Month: August 2017

I want to start out today a bit more philosophical than usual. Let’s say that in an “experiment” you take 100 subjects and you do something that will affect all of them – some in a good way and some in a bad way. Is there a point at which you say, “this experiment is not working”, because too many people are being adversely effected. Or do you just plow ahead, saying as long as good is being done for some, maybe even for a lot, then, “oh well, it’s too bad about those who are getting shafted . . . as that is just ‘an unfortunate part of life’!”

When I presented this abstract philosophical problem to my poker group, most of them responded that, in general, it depended on the gravity of the harm versus the quantification of the good. I felt that this was a reasonable response recognizing that judging the amount of harm versus the amount of good is often not that easy.

Now let’s look at an experiment that is affecting people today in their everyday lives. This “experiment” is the mandated rapidly increasing minimum wage. Yes, I do think that it is an “experiment” as no one really knows what the outcome will be.

Today I read about a young man, Devin Juran, who works at Z Pizza in Seattle. As reported by a local TV station, (K13-Fox) he was initially happy because his (minimum) wage had been recently raised to $11.00 per hour, and it was scheduled to go to $15.00 per hour over the next several years. He said, “I definitely recognize that having more money is important, especially in a city as expensive as this one.” However his euphoria was short lived, because Z Pizza is closing its doors in a few months, resulting in Devin and an additional 10 of his coworkers losing their jobs at Z Pizza. “People like me are finding themselves in a tougher situation than ever.”  The owner, Ritu Shah Burnham, said that she had tried everything that she could to try to keep Z Pizza opened, but with the new increased minimum wage she could not make it. She is very concerned about her employees. “I am absolutely terrified for them as I have no idea where they are going to find jobs, because if I’m cutting hours, I imagine that everyone is across the board.”

On the other side of the issue, let’s look at the everyday life of Shardeja Woolridge in early 2016 before the minimum wage was increased in California. She lived in a two bedroom apartment in Hayward, Ca. with her mother who was on disability. She had a part time job at McDonalds and struggled to pay the rent (they had received eviction notices already), and also struggled  to keep the electricity turned on, as it had been turned off in the past. When asked about a raise in her minimum wage to $15.00 per hour . . . “Whoa”, she exclaimed. At $15.00 per hour she could help pay the rent. She could stock the fridge with food. She could afford Wi-fi.

Now back to the original philosophical question. Is the “experiment” in question (the mandatory raising of the minimum wage) a good thing or not?  How many people like Devin Juran have to lose their jobs, before raising the minimum wage for people like Shardeja Woolridge starts to lose its appeal? Are people losing their jobs like Devin and his co-workers just ‘an unfortunate part of life’, while many more like Shardeja are benefiting from the increased minimum wage?  As my poker group wanted to do, can we compare the gravity of the harm to the Devins to the benefits of the Shardejas? Is the gravity of Devin’s losing his job as bad as, comparable, or worse than the benefit in the day to day lives of Shardeja and her mother because of her increased minimum wage?

Who is right? At this time, I surmise that no one really knows.

Those on the right will side with the Devins – against the increasing minimum wage.

Those on the left will side with the Shardejas – for the increasing minimum wage.

However, I believe that as the situation becomes clearer in the next few years that either the right or the left will admit the error of their thinking, and say “this experiment is or is not working!”

“Oh yeah, BTW I still believe in the Tooth Fairy and the Easter Bunny.”

 

In my neighborhood there is a store called The Dollar Store, but soon it may need to be called “The Dollar Nine & One-Half Cent Store”.

“Why?”,you ask.

Basic economics – related to the recent rise of 9.5% in the minimum wage, which went from $10.50 to $11.50 per hour in San Diego on January first of this year. The profit margin at this Dollar Store is small, and as almost all of its employees are minimum wage employees, the only way to maintain this small profit margin is (Door #1) to layoff some employees, or (Door #2) to raise prices . . . and thus the potential name change.

Which do you think will happen?

In a similar vein this week two ladies told me that they had stopped going to a particular movie theater because it had raised the senior rate from $8.50 to $11.50. This increase in the senior rate was 35%! They could no longer afford to go to that theater any longer.  “Our Social Security COLA this year was only 0.3% and so we can no longer afford to go to that theater.” Coincidentally, another movie theater that my wife and I usually go to raised its rate a similar 35%. When I asked, “Why the substantial increase?”, the answer revolved around the increased minimum wage. At this theater there are always four to five very young employees doing menial tasks, such as asking to which movie you are going and issuing a ticket, serving popcorn, drinks, and candy, and collecting the tickets. None of them are old enough to be a bread-winner for a family. None of them are minorities. All are teenagers; some out of high school, some not.

We will not be going back to this movie theater.

At this point both of these movie theaters have apparently opted to substantially raise their prices (Door #2) rather than lay anybody off(Door #1).

