California instituted a mandatory 15-dollar minimum wage. Elementary economics predicts that a legally-set higher than market minimum wage causes unemployment and hurts the poor most of all. So why did the California legislature do such a thing? And what will happen if the Obama Administration tries to raise the national minimum wage?
The answer to both questions: nothing good.
San Francisco and Los Angeles already had municipal minimum wage regulations. These local regulations were politically unstable, but not because they hurt the poor. That is a given. More to the point, these municipal minimum wages hurt the politicians who enacted them. Business were already closing or moving to other California cities. Those pockets of unemployment and empty buildings looked terrible for local politicians. They couldn’t let people be unemployed, on welfare and involved with drugs and crime in one city, while they were busily at work next door in the neighboring city where there was no minimum wage. Big city Socialist politicians in California couldn’t allow that ugly contrast sitting right on their doorstep. They knew exactly what to do to fix their political problem.
The Socialists controlled California legislature spread the minimum wage across the entire state.
A minimum wage means it is illegal for two consenting parties to trade work for money unless the price is greater than 15 dollars per hour. The results are entirely predictable, particularly in this failed Obama economy. We knew (and here) that the minimum wage was going to kill jobs. We also knew which workers would be hurt the most. We were right.
In an unregulated free market, everyone who wants a job can find one at some price. My handicapped son can find a job. The young and unskilled high school students can find his first job. The semi-skilled students going to college can find a part time job too. The college student may get a higher price if she is a more productive worker. A high minimum wage has no impact, good or bad, on a white-collar professional. For semi-skilled or entry level workers, working for less may be their one and only way to get a job. This high minimum wage means that all low-skilled and entry-level workers have to be paid the same high rate… or not.
That probably means my handicapped son and the unskilled high school student are out of luck, and out of a job. So is the young minority student who really needs the income. So is the young person who needs the experience of a first job, but who doesn’t necessarily need the money to live on. That didn’t stop the California Socialists.
There are two types of workers affected by the minimum wage. The guy who keeps his job and gets a raise to $15. He loves the minimum wage and the politicians who passed it. These workers are the ones the Socialists and the news media talk about.
Other people aren’t so lucky. They are pushed out of their jobs, and possibly on to welfare. The Socialist politician blames the greedy businessman and claims that welfare from the state has made the worker whole. This worker is obliged to the state, owned by the state, and will do as his welfare case worker tells him to do.
It is a win-win situation for the Socialist politicians.
We’ve seen what happens in depressions before. Almost a hundred years ago, the “Great Depression of the 1930s,” swept across the US for almost a decade. (Yes, there were depressions before Obama.) Back a hundred years ago, the unemployment rate was lower for blacks than for whites. You read that correctly. As a percentage, more blacks had jobs than whites. That was despite the segregation and racism of the early twentieth century.
Contrast that with the unemployment rate for young black men today. The unemployment rate for minorities in our inner cities is over 50 percent today. The rate is even higher in California. Not only are California Socialists indifferent to the suffering of young minorities, the Socialists profit by it.
I’m guessing that political consultants conducted marketing tests to see which minimum wage polled best. You can’t really raise a family on $15 per hour. A $50 minimum wage would be too obviously absurd. The Socialist politicians, and the unions who support them, took what they could get. The poor suffer, but that doesn’t matter. The Media-Political Establishment carefully conceals the connection between the minimum wage and the loss of jobs for the poor in the first place.
Today, businesses are leaving California, particularly the garment industry in Los Angeles. This harm, this self-inflicted economic injury that California created for itself, is just as politically unstable as the harm Los Angeles and San Francisco created for themselves with their municipal minimum wages. Expect more California businesses to close as state payroll taxes rise again to pay unemployment benefits.
Look for Socialists in Congress to attempt special welfare payments aimed at California. Also look for the Socialists to nationalize this problem by increasing the national minimum wage. And please, speak out against it, especially, if you are a blue collar worker.
It is time for the victims to make themselves heard.
Image: photo credit: Fast food workers on strike for higher minimum wage and better benefits via photopin (license)