California has just adopted a $15 per hour minimum wage, to be phased in over six years. New York is doing the same thing.
It amounts to a social science experiment, and its proponents argue that it will "give a raise" to low-income workers. Actually, it will do nothing of the sort. It will, rather, deny low-skilled workers the one advantage they have, which is a willingness to work for less than others. Which means more of them will be unemployed, or else will move to states wise enough to avoid this kind of experiment.
In February 2014, the Congressional Budget Office examined raising the national minimum wage to $10.10. It found that such a step would vaporize up to 1 million jobs at the low end of the income scale (the median estimate was 500,000). It also found that only 19 percent of those workers who would keep their jobs and get a raise belonged to households living in poverty.
The vast majority of minimum wage workers are not in poverty. In fact, 29 percent come from households earning more than three times the poverty level.
So who actually works for minimum wage? According to the Bureau of Labor Statistics, only 3.9 percent of people work for minimum wage. This includes many workers who make more or much more through tips. Just under half of all minimum wage hourly workers are between the ages of 16 and 24. Two-thirds are part-time. Did you ever have a summer job during high school or college, perhaps at a restaurant, which is where more than half of minimum wage workers are employed? That's who minimum wage workers are.
But if the minimum wage had been $15, you would probably never have been given the job. You might not have known why. But everyone will know why when this happens soon in California.
Low-wage jobs serve several good purposes. One is to give first-time job-seekers a bottom rung from which to climb the income ladder. Remove the lower rungs — a $15 minimum would remove at least a couple of them in some parts of California — and the lowest rung on the ladder is out of reach for some.
A high minimum wage forces employers to be more choosy about whom they hire, and often the numbers make it wiser not to hire anyone. The truth that left-wingers such as Bernie Sanders and me-too Hillary Clinton refuse to accept is that the monetary value of work does not rise just because the government instructs it to. If the government raises the minimum wage above the value of the work, no one will buy that labor. Left-liberals are wilfully blind to the fact that businesses are not bottomless wells of money.
When work costs more, businesses buy less of it. Government-generated burdens create incentives for businesses to automate. Have you noticed that fast food restaurants now have touchscreens to take your order? Those machines will never call in sick or file employment lawsuits. For other kinds of businesses, such as landscapers, the minimum wage can make legal hiring prohibitively expensive. That's important in California and other such places where there is so much illegal labor available.
A ridiculously high minimum wage works against the people it is ostensibly intended to help. This January, California's teenage unemployment rate was 21 percent, which is very high but much better than a year earlier when it was 25 percent. It will now go higher again. This will deprive young people of summer job opportunities and force many of them to borrow more for college.
California's less affluent communities, where the cost of living is lower and unemployment much higher than in San Francisco, will feel the shock first and most acutely. It will result in raises for a handful of workers, while exacerbating California's income inequality, already the nation's worst. This change will make life hardest for the state's poorest and least-skilled residents, more of whom will be forced to rely on the taxpayers' generosity for their sustenance.
Experiments are supposed to produce replicable results. Sadly, California's experiment will do just that, repeating the baleful outcomes that have been achieved by the minimum wage before and elsewhere.
Democrats, who are invariably those who support the minimum wage, like to think of themselves as being the party of the have nots, standing up for the little guy against the haves. It's bleak irony and the reverse of the truth. The minimum wage helps those who have jobs, and victimizes those who will no longer be able to find them.
What actually provides opportunity for the have nots is free enterprise and freedom of contract, in which an employer and a job seeker can freely contract to exchange labor for wages at a price agreeable to them both.
Pious left-wing politicians in Sacramento, their supporters in upscale and right-on environs of San Francisco, and preening donors in Tinseltown, will congratulate themselves on their social consciences. But they will have consigned more of the little people to unemployment.