Unintended Consequences

This article was first published in print and online on September 17th in Bruce’s “We the Government” column. For more information about his biweekly syndicated column, be sure to read the introductory post here.

Driving by a local Chick-fil-A recently, I was surprised to see their largest sign (30 feet in the air) proclaim $17 per hour as their starting wage!  The restaurant’s premium ad space was not directed to customers, but to potential employees! 

Wow, that’s $4 an hour over the $13 minimum wage if 25 employees or less ($14 if over 25 employees).  $35,000 a year for unskilled labor – that’s more than some teachers make.  I don’t think the Chick-fil-A prices have increased much, so this small business’s bottom line is being squeezed.  

At a local Denny’s, I called to reserve a table and was told that they close at 5pm because they had no employees!  What?  Yes, the manager advised.  “We need 30 employees, but only have ten. We can’t find anybody to work.”

I related the Denny’s experience to a friend, who said, “It serves them right.  These big corporations don’t pay a livable wage to workers to risk their life with Covid!”  I explained that this Denny’s is a franchise (a small business owner who I know) and Covid barely impacts younger, healthy people.

Clearly, the lack of employees has become a big thing for many businesses!  Remember Costco food samples by Club Demonstration Services (CDS)?  A highlight of my Costco visits!  They stopped with Covid, but they’re back, in limited number.  A CDS employee advised that they need 25 servers at Folsom, but could only find five, and one of those drives 36 miles from Jackson – one way!  

Kathrin Grosse, a German immigrant, started Kathrin’s Biergarten in Rocklin in 2017, says the employee shortage for she (and vendors she depends on) is extremely stressful — working herself and family to death while not knowing what business hours she can keep open due to staffing.  “Soon people will not know how to work anymore and feel entitled.  And, when I’m closed, it hurts my people who want to work!”

Here’s the thing, basic unemployment is about $400 per week (it ranges $40-$450), and the Federal Pandemic Unemployment Compensation (FPUC) provides $300 weekly.  That’s $700/week, $2,800 a month, or $36,400 a year! 

A manager of a Tahoe breakfast restaurant was blunt:  “Not everyone wants to come back to work.  If you work, you make $3,000 to $3,500 plus a little extra tip income.  But, if I can make $2,800 a month, why bust my ass, I’ll stay home!”

The lesson is that government interference with the economy is a delicate balance (from “laissez-faire” to “command and control”) and almost always creates “unintended consequences.”  Working years in the Governor’s Finance, I was briefed on these matters.  For example, Proposition 13 reformed taxes, but that created other problems, so we did something else…which created new consequences, so we tried another thing, and so forth.  The current FPUC extension ends Labor Day, but it could be extended to 2022 (per rumors as of this column submission).  

Government tends, with the best of intentions, to bumble along.  Nobody thought the FPUC payments would stifle employment by creating a worker dependency upon government money – disincentivizing employment.  Politicians were being “nice.”  But the “politics of niceness,” as I call it, creates problems.  Bureaucrats who live thousands of miles away cannot predict all consequences.  And, their “one shoe fits all” approach seldom works well.

Hence, decentralized decision making is usually the best approach.  Local decision makers are in-tune with local circumstances.  And, better yet, the most decentralized process is to provide reliable information to citizens and let them make the best choices for themselves!  In this way, we have liberty, as well as healthy decision making.  

Decentralized government to practical extent is an important protection of our unalienable rights.  This is the sixth principle in my list of founding principles of our America.  This is why Thomas Jefferson wrote in 1811, “(T)he true barriers (defensive walls) of our liberty in this country are our state governments …” 

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