month before their sons—the 11-year-old and his 4-year-old brother—were allowed home again. Only after the eldest spoke up and begged a judge to give him back to his parents did the situation improve.
Cindy and Fred cannot be sure who called the cops and turned their lives upside down. (They have their suspicions.) But they do know who told them they needed to take parenting classes, get therapy, and promise never to let their kids play in their own backyard without a watchman again. They know who took their children away. And you know, too.
Yesterday I ran an interview with the Florida mom whose children were removed from their home for a month after a neighbor reported the family to Child Protective Services because their 11-year-old son was left outside by himself for 90 minutes.
This story is so incredible, some people almost can’t believe it—and I can see why. It is as crazy as Maryland’s Child Protective Services accusing Danielle and Alexander Meitiv of negligence for letting their kids walk home from the park in Silver Spring. Unfortunately, sometimes this kind of thing happens. But when it is sufficiently publicized, change can happen—which is why publicizing these cases is important. And in fact, as Donna St. George reported in yesterday’s Washington Post, Maryland’s CPS has just issued new guidelines, saying, “Children playing outside or walking unsupervised does not meet the criteria for a CPS response absent specific information supporting the conclusion that the child has been harmed or is at substantial risk of harm if they continue to be unsupervised.”
I hope this starts a trend.
The parents from yesterday’s story—”Cindy” and “Fred”—want their anonymity preserved. They don’t want to provoke the government officials handling their case, and Cindy has very real concerns that she would lose her job if her identity was revealed. But to quell the idea that this couldn’t have really happened, here is page 1 below of the county court documents ordering the children to be removed from their home. (I blacked out anything I thought might reveal their identities. The full, unredacted document has been viewed by Reason editors.)
After this legal mess is safely behind her, Cindy may talk to the press—or not. Right now, the kids are back with their parents, but the family remains in limbo. At yesterday’s court appearance the judge instructed the family’s lawyer and the prosecutor to try come to a mutual arrangement and return to court at the end of the month.
MP: This story illustrates perfectly why it’s so dangerous to grant too much power to government authorities, and how concentrated government power eventually affects even the most innocent, law-abiding citizens. A government that will lock you up in a cage for smoking weeds grown in your back yard is a government that will take your children away from you for playing basketball unsupervised in your own yard. That same government will also seize your cash and keep it from you even if you broke no law and are not charged with a crime. They’ll anally probe you against your will with a forced colonoscopy if they suspect you are hiding a small amount of drugs. They’ll break into your house with a SWAT team kill your dogs and throw stud grenades that explode in your toddler’s face, scaring him for life, etc. etc. etc. You get the point……
A case like this is almost unbelievable because it goes way beyond nanny statism into the dangerous realm of state totalitarianism. For those of you who put faith in the government and tolerate them regulating your life, allow them to tell you what you can and can’t put in your body – which plants and weeds and what type of milk you’re allowed to ingest, accept government laws that force employers to pay their workers a mandated wage, etc., be careful what your wish for…. and watch out when a neighborhood snitch calls your government and they come and seize your unsupervised children.
Update/Related: An eye-popping op-ed in today’s WSJ by Brian T. Majeski (editor of Music Trades magazine, where you view the entire article) documents how the once-boring music industry has come under attack on various fronts by teams of federal regulators who have tormented the industry with punitive fines, armed raids and even threats of jail. Here’s an excerpt of “The Federal Marching Band of Music Regulators“:
For more than a century, the music industry escaped the gaze of government agencies thanks to its small scale—$6.8 billion now in the U.S.—and its wholesome, noncontroversial products. Few things seem less deserving of federal regulation than a 5th grader with an oboe. On the rare occasions in history when prominent officials took notice, the magazine I edit, Music Trades, ran celebratory headlines: “President Taft At Baldwin Piano Plant Opening,” or “Clinton Says Playing Music Made Me President.”
Over the past seven years, however, the tenor of the government’s interest in the music business has changed. Our magazine now regularly carries accounts of punitive fines, armed raids and threats of jail time.
