It's The Economy, Stupid!

By Evelyn Preston, Money Lady

So let’s eat out!

Whether a treat or a convenience, restaurants used to be affordable…and effective entry level jobs. However, when government sets the minimum wage, today’s diners not only dole out for inflated menus but they must also now dig deeper for staff, servers, tax, tip, a new service charge (credit card fee) and in some cases, a city or health-care tax. Delivery saves little.

Kiosks (and soon robot servers) reduce or replace paid workers. But what’s the economic lesson and who really gains when three workers earn a mandated “living wage,” yet four are let go and get zero?


Not the case, write economic professors, M.Reich and J.Whiltshire (CalMatters) in a strong rebuttal to these dire warnings of layoffs and business losses on the heels of change. They predict a positive power shift—motivated workers with less turnover will lead to more jobs with more productive workers.

This will save on recruitment and training. They cite stats at McDonald’s in NY and CA. For every dollar increase in minimum wage, a five-dollar Big Mac rose by only 12 cents. This leads, they say to bigger profits without reducing fast food jobs. We’ll see.

Taken for a ride?

Many enjoyed what they saw as the win-win of Uber

and Lyft—an economic bonanza that worked well for moonlighters, between-jobs and still-in-school drivers who needed the extra cash. Customers “tapped” for a swift, affordable ride.

Others viewed the new “gig” only viable as a full-time career and over-rode this freewheeling economy. Convenience and low-cost made way for government mandated rules, regs, 401ks and taxes of permanent jobs which forced ride-shares to pull out of many markets. Costs rose. Will self-driving cars soon take a robot to lunch?

Stay well!

Several hundred thousand lower paid hospital and health care workers are due a $25 minimum wage hike in June with the same potential outcomes—spending cuts of hours, benefits and layoffs to the argument that it will be good for workers and work out for hospital and providers via collective bargaining.

These few examples showcase the use of money in our society. In all our roles—earners, consumers, students, taxpayers, retirees—how we use money affects the economy.

Thomas Elias, columnist at California Focus adds that the “enemy is also us.” Besides the living wage ideal, we ignore our own responsibility voting for governor and legislatures that lead to: rising insurance rates, higher gas prices, PUC rate hikes and against rent controls. Do you know who’s paying for the new mental health initiative that just squeaked through?

With this issue so important on the ballot, let’s get back to basics. No longer the Dismal Science, Economic Theory was simply stated by the Nobel Prize winning economist, Milton Friedman and his four ways to spend money.

The first two prove that when we use Our Own Money on ourselves or others, we economize and seek the highest and best value. Even when using Other People’s Money for ourselves, we’ll spend more but still seek value—like expense-accounts or company credit card.

However, when spending OPM on others as in our welfare systems, we care little about getting the biggest bang for our buck. A perfect example—ongoing headlines shout about lax or no accounting for the billions spent to relieve homelessness—which just grows worse.

With no “skin in the game,” the redistribution of government billions to nameless others explains the rising costs from public housing to health care, and recently, government loans that allowed college tuitions to skyrocket…with no end in sight. If no one really pays, no one really cares.

Like black magic, dollars disappear in burdensome bureaucracies as well as dissolve in carelessness, cheating and scams—until this slight-of-hand hits home.

 Knowing it’s our own money losing value via ever-increasing costs, we wake up. We the people, especially seniors counting on retirement funds, must figure it out, seek value and vote for those locally and nationally who will make the smart economic choices. Let’s follow the money to save our own.

Evelyn (Evie) Preston is a financial columnist for A050 and worked as a financial advisor for over 25 years. Reach her at [email protected].