Why this minimum wage frenzy? Well the party line is that this increase will allow individuals to better raise a family . . . except that the minimum wage employees that I have run into are not raising families. While I am sure that there are some who are, these menial jobs were never meant to support a family. For the politicians it certainly is a “look at how wonderful I am; look what I am doing to help the less fortunate; and of course by raising our local minimum wage more than is mandated by the state of California, I am even more saintly.” Whether it will actually do more harm or more good is irrelevant for them because rather than thinking about the consequences of their actions, they are all about emotion, and besides ” I will be out of office when the sh** hits the fan.”

Whether the business establishments choose Door #1 or Door #2, only bad things will happen for either for the employees (some will get laid off), the consumers (who will be forced to pay higher prices), or the businesses (decreased profits as some customers will go elsewhere).

Unfortunately at this point, there is no Door #3.

If you are going to be sick, you better do it soon, especially if you live in California. I say this because if you wait too long, there may not be the doctors to take care of you, especially if you live in California.

A recent study has predicted a shortage of 40,800 – 104,900 physicians in the U.S.A. by 2030. This shortage will be felt in both urban and rural areas, and will effect both primary care and sub-specialties. Nurse practitioners and physician assistants will help, but they are not qualified to deliver the exact same services. If there is going to be such a shortage by 2030, why not just open up the spigots and increase the number of physicians being trained in order to satisfy the growing need? Unfortunately caps were placed on Medicare funding for residency training about twenty years ago, and these caps make it very difficult to expand graduate medical education. Okay, so there is going to be quite a shortage of physicians in thirteen years, but why?

The answer involves retiring older physicians, newly trained younger physicians, and some “basic economics.” Part of the problem is that older physicians seem to be retiring at an increased rate. One factor here is burnout, and according to the Maslach Burnout Index, this is due to a combination of six factors – workload, control, rewards, community, fairness, and values conflict. This burnout problem is intensified by the excessive use of Electronic Health Records, which is negatively affecting physician well being. The most recent data indicates physicians are spending about the same amount of time each day in front of the computer screen as they are with face-to-face patient contact. These days when older physicians are financially able to retire comfortably, they just say,  “Show me the door!”

Okay, so what is the problem with the supply of newly trained physicians, and why should they be less apt to practice in California? This is where “basic economics” comes in.

First of all the cost of living is higher in California than in many other places in the country, and this assuredly includes the cost of housing. A friend of mine recently left California because he and his wife concluded that they would never be able to afford a house in California, and now they have a house and are quite happy in Texas.

Second, most new physicians these days are coming out of med school with significant, and sometimes overwhelming debt. Paying off this debt is a major undertaking as the interest on this debt is constantly churning! For the sake of discussion let’s assume that the newly trained physician owes $200,000 because of college and med school loans, and let’s also assume that he/she can potentially earn $200,000 per year. (Both of these figures are not far from what the averages are these days.) Why should the new physician, possibly now with a wife/husband and a young family want to settle in a state that has the highest state income tax in the country? Why should he/she pay $20,000 in state income tax when that same $20,000 could be used to pay down the school loans? If this newly trained physician settles in California, it could take 10-20 years to escape the burden of that debt – remember that the interest continues to pile up as long as there is still any balance due on the loan. So if you were a young M.D., would you rather live in a small rental in an area with a good climate, or live comfortably in your own house in a state other than California?  Duh!!

Third, all of this so far is without the extra burden of “single payer health insurance” coming soon to a liberal Democratic state near you soon – i.e. . . . California! (This is a topic that will be a disaster for practicing physicians in California and will need an entire blog all to itself to discuss.)

I rest my case.

Trouble is a comin’.

Again I say, “If you are going to be sick, you best do it soon, especially if you live in California!”

Last week President Trump fulfilled another campaign promise (“If I am elected, I will accept no salary”), as he donated his second quarter salary of $100,000 to Education Secretary Betsy DuVos – this money to go toward hosting a camp for STEM students at the Department of Education. For those of you who had missed this announcement on CNN/MSNBC, this is the second time that President Trump has donated his quarterly salary. His first quarter salary of $78,000 was previously donated to the National Park Service.

Have any past presidents chosen not to accept their salary?

Did Barack Obama accept his salary while he was in office?

Yes, B.O. did accept his $400,000 per year salary. After all, he whined that he and Michelle had just paid off their college loans a few years before he was elected, and they needed to put money into the college funds for their daughters. He also said that he accepted his salary merely in order to show solidarity with all of the other federal workers! Wow! (If you believe that, I have a bridge that I want to sell you.) That did not make any sense back then, and it certainly does not make any sense now considering that the Obamas are getting a record book deal worth more than $60 million.

Fortunately, I will not need to read that book as I already know how they feel about things. I remember B.O. in 2008 talking about how small-town Americans “cling to guns and religion,” and I vividly recall Mrs. Obama in 2008 saying, “for the first time in my adult lifetime, I am proud of my country!”

Although I do not read the Washington Post or the N.Y Times regularly, I doubt that Trump not accepting his salary made the front page of either as I have not seen this item in my local WaPo/NYT wannabe “newspaper.”

FYI – In the history of the USA only two and possibly three presidents have chosen not to accept their salary. JFK and Herbert Hoover did not receive a salary, and whether George Washington accepted his salary is open to question.

Add Donald Trump to that list.”Congrats” to President Trump for fulfilling another campaign promise.