Here are six examples from the article of the “federal marching band of music regulators” harassing the music industry:
1. In 2007 the Federal Trade Commission launched a broad and far-fetched price-fixing investigation against instrument and equipment manufacturers.
2. In March 2013 the FTC then turned its sights on the Music Teachers National Association, a 139-year old organization comprised primarily of women who give piano lessons in their homes.
3. In 2009 armed FBI agents burst into the Gibson Guitar plant in Nashville, Tenn., seizing pallets of ebony and rosewood. Two years later, agents staged an encore at the Gibson plant in Memphis.
4. Last year Gold Tone Banjo was fined $110,000 by the Fish and Wildlife Service over a few bits of oyster shell. These aren’t endangered species, but farmed oysters like on menus everywhere.
4. Then there’s the Federal Communications Commission, which evaluates electronic devices to ensure that they don’t emit radio waves that interfere with broadcast signals, wireless communication or other electronic devices. Recently, the FCC has used this authority to extract fines for technicalities: $50,000 for displaying a pre-production prototype of an audio effects processor on a website before it was FCC approved; $25,000 for placing the FCC labeling on the wrong side of the package of a digital mixer; and an inexplicable $425,000 fine for a guitar effects pedal that included a chip—the same kind found in virtually every smartphone—that it claimed was not compliant.
5. Proposition 65, a California statute covering potential carcinogens, has forced the industry to defend the legality of guitar strings because a nickel alloy that has been used for decades contains trace elements of lead.
6. Bans on ivory cause hassle for musicians traveling to the U.S. because 50-year-old violins and guitars contain a few grams of the stuff.
And what is the overall effect of these overzealous regulators and its sprawling bureaucracy on the music industry?
The fines and legal fees associated with these investigations have topped $35 million, a pittance in Washington, D.C., but a significant sum for a small, low-margin industry. In addition, they divert time from management and have depressed industry spirits, as many wonder what’s next. It isn’t coincidental that this increased attention from the feds has been accompanied by a period of stagnant industry growth. If the sprawling federal bureaucracy has sapped the vitality of the little music industry, is it having a similar effect on the rest of the economy?
MP: Thanks overzealous federal regulators with your sprawling federal bureaucracy, you’ve made America a much safer and better place. Not.
View related content: Carpe Diem
The comments below by Gov. Bobby Jindal appeared in yesterday’s WSJ in its “Notable and Quotable” feature (emphasis mine):
From Louisiana Gov. Bobby Jindal’s response to a question on Mike Gallagher’s June 10 syndicated talk-radio show about the “moral case” made this week by President Obama for ObamaCare:
Let’s call Obama’s remarks exactly what they are. The president made the moral case for socialism. Let’s not sugarcoat it, that’s exactly what he believes. He doesn’t hide it, he doesn’t pretend, we shouldn’t either. This isn’t new. Those who favor socialism always make the moral case for it. The truth is, maybe they actually believe in it, but in the real world, socialism harms, it weakens the economies of countries that have tried it. It just does. Weaker economies hurt everybody in them. Socialism kills incentive, opportunity, freedom. It is the opposite of what America is all about. Look, socialism always harms the people it claims to help the most. It handicaps them, leaving them weaker, less self-determined, less free.
We should have this debate out in the open. His “moral case” for ObamaCare is actually immoral. Spending money you don’t have is immoral. Borrowing more money than you can pay back is immoral. Lying to the American people is immoral, so it’s ironic he chooses to use the terms “moral case” or “moral imperative” to make the case for what I think is a very flawed law. The Supreme Court, I hope, rules the correct way. We need to repeal this, replace this. Mike, we cannot measure success by how many people are dependent on government. That’s what President Obama wants. That is the opposite of what America stands for.
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1. Chart of the Day I (above). For the 4th straight month, consumer spending at restaurants and bars in May ($51.48 billion) was greater than spending at grocery stores ($50.45 billion), according to the May retail sales report today from Census.
