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Drudge Retort: The Other Side of the News
Friday, June 11, 2021

The owners of Klavon's Ice Cream Parlor had hit a wall. The job posting for scoopers " $7.25 an hour plus tips - did not produce a single application between January and March. So owner Jacob Hanchar decided to more than double the starting wage to $15 an hour, plus tips, "just to see what would happen." The shop was suddenly flooded with applications. More than 1,000 piled in over the course of a week.

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For Patrick Whalen, co-owner of the 5th Street Group, comprising five restaurants in Charleston and Charlotte, the breaking point came in late March.After one of his managers told him that a line cook needed to borrow money to get groceries, Whalen was moved to reconsider wages at the company. "It was just one of those moments where you just kind of stop and you say, Is there a real problem in our industry?'" he said. "We always kind of knew it was there, but we didn't really know what to do with it."

The company raised the starting wage for all of its staff to $15 an hour, up from $12 to $13. And it created a "tip the kitchen" program, adding a second line to table checks for gratuity for the back-of-the-house staff, which the restaurant matches up to $500 per night. That move has increased wages for non-tipped employees such as line cooks and dishwashers to an average of $23.80 an hour, Whalen said.

Applicants began pouring in nearly overnight, Whalen said. A manager at one of his restaurants, Tempest, told him that 10 people walked in to drop off rsums over the course of one week after the policy change, compared with just 15 people over the four previous months.

Within three weeks, the restaurant group went from about 50 to 60 percent staffed to nearly fully staffed.

"There is no one in Charleston or Charlotte that can compete with what my guys are making," Whalen said.

Aaron Dearing, a sous chef at Whalen's 5Church Charlotte, said the tipping initiative had raised his pay by about $1,000 a month " the biggest raise he has received in 20 years in the industry.

"It puts everybody in a better position in their home life, so they come to work a lot happier," he said.

It's wonderful that the invisible hand of capitalism is finally dropping more shekels into the baskets of its workers, but this is one of the most frustrating thing about supposed "free market" economics. It should be obvious to anyone why our safety net programs dole out such meager benefits. Business lobbies and business friendly politicians have intentionally designed them to provide far less than is needed by anyone to survive so that even low wage employment is preferable to being unemployed. This has systematically kept wages far lower than they should be given the massive profitability of larger businesses. And smaller businesses can still thrive paying higher wages even if they have to raise prices modestly. Price increases are a part of business for myriad reasons. Paying better wages should not be anathema any more than raising prices because of increases in every other type of expense small businesses encounter.

The pandemic and the need to provide extraordinary support for tens of millions has reoriented American business and tipped some leverage onto the side of workers. I for one, couldn't be happier for all those finding their lives a bit happier and more secure these days.

#1 | Posted by tonyroma at 2021-06-10 08:45 PM | Reply

Economics 101 - supply and demand.

Who would've thunk?

#2 | Posted by LampLighter at 2021-06-10 10:24 PM | Reply | Newsworthy 1

Essential workers deserve a premium wage.

#3 | Posted by snoofy at 2021-06-10 10:27 PM | Reply

Reward work as generously as capital gains. Everything else is b*******t.

#4 | Posted by danni at 2021-06-11 07:49 AM | Reply

-Essential workers deserve a premium wage.

It doesn't matter what they deserve.

It matters what they can get.

And now they can get more.

Don't delude yourself into believe this is about morality or "generosity" or what people "deserve".

It's the marketplace. It was yesterday, today, and tomorrow.

Prices go up........and they go down.

The ice cream guy decided he can get enough margin for his product to afford the higher wage...or close his doors.

#5 | Posted by eberly at 2021-06-11 08:28 AM | Reply

This is great to read.

We'll see what the outcome will be, whether these increased wages will result in economic growth or decline.

I'm betting growth. Profits might suffer a little and prices will go up slightly but I think overall it will be a win.

#6 | Posted by jpw at 2021-06-11 10:03 AM | Reply

Wages and compensation for working class Americans has been stagnant since Aug 1,1981 When Reagan and the Republican Party began their successful war against Unions and Union membership.

We are seeing an organic, economic non-unionized push for higher compensation for labor, as a result of radical Economic landscape adjustment.

Republicans now hate supply and demand labor wage increases as much as they hate Unions. Face it, in the eyes of the Chamber of Commerce, and Republicans, the target has always been depressed wages, and uncontrolled working conditions.

Even when the 'invisible hand of the market' reacts to economic changes, BOAZ and Cons will hate the folks who are being paid a little bit better.

#7 | Posted by oldwhiskeysour at 2021-06-11 10:28 AM | Reply

"One of the best-kept secrets in economics is that there is no case for the invisible hand. After more than a century trying to prove the opposite, economic theorists investigating the matter finally concluded in the 1970s that there is no reason to believe markets are led, as if by an invisible hand, to an optimal equilibrium " or any equilibrium at all."

Harvard Business Review

hbr.org

Myth: Any new corporate taxes will just get passed on to consumers (or other costs)

Often, if taxes are raised (or other costs go up) for businesses, the owners say that they will just raise prices and pass the costs on to their customers.

This claim is often accepted as fact because many people don't know about "elasticity of demand".

Elasticity of demand is perhaps the most important basic idea in economics that many people don't know.

It's a little technical, so here's a short version and a long version:

www.cs.cmu.edu

maybe I'll change my handle to Mythbuster!

#8 | Posted by Corky at 2021-06-11 11:04 AM | Reply

The low pay in the restaurant industry is a public heath disaster. When an employee is making low wages, they cannot afford to take time off when they are sick, so they work sick, and spread disease to the customers who can afford to eat out. Diseases like covid.

When the public officials refuse to prioritize restaurant workers for early vaccines, in spite of the fact that in-person dining was one of the main forms of transmission of covid, workers really get the F-you message from their employers and leaders. (meanwhile workers in the health care industry who were working from home were prioritized for the vaccine due to the lobbying power of their industry)

Regardless of the unemployment benefits, many are just unwilling to work for crap wages in an industry where they get no respect. Now, because the restaurant owners and industry has mistreated their employees for so long, they are getting to find out how much they actually have to pay to attract workers. Unfortunately for the owners of restaurants, many of those workers have left for good.

I know many people in the restaurant industry, and they are starting to get real wages which are in line with their talents and efforts. One of my friends got a $3/hr raise last month. Another got a $5/hr raise last week. Literally every restaurant in town is hiring. Restaurants are poaching employees right and left with higher wages forcing restaurants to pay competitive wages. Look forward to half of your favorite restaurants going under this summer.

free market solutions for heartless capitalists who don't mind paying slave wages....

#9 | Posted by bus_driver at 2021-06-11 11:08 AM | Reply | Newsworthy 1

I think a lot of credit for recent wage gains needs to be given to organized labor and other pro-labor advocacy groups for seeding the idea among service industry workers that that their labor is worth more than sub-poverty wages. That effort combined with a year of service industry employees being told that they are essential and heros, often times by the same employers and politicians that gamed the system to exploit them in the first place, has solidified that idea among much of the American workforce.

#10 | Posted by johnny_hotsauce at 2021-06-11 11:12 AM | Reply | Newsworthy 1

Right to work laws all over the country have destroyed unions which was the intention of the Republicans who passed such laws. Notice, always the police unions are intact because they are the enforcers for the anti-union employers. I have no respect what so ever for them. Don't claim to be a union and then not support other unions. They are scabs willing to bust the heads of all the other unions for their masters.

#11 | Posted by danni at 2021-06-11 11:25 AM | Reply | Newsworthy 3

Places like McDonalds pay living wages in Europe and the cost of a Big Mac is a few pennies more literally.

#12 | Posted by Sycophant at 2021-06-11 11:39 AM | Reply | Newsworthy 1

I can only speak on the IBEW. Electricians make about 10 bucks more an hour in the IBEW. Plus you get way better benefits. Pension and healthcare for life after 15 years. If you are a Lineman or Electrician get in the IBEW or else you are only hurting yourself.

#13 | Posted by byrdman at 2021-06-11 12:04 PM | Reply | Newsworthy 1

There hasn't been a raise in the minimum wage since 2009. Businesses can't keep getting away with it forever. Workers have suffered long enough.

#14 | Posted by Derek_Wildstar at 2021-06-11 12:47 PM | Reply

#8 | Posted by Corky

Economics 101 stuff... :)

#15 | Posted by GalaxiePete at 2021-06-11 01:30 PM | Reply

"Pension and healthcare for life after 15 years."

Moochers!

#16 | Posted by snoofy at 2021-06-11 02:03 PM | Reply

It doesn't matter what they deserve.

It's a shame, to have such apathy for others.

It's part of what makes capitalism dangerous.

The mentality of, "I got mine. fffk everyone else".

Working together and for the common good of all is socialism.

Don't worry who's neck is getting stepped on.

Just make sure you got yours taken care of.

#17 | Posted by ClownShack at 2021-06-11 03:55 PM | Reply | Newsworthy 2

Supply and demand? Communists!

#18 | Posted by Jaspar at 2021-06-11 08:14 PM | Reply

#11 is spot-on. Policing in this country can trace its roots back to Pinkerton men whose job was literally to attack striking workers.

#19 | Posted by snoofy at 2021-06-11 08:47 PM | Reply

Businesses Overcome Worker Shortage by Paying Higher Wages

Well duh.

Here in Tennessee waiters and waitresses have to work for $2.13 an hour plus tips. Egregious!

