3/24/2015
By Charles Payne, CEO & Principal Analyst

It's Spring again
I can hear the birds sing again
See the flowers start to bud
See young people fall in love

Well, it's Spring again
Thunder showers, they are here again
An extra hour for me and you
To spend together

Pretty colors are everywhere
Mother Nature, she still cares

-Lou Rawls

Target announced that they have settled a class-action lawsuit over its credit card breach. The company has agreed to pay victims $10,000 each. In addition, the discount chain giant joined rivals Wal-Mart and TJX Companies in upping its minimum wage to $9.00 an hour.

That news is a moot point in Seattle. The final legal hurdle was cleared earlier this week when U.S. District Judge Richard A. Jones rejected claims of discrimination by the restaurant franchise industry.  The judge says there is no proof that a higher minimum wage will hurt the business of franchisees.

Therefore, large franchise owners will have to fork over $11 an hour on April 1^st, and eventually that number will grow to $15.00 an hour.

However, a rash of restaurants have already gone out of business or moved away from Seattle. In spite of the judge’s observation, the math simply points to a disaster.

According to Anthony Anton, the Washington Restaurant Association President, the math is simple:

Currently, typical restaurant owners in Seattle enjoy a profit margin of 4%.

With a $15 an hour minimum wage, a small restaurant will lose 2% a year, while larger operations will lose 7% a year.

Speaking of progressive policies doomed for failure…the role of corporations as mediators or peacemakers show faux efforts of concern.

By now, you have all heard about Starbuck's effort to start a national conversation on race by having baristas write "race together" on coffee cups. For me, the idea is an unmitigated disaster and it is insulting.

However, I was not the only one taken aback; the social media backlash was swift and unrelenting. Here are some of the nicer tweets to @Starbucks:

• It's worth a little discomfort. Here's the what and the why of #RaceTogether http://sbux.co/racetogether
• I love you guys, but I'm probably not going to have a complex discussion about racism at 8am with my barista.
• My fam spends thousands at your stores yearly, and we don't come there to be beat over the head with your political ideologies.
• Just sell coffee. How hard is that? *You had one job*.  JUST SELL COFFEE.
• how about getting my name spelled correctly on my cup, then we can talk about deeper issues.

Moreover, having conquered the world of business and politics, Starbuck's CEO Howard Schultz is aiming higher. In February’s Time magazine cover, Schultz essentially says it all; his to-do list; checked off is jobs, race, education, and veterans, but 2016 candidate is left unchecked.

The regular viewers to my show know that I have a special dislike for the so-called conscious capitalism crowd of which Schultz is the godfather of this movement. He and the Whole Foods CEO have been able to carve out reputations for liking the little guy, even as they sell them very expensive coffee and breakfast cereal.

However, the company that has worn its disdain for American-style capitalism does not have the luxury of selling overpriced plastic hangers. Hence, The Container Store (TCS) has paid a heavy price for putting their shareholders last.

TCS

For me, there is nothing more insulting than the notion that I should be happy because some liberal is taking the time to be nice to me and ask about race, as if that is some amazing prize. Keep your Oscars and pats on the head. Black people want a chance to work. And I must say that I do not see many of them at any of these great open-minded businesses.

Charles Payne
Wall Street Strategies

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