2. Chart of the Day II (above). For the first time in the history of the BLS’ “Job Openings and Labor Turnover Survey (JOLTS)” (started in December 2000), the number of unfilled private-sector job openings (red line) exceeded the number of private-sector hires in May. According to Michael Gregory of BMO Capital Markets:
This speaks to the structural problems in the U.S. labor market such as skills mismatch (due to inadequate training and education), skills deterioration (owing to long-term joblessness) and impinged mobility (perhaps reflecting negative home equity values). Importantly, these things cannot be fixed by super-accommodative monetary policy, and there are limits to how much more further improvement in the labor market the Federal Reserve will want to see before pressing the liftoff button and starting the gradual policy normalization process.
3. Chart of the Day III (above). According to the most recent EIA forecast to 2040, dependable, reliable and affordable fossil fuels (coal, gas and oil) will continue to supply the large majority of our energy needs (more than 81%) even 25 years from now. In contrast, renewables will increase slightly as a share of total energy consumed, but will supply only 8% of our energy consumed in 2040.
4. Chart of the Day IV (above). At the end of last year there were almost 102,000 patients on the kidney waiting list, a number that far exceeded the number of kidney transplant operations in 2014, slightly more than 17,000. Here’s one way to understand how desperate the situation is for kidney patients: in the last decade, the kidney waiting list has grown by 41,510 (from 60,400 to 101,910) while the number of kidney transplant operations has only grown by 1,100 (from 16,006 to 17,106). Or we can say that in 2004 there were fewer than 4 kidney patients on the waiting list for every kidney transplant operation (3.77 to 1) while in 2014 there are nearly 6 patients for every operation (5.96 to 1).
5. Chart of the Day V (above). According to Federal Reserve data released yesterday, the net worth of US households (assets of nearly $100 trillion minus liabilities of about $14 trillion) reached a record high of $84.92 trillion in the first quarter of the year, measured in both current dollars (blue bars in chart) and real (inflation-adjusted) dollars (brown line). Contributing to the record-high household net worth during the January-March period was a 2% increase in both the value of stocks held by US households and the value of real estate owned by households compared to the previous quarter.
6. Table of the Day (above). With an average MCAT score (27-29 points, see blue shaded middle column) and average GPA (3.4-3.6), black applicants were about 4 times more likely to get accepted to US medical schools (81.1%) than Asian applicants (20.4%) for the 2013-2014 and 2014-2015 academic years.
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1. From a news report today (emphasis added):
Foxconn Technology is in talks to manufacture Apple’s iPhone in India, government officials said, in a move that could lower prices in the world’s No.3 smartphone market where the US firm trails Samsung Electronics and local players.India could help Foxconn mitigate accelerating wage inflation in China, where it makes the majority of iPhones, and base production sites closer to markets where its key clients want to grow.
Officials have given final approval to an ordinance that makes Los Angeles the largest city in the U.S. to gradually raise the minimum wage to $15 an hour. The City Council voted 12-1 in favour of the increase Wednesday and forwarded it to Mayor Eric Garcetti. His office says he plans to sign it Saturday.
The wage hike received lopsided majority votes from the council last week and in May despite complaints from the business community.
Bottom Line: Most people understand generally that businesses are extremely cost-conscious, operate on thin profit margins, and have to operate as efficiently as possible to survive and stay in business, and will shift their factories and production facilities from high-wage to low-wage countries. But then many of those same people seem to think that small businesses and restaurants in cities like LA who operate on razor-thin margins and who employ minimum wage workers can somehow easily absorb a 66% increase in their labor costs? The eventual $6 per hour increase in LA’s minimum wage will increase the annual cost of employing a full-time minimum wage worker by more than $13,000 (including employers’ share of payroll taxes). No wonder the LA business community objected. In comments I featured before on CD, raising the minimum wage to $15 per hour is not a political problem, it’s a “math problem.” And the “new math” of a $15 minimum wage will break the system for many restaurants and small businesses.
Here are a few other related news items from today:
Putting the ridiculously large $18 trillion US economy into perspective by comparing state GDPs to entire countries
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Following the BEA release today of US state Gross Domestic Product (GDP) data for 2014, I was able to update the map above (and make it color this year), which appeared on CD a year ago using 2013 data.
The map above was created by matching economic output in US states in 2014 to foreign countries with comparable nominal GDPs, using BEA data for GDP by US state and GDP by country from the International Monetary Fund, via Wikipedia here. For each US state (and the District of Columbia), I tried to find the country closest in economic size in 2014 (measured by nominal GDP), and for each state there was a country with a pretty close match – those countries are displayed in the map above and in the table below. Obviously, in some cases the closest match was a country that produced slightly more, or slightly less, economic output in 2014 than a given US state.
It’s pretty amazing how ridiculously large the US economy is, and the map above helps put America’s GDP of nearly $18 trillion in 2014 into perspective by comparing the GDP of US states to other country’s entire national GDP. For example:
1. America’s largest state economy is California, which produced $2.31 trillion of economic output in 2014, just slightly below Brazil’s GDP in the same year of $2.35 trillion. In 2014, California as a separate country would have been the 8th largest economy in the world, ahead of Italy ($2.1 trillion) and India ($2.04 trillion) and Russia ($1.86 trillion). And California’s population is only 38.8 million compared to Brazil’s population of 200.4 million, which means California produces the same economic output as Brazil with 81% fewer people. That’s a testament to the superior, world-class productivity of the American worker.
2. America’s second largest state economy – Texas – produced $1.65 trillion of economic output in 2014, placing it just slightly behind the world’s 11th largest country by GDP – Canada – with $1.78 trillion of economic output.
3. Even with all of its oil wealth, Saudi Arabia’s GDP in 2014 at $752 billion was just slightly more than the state GDP of Illinois ($746 billion).
4. America’s third largest state – New York with a GDP in 2013 of $1.4 trillion – produced the same amount of economic output last year as Spain ($1.4 trillion), even though Spain’s population of 47.3 million people is more than twice the number of people living in New York (19.75 million). Another example of the world-class productivity of the American workforce.
5. Other comparisons: Florida ($840 billion) produced about the same GDP in 2014 as the Netherlands ($866 billion), Pennsylvania ($663 billion) produces almost as much as the entire country of Switzerland ($712 billion) and Ohio ($583 billion) produces more than the entire country of Nigeria ($573 billion).
MP: Overall, the US produced 22.5% of world GDP in 2014, with only about 4.6% of the world’s population. Three of America’s states (California, Texas and New York) – as separate countries – would rank in the world’s top 14 largest economies. And one of those states – California – produced more than $2 trillion in economic output in 2014 – and the other two (Texas and New York) produced more than $1.6 trillion and $1.4 trillion of GDP in 2014 respectively. The map and these statistics help remind us of the enormity of the economic powerhouse we live in. So let’s not lose sight of how ridiculously large and powerful the US economy is, and how much wealth and prosperity is being created all the time in the world’s largest economic engine.
|State||2014 GDP (millions)||Country||2014 GDP (Millions)|
|District of Columbia||$115,473||Morocco||$109,201|
|West Virginia||$75,337||Sri Lanka||$74,588|
Note: Earl Fry, Professor of Political Science at Brigham Young University, gets credit as the original creator of US maps with states renamed for countries with similar GDPs (international doppelgangers of US states). He has produced these maps on a regular basis since 2003.
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val·e·dic·to·ri·an (noun): The student who has the highest grades in a graduating class and who gives a speech at graduation ceremonies.
In today’s world of “easy As” and massive grade inflation, the concept of a single student being valedictorian presents a real problem. According to this report from The Columbus Dispatch about an Ohio School District, “Roughly 20% of all graduating seniors at Dublin’s three high schools were awarded valedictorian status.” Here’s more:
Graduation ceremonies might still be going on if Dublin schools had asked all of its valedictorians to speak. There were 222 of them. That means two out of every 10 graduates at Dublin’s three high schools received top honors this year. Dublin Scioto had 44 valedictorians, Dublin Jerome had 82, and Dublin Coffman had 96.
