CNN Learns There Really Is No Such Thing as a Free Lunch After All

Oct. 16, 2019
Bob Adelmann

Many readers of science fiction consider Robert Heinlein's "The Moon is a Harsh Mistress" his finest work. Book Three is entitled TANSTAAFL, perhaps the core of Heinlein's economic libertarian philosophy. It simply means that one cannot get something for nothing.

It's a lesson that CNN has been slow to learn.

Two years ago, CNN was delighted to learn that Target was going to increase the minimum wage it was paying its employees: "Target is giving its workers a raise." It explained that the company would start paying $11 an hour while committing to additional raises over the next few years to $15 an hour by the end of 2020.

Nothing was said at the time about just who was going to be paying for those increased wages.

On Monday, CNN answered that question: the employees themselves, by many of them having their hours cut.

Over the last few months, CNN Business interviewed 23 current and former Target employees and learned that many of them had had their hours cut as their hourly wage increased. Said CNN: "Many of these workers say the cuts … have hurt them financially."

Their lengthy summary of those interviews included this from Heather, who started work at a Target store in Florida last November: "I got that dollar raise, but I'm getting $200 less in my paycheck." Caren Morales quit working at Target when her paycheck didn't cover the cost of daycare for daughter.

Others, like Michael, a veteran worker at a Target store in Texas, have had their hours cut so that they are "right at the cutoff point" for qualifying for the company's health care benefits. He needs 30 hours a week or more to qualify, but he now averages between 20 and 30 hours. Said Michael: "I'm hoping … Christmas will keep me at the average needed, but at this rate, who knows?"

Such was predicted years ago by Cato, a free-market think tank. In its summary of "The Negative Effects of Minimum Wage Laws," author Mark Wilson said that when businesses raise wages they must "make adjustments to pay for the added costs, such as reducing hiring, cutting employee work hours, reducing benefits, and charging higher prices." In other words, wrote Wilson, "A decision to increase the minimum wage is not cost free." It must be paid for by someone.

If you like this kind of hard-hitting news – info you won't get from the major media – sign up for G2 (military-speak for intelligence gathering). For only $7/quarter you'll have links to the most critical news of the day delivered right to your inbox. Sign up here.

One former Target store director in Ohio was forced to cut the hours of the 130 people he managed when his store opened self-checkout kiosks and reduced backroom shifts as new, more efficient handling strategies were installed. He told CNN Business: "Older cashiers were used to getting 30-some hours and [then] they were getting less and less. [The company] really cut those hours back … with the introduction of self-checkout."

The reality is simple: It's often cheaper for retailers like Target to hire part-time people rather than full-time employees because of the increasing costs of healthcare. In addition, full-time employees get more paid time off and if there is extra work needed on short notice they become eligible for overtime pay.

A spokesman for Target tried to spin the results of the CNN report:

We've been investing more than ever in our stores team, including more than 100 million additional payroll hours each year since 2017, so that we can create a great experience for our guests. In fact, nearly half of our team members are working more hours than they were last year, while the remainder is either working the same hours or slightly less.

This is the reality Target is dealing with. An increase in wages must be paid for by someone. What CNN learned is that, in many cases, those costs are being borne by the very people those wage increases were supposed to help.

Heinlein was right: There ain't no such thing as a free lunch.



Background on TANSTAAFL

Amazon: Robert Heinlein's The Moon is a Harsh Mistress (1966)

CNN: Target raises minimum wage to $11 an hour, $15 by 2020

CNN: Target raised wages. But some workers say their hours were cut, leaving them struggling Target unintentionally proves case against $15 minimum wage

Washington Examiner: Target accidentally proves the case against the $15 minimum wage

National Review: Target Cuts Workers' Hours after Vowing to Raise Minimum Wage to $15 By 2020 Target responds following report of employees working fewer hours after minimum wage increase

Cato: The Negative Effects of Minimum Wage Laws

The New American$15 Minimum Wage Takes a Bite Out of Big Apple's Restaurants

Add new comment

Plain text


McAlvany Weekly Commentary provides investors with valuable monetary, economic, geo-political and financial information that cannot be found on Wall Street. Your host David McAlvany presents a solid strategy of wealth preservation for your financial and retirement assets while living in an unstable economy.

Through its client focused, customized approach, MWM is committed to providing independent, well-researched, objective advice, and investment professionalism. At MWM, our client commitment is to preserve capital, manage risk, and grow your assets in an ever-changing global environment.

At International Collectors Associates (ICA), we specialize in the sale of bullion, semi-rare U.S. and European gold coins and secure offshore storage in Switzerland for your precious metals. Our highly trained and experienced advisors strive to help you in customizing solid strategies of wealth preservation for your financial and retirement assets.

McAlvany Financial Group

The McAlvany Financial Group has a contrarian, in-depth approach to its analysis, allowing the company to avoid decisions based on emotion, and thus combine maximum risk mitigation with consistent real growth for its clients’ investments. Integrity, attentiveness, and longevity have characterized the company’s client relationships since 1972.