Another day, another proposed social engineering tax for the residents of New York City. While former Mayor Michael Bloomberg was a well-known anti-soda crusader, even going so far as an attempted ban on the beloved "Big Gulp," current Mayor Bill de Blasio has another target: cigarettes.
Wednesday, de Blasio announced a new initiative aimed at curbing smoking in the Big Apple by raising the minimum price of cigarettes to $13 per pack. New York already has the highest minimum price in the nation at $10.50 per pack.
By coupling the increase with a proposal to grant fewer business licenses to sell tobacco products, de Blasio hopes to reduce the number of smokers by 160,000 by 2020, down from 900,000 current smokers.
De Blasio might have good reason to be hopeful, especially considering what economic theory predicts and what real world examples have shown.