The valedictorian was once the single highest-performing graduate. But experts say it’s more typical to see multiple valedictorians or none at all as educators try eliminate the competition among students to be No. 1 of their class.
Prediction: At some point in the future, in Lake Wobegon and beyond, “all the students will be valedictorians.”
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An increase in the minimum wage has some very predictable economic effects, some positive, but mostly negative, here’s a summary of some of those effects:
A. Positive Effects of Minimum Wage Increases:
1. Some low-skilled, limited-experience workers will benefit if they are able to keep their jobs (and some workers who manage to find a job) at the higher minimum wage, without having their hours cut and who don’t lose any fringe benefits (paid vacation, free uniforms, profit-sharing, health care, employee discounts, parking, tuition reimbursement, etc.).
B. Negative Effects of Minimum Wage Increases:
1. Low-skilled workers who lose their jobs due to an increase in the minimum wage.
2. Low-skilled workers who can’t find a job following an increase in the minimum wage.
3. Workers who keep their jobs following a minimum wage hike but have their hours reduced or who lose some of their fringe benefits to the point that they are worse off after the minimum wage increase than before in terms of take-home pay and total compensation.
4. Companies and small businesses who hire unskilled and low-skilled workers and find it difficult to absorb labor cost increases of 40% or higher, especially businesses like restaurants that operate on razor-thin profit margins of 5% or less. Some of these businesses may shut down, contract, or scrap any plans they had to expand their operations (e.g. open new stores or restaurants). Other start-up businesses that might have been planning to open may now decide that they cannot operate profitably with the higher labor costs mandated by a minimum wage hike.
5. Consumers and patrons of small businesses, book stores and restaurants who now face higher prices in response to an increase in the minimum wage if their preferred businesses can only remain open by raising prices. If some businesses close because they can’t absorb increases of 40% or higher in their labor costs, consumers can be harmed by a reduction in shopping options available to them, especially if they were loyal patrons of a preferred restaurant, store, book store, etc.
Discussion: Most of the discussion on the minimum wage focuses on the minimal benefits to some workers (Item A1 above), while ignoring the overwhelming negative costs and consequences for workers, employers and consumers (Items B1 to B4 above). The fact that 71% of Americans support raising the minimum wage suggest that the general public exaggerates the minimal benefits of higher mandated wages for a few workers while completely ignoring and/or under-estimating the significant costs and hardships for a much larger number of business owners, employees and consumers.
To help the general public understand the reality that “Raising the minimum wage has big consequences for small businesses,” the website “The Faces of $15” (a project of the Employment Policies Institute and MinimumWage.com) highlights “real faces of $15” with real stories of the employers who struggle to survive with significantly higher labor costs from minimum wage hikes (and who sometimes fail and go out of business) and of the real hardships that many low-skilled, limited-experienced employees face. As these stories show, increases in the minimum wage often mean fewer opportunities for both small businesses and for the unskilled and low-skilled employees that these laws are meant to help. Here are 12 of those stories:
1. Abbot’s Cellar in San Francisco. One of San Francisco’s most-buzzed-about new Mission restaurants closed its doors at the end of January, citing the then-impending minimum-wage hike on May 1 as its death knell.
2. Anonymous San Francisco Apparel Manufacturer. This family-run business that contracts to make clothing for a company in San Francisco had to slash its staff after Oakland’s minimum wage increased. It used to be the owner and her husband, plus five to six other workers; now it’s 1-2 additional staff members.
3. Boca Nova in Oakland. The restaurant’s servers will no longer receive tips. “A note on the menu reads: ‘In lieu of gratuity, a 16% Lift Up Oakland Surcharge and 4% Service Charge will be added to your check beginning March 1st, 2015.’ The 4% goes directly to servers. The 16% covers the cost of raising other staff salaries.”
The Contra Costa Times reports that this policy change represents a pay cut: Servers made between $38 and $70 an hour with tips before the change; now they’ll earn between $22 and $28 an hour. The Times said that “about 60% of the restaurant’s wait staff, concerned their income would drop, decided to quit because of the policy…”
4. Boot and Shoe Service in Oakland. The owner raised prices by 16% at his three restaurants in Oakland, following the city’s 36% minimum wage hike to $12.25 per hour in March.
5. Booth Memorial Child Development Center in Oakland. If the Salvation Army can’t scrounge up money to cover the 36% wage hike by writing grants and finding donors, it might have to cut some of its 63 child care slots.
6. Borderland Books in San Francisco. The owner was set to close his bookstore this year, in the wake of San Francisco’s plan to hike the city’s minimum wage to $15. But Borderlands Books is getting a lifeline from nearly 500 customers who have purchased $100 annual membership subscriptions — one that will keep it open for at least another year. If customers with a membership purchase one book per month, they would pay an additional fee of more than $8 for each book.
7. Comix Experience in San Francisco. The bookstore “will soon have to generate an additional $80,000 a year in sales just to meet the minimum wage rise. … In order to fully cover the shortfall, we need to sell 334 memberships at the yearly rate of $240.”
8. Icon Grill in Seattle. Following the minimum wage increase, all employees at the restaurant will now only get one week of paid vacation. Some employees who’ve worked at the restaurant for more than a decade will lose three weeks of vacation.
9. Chinatown in Oakland. Four restaurants and six grocery stores in and around Chinatown have already shuttered since January, at least partly for fear that the wage increase was going to put them over budget. Among them is Legendary Palace, one of two banquet restaurants in the neighborhood.
10. Reaching Beyond Care in Oakland. Child-care assistant Eunice Medina, 23, was thrilled when Oakland’s 36% increase in the minimum wage took effect in March. But almost as quickly, Medina’s workdays were cut and her hours shaved from eight to six. Her employer, Asiya Jabbaar, says she had no choice. Despite slicing hours and laying off one of three assistants, Jabbaar says she still may need to close her business next year and convert it to a part-time after-school program. Her experience illustrates what can happen to small employers when minimum wages jump suddenly.
11. Sterling’s Family Childcare in Oakland. The owner, Muriel Sterling, significantly reduced hours for her employees in response to the wage increase– they were coming in at 7:30 am, and now they come in at 10 or 11. She’s also planning rate increases for some families, and she’s had to eliminate a “free rides” service she provided to members of the community.
12. Z Pizza in Seattle. In August, Z Pizza is closing, putting 12 employees out of work. Owner 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.
MP: As predicted above, the minimum wage increases in San Francisco, Oakland and Seattle have led to predictable and negative consequences: a) business closings (#1, #9 and #12), b) reductions in employment (#2), c) reductions in hours and fringe benefits (#8, #10 and #11), d) higher prices for consumers (#3, #4, #6, and #7), and d) reduced options for consumers (#5). And as even higher minimum wage hikes are phased in over the next few years in these cities (and as minimum wage laws are passed in other cities), we can expect the number of real stories highlighted by “Faces of $15″ to grow larger and larger.
View related content: Carpe Diem
My AEI colleague Christina Sommers has just released a new video (“The Real Oppression That Campus Feminists Aren’t Talking About”) in her increasingly influential and popular “Factual Feminist” series – this one already has more than 15,000 views on YouTube in just the last day. Here’s a preview:
Atena Farghadani is a 28 year old Iranian artist. She was just sentenced to 12 years in prison for the crime of posting a feminist cartoon on Facebook. Farghadani is a genuine victim of a repressive patriarchal society—yet you will hear little or nothing about her from the American women’s movement. Why not? In the video above, Christina Hoff Sommers (“The Factual Feminist”) has the answer.
Bonus: Here’s a related Venn diagram below to accompany Christina’s video.