I’m not trying to put words in your mouth, but it seems like you’re admitting that higher minimum wages are harmful to businesses. Am I misreading your statement?
Of course raising minimum wage can only hurt businesses who are paying less than that previously. That says nothing about the macroeconomic potential benefits of having a minimum wage. You can see how non-partisan studies like that of the CBO https://www.cbo.gov/publication/55681 look into the benefits for the economy over the long run but that’s not what I was getting at.
I meant to highlight that restaurants with higher profit margins will be able to absorb the higher labor costs more readily that low profit margin restaurants that barely made enough profits to stay open before. The success rate for restaurants is very low anyway (around 20%) so it’s not hard to find ailing restaurants that will not be able to handle a raise in minimum wage.
3 rate cuts? Make that 2 and dropping:
- US RATE FUTURES PRICE IN TWO RATE CUTS IN 2024 AFTER PAYROLLS DATA
- FED SWAPS SHIFT FULL PRICING OF RATE CUT TO SEPTEMBER FROM JULY.
- PIMCO TRIMS 2024 FED RATE CUT EXPECTATIONS TO 2 AFTER THE JOBS REPORT
- US ACTING LABOR SECRETARY SU: THIS WAS ANOTHER INCREDIBLE JOBS REPORT.
- FED’S BARKIN: THAT’S A QUITE STRONG JOBS REPORT.
And similarly strong statements out of various Fed comments
- FED’S KASHKARI RAISES THE POSSIBILITY OF NO RATE CUTS THIS YEAR
- FED’S BOWMAN: WHILE NOT LIKELY, IT IS POSSIBLE THE FED MAY HAVE TO HIKE AGAIN TO COOL INFLATION.
- FED’S LOGAN: I BELIEVE IT’S MUCH TOO SOON TO THINK ABOUT CUTTING INTEREST RATES GIVEN UPSIDE RISK TO INFLATION.
- FED’S BOWMAN: IT IS NOT YET TIME FOR US CENTRAL BANK TO CONSIDER CUTTING INTEREST RATES.
Unrelated, it looks like inflation put this “everything’s $0.99” discount store out of business
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Here’s further analysis of the CA min wage law. Excerpt below of the entirely predictable consequences.
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As the cost of hiring and training unskilled workers grows, businesses face inflated expenses, potentially prompting a shift toward automation, reduced hours for workers, and outright closures. Employers face a dilemma: automate or die.
Lawmakers shouldn’t act surprised about these pressures. Since Newsom signed AB 1228, mass industry layoffs have been anticipated. Shortly after Christmas in 2023, Pizza Hut announced the termination of more than 1,200 delivery drivers.
For the state’s workers, the legislation’s timing couldn’t be worse. California’s unemployment rate has surged to 5.3 percent, highest in the nation, according to new data. High unemployment will drive demand for public assistance, while reducing consumer spending and productivity, leading to lower incomes. Paying out unemployment benefits won’t be easy: the latest report from the California Legislative Analyst’s Office projects a $73 billion deficit for the upcoming fiscal year.
AB 1228 also makes a mockery of California’s vaunted equity agenda. The hit to employment from the new minimum wage will disproportionately affect black and Hispanic Californians, who are overrepresented in the state’s low-skilled workforce.
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Marginal buyers in a margin economy getting squeezed
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From the article. A lot of the need for BNPL is due to poor choice of college major and college loan debt
Espinoza said he made less than $7,000 last year after earning his bachelor’s degree in history two years ago.
Jasmine Parker, 30, also uses Klarna for groceries, including when she’s waiting for a paycheck. It allows her to buy everything she wants rather than forgo a few items, but she said she usually pays her full balance after the second installment comes due “so I don’t have to worry about it.”
“I don’t like owing a bunch of money,” said Parker, who works in customer service and lives in the Raleigh-Durham area of North Carolina, adding that the thought of her student loans stresses her out
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Are they? The article states (emphasis mine):
Also this article linked in the quote above states (emphasis mine):
A loan with no fees, no interest, and only a soft inquiry? That’s better than a no-rewards credit card. My guess is the merchants are paying BNPLs as much as or less than what they pay their CC processor, so a fee of 2% for a 6 week loan is equivalent to a 17% annual return for the BNPL.
I’ve never even considered using BNPL because I incorrectly assumed that it was treated like all other credit (hard inquiry, interest, and credit reporting). I wonder if there’s a sweet spot, i.e. a BNPL that gives out 4+ digit long-term loans without fees, interest, hard inquiry, or credit reporting. You know, one burning through VC money.
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Probably people on this website would pay off on time, but I bet the loan companies rely on people missing payments. In that case, it can cost the borrower hefty fees and interest
From the article
What Is the Interest Rate on a BNPL Loan?
Most plans charge 0% interest as long as you make your payments on time.
However, if you fail to do so, interest rates can range up to 36%.
The plans may also charge late fees, typically $7 or $8 according to the Consumer Financial Protection Bureau.