#20 | Posted by AMERICANUNITY at 2021-06-11 11:57 PM | Reply

I recall reading about a study prior to Covid that showed when businesses paid minimum wage workers a living wage, they were able to hire better employees, they suffered less than half as much turnover, fewer sick days, had greater punctuality, and productivity. Employees didn't have to work two jobs so they were more alert, got sick less often, and worked harder. It's funny how a living wage can improve things for both the employee and the employer.

#21 | Posted by _Gunslinger_ at 2021-06-12 12:52 PM | Reply

"I can only speak on the IBEW."

And I can speak for the entertainment industry: the next non-union actor or VO artist I meet who gets pensions, health insurance, regulated working conditions, and grievance redress ...

... will be my first.

#22 | Posted by Danforth at 2021-06-12 01:44 PM | Reply

If the chamber of commerce and American business had its way slavery would be back on the menu.

#23 | Posted by dibblda at 2021-06-12 02:00 PM | Reply

#11 is spot-on. Policing in this country can trace its roots back to Pinkerton men whose job was literally to attack striking workers.

#19 | POSTED BY SNOOFY

Well, that and slave patrols...

#24 | Posted by WhoDaMan at 2021-06-12 09:46 PM | Reply

...and as many predicted, we have significant inflation in food prices and hyper-inflation in house and car prices.

#25 | Posted by e1g1 at 2021-06-13 06:55 AM | Reply

double $7.25 is not more than $15.

#26 | Posted by jakester at 2021-06-13 07:25 AM | Reply

Policing in this country can trace its roots back to Pinkerton men whose job was literally to attack striking workers.

#19 | POSTED BY SNOOFY

Sorta. It was a way to transfer the cost of maintaining guards to the public. Like we transferred the cost of protecting airlines to the public with "homeland security". Isn't socialism in a capitalist society fun?

The modern police force started in the early 1900s, but its origins date back to the colonies. In the South in the 1700s, patrol groups were created to stop runaway slaves.

The first publicly funded, organized police force with officers on duty full-time was created in Boston in 1838. Boston was a large shipping commercial center, and businesses had been hiring people to protect their property and safeguard the transport of goods from the port of Boston to other places, says Potter. These merchants came up with a way to save money by transferring to the cost of maintaining a police force to citizens by arguing that it was for the "collective good."

In the South, however, the economics that drove the creation of police forces were centered not on the protection of shipping interests but on the preservation of the slavery system.

time.com

#27 | Posted by donnerboy at 2021-06-13 09:33 AM | Reply

-It's a shame, to have such apathy for others.

It's worse to be a -----.

Don't assign apathy to me like a troll.

I'm not apathetic. The marketplace is apathetic.

You still keep thinking presidents and political parties determine wages.

When the competition for labor expanded to include the world then things got rougher for American workers.

If you want to blame politicians then blame the bipartisan effort to pass NAFTA.

#28 | Posted by eberly at 2021-06-13 10:40 AM | Reply

-There hasn't been a raise in the minimum wage since 2009.

In many areas it has been risen.

You're just talking about the federal minimum wage.

It's a waste of time to drive the wages up via a an increase in the federal minimum wage. Better to be done at the state and local levels. Nothing stopping states and cities from doing it.

#29 | Posted by eberly at 2021-06-13 10:43 AM | Reply

Many republican states have laws making it illegal for local jurisdictions to pass local minimum wages. They say only the state legislature has that discretion. Many states also have no mechanism for local referenda.

Your ignorance of the law is showing Eb's.

Good point about NAFTA tho'.

#30 | Posted by Effeteposer at 2021-06-13 11:00 AM | Reply

It's a waste of time to drive the wages up via a an increase in the federal minimum wage. Better to be done at the state and local levels. Nothing stopping states and cities from doing it.

Posted by eberly

Republican legislatures, like ours in TN - which has no income tax - don't care.

The hourly rate for restaurant servers is $2.13 an hour. Has been for many, many years despite calls to increase it.

#31 | Posted by AMERICANUNITY at 2021-06-13 12:16 PM | Reply

"The hourly rate for restaurant servers is $2.13 an hour."

Combine that with 1/3rd capacity, and dealing with mask- holes...who'd want to return to that?

#32 | Posted by Danforth at 2021-06-13 12:31 PM | Reply

-Your ignorance of the law is showing Eb's.

You're right. To be honest, I didn't realize how many states had laws preventing localities from increasing minimum wage.

#33 | Posted by eberly at 2021-06-13 06:53 PM | Reply

This could be the renaissance(sp) I was hoping would come out of all our suffering.

#34 | Posted by Tor at 2021-06-13 07:03 PM | Reply

"I didn't realize how many states had laws preventing localities from increasing minimum wage."

Yeah it's pretty impressive how committed Republicans are to making life harder for the poor.

#35 | Posted by snoofy at 2021-06-13 07:18 PM | Reply

Poor desperate people are easier to manipulate and take advantage of, so natch.

#36 | Posted by bored at 2021-06-13 07:47 PM | Reply

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