Credit cards do the same things, and their late fees are even higher, so it might still be a better deal.
Sounds a lot like a credit card wearing a different mask.
And neither is suitable for marginal buyers as @xerty observed. Anyone who needs to borrow to buy groceries is not in a position to use high interest rate products. The financial companies behind the products are exploiting them.
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Isnt this the underlying problem? They are buying what they want, then deciding how to pay for it. That is a different equation than the one you and I typically look at.
They maybe are being exploited, but to no small extent they deserve it. They are making conscious decisions to repeatedly put themselves at these finance company’s mercy.
And dont get me started about the dude with the history degree who only made $7,000 last year. $7k isnt the fault of the major.
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That’s what we used for a home remodeling last year. 0% interest for 2 years as long as we make minimum monthly payments of about 1% of loan value. Now after the 2-year period, interest rate is 19.99%.
Since there is no prepayment penalty, we just put the money in a 2-yr 5.55% CD. But I’m sure the lender hopes that we forget the loan and start paying 20% APR on the balance.
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Time for some postal inflation, just some 17% inflation here.
- USPS: ADDITIONAL-OUNCE PRICE FOR SINGLE-PIECE LETTERS WOULD INCREASE FROM 24C TO 28C
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Mar’24 CPI is out +0.4%, which is 4.9% annualized. Core CPI is running at the same rate. Higher for longer, here we come. No way the Fed is going to cut rates from 5% when inflation has been running at 5% for the last 3 months straight.
- US CPI MOM ACTUAL 0.4% (FORECAST 0.3%, PREVIOUS 0.4%)
- US CORE CPI MOM ACTUAL 0.4% (FORECAST 0.3%, PREVIOUS 0.4%)
- US CPI YOY ACTUAL 3.5% (FORECAST 3.4%, PREVIOUS 3.2%)
- U.S CORE CPI (YOY) (MAR) ACTUAL: 3.8% VS 3.8% PREVIOUS; EST 3.7%
here comes the market waking up. SPY down -1.3% premarket, Russell -3%, bond rates higher.
- FED SWAPS PRICE IN ONLY 50 BASIS POINTS OF EASING IN 2024
- US SHORT-TERM INTEREST-RATE FUTURES DROP AFTER CPI REPORT
- US TREASURY 10 YEAR YIELDS UP OVER 10 BPS TO 4.47% AFTER INFLATION DATA
- US TREASURY TWO-YEAR YIELDS SPIKE AROUND 16 BPS AFTER INFLATION DATA
- TRADERS BET AGAINST JUNE START TO FED RATE CUTS AFTER INFLATION REPORT, NOW SEE LATER START MORE LIKELY.
- FED SWAPS SHIFT FULL PRICING OF RATE CUT TO NOVEMBER FROM SEPT
The buck stops elsewhere
- BIDEN: INFLATION DOWN MORE THAN 60% FROM PEAK BUT MORE IS NEEDED
- BIDEN CALLS ON COMPANIES TO USE RECORD PROFITS TO CUT PRICES
Getting reelectedFighting inflation remains my top economic priority. We’re making progress: wages are rising faster than prices, incomes are higher than before the pandemic, and unemployment has remained below 4% for the longest stretch in 50 years. But we have more to do: my agenda is lowering costs for prescription drugs, health care, student debt, and hidden junk fees
Ever tried staying within a budget and maybe paying down some debt? Nah, I’m sure it didn’t occur to him (or his handlers putting out timely PR’s on how bad Bidenflation is getting).
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LOL Very insightful chart thoroughly proofread from title to legend! Ah the wonder of ChatGPT journalism.
With all this research, I’m sure they’ll be the first (and only) to call the next election in favor of the Average Annual Food Inflation party in November! 
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I think they should try harder at the deceptive spin game.
Wages will have a tough time keeping up with nearly 5% core inflation if this continues. Plus, I’m not sure what kind of BS they think they can feed us. Everybody knows that incomes are not higher now than before the pandemic in inflation-adjusted dollars. Adjusted for inflation, real median household income in US has dropped from $76.6k to $74.6k from 2020 to 2023. https://fred.stlouisfed.org/series/MEHOINUSA672N
Maybe let’s spend a little less on BS PR spin trying to pull a fast one on people and actually doing your part in reducing inflation by curbing deficits.
All this nonsense aside, yeah the odds of higher for longer look better and better each month. At this rate, we could be lucky to avoid further rate hikes.
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People with 401K’s and other stock market investments are doing much better, though. It’s the folks with little if any disposable income that are struggling.
Agreed. Although household income is not equivalent to wages, I thought there’d be significant overlap especially for the lower tiers of the income distribution.
But the statement is still misleading looking strictly at wages: Fed Mean Real Wages
At best they are now statistically identical to Q1 2020 and lower than Q2 2020. And that’s despite the minimum wage having been bumped 30-50% since then. In other words, median wages (not incomes) may have barely kept up with inflation despite lower tier wages getting a disproportionate boost. Not really the major achievement the statement made it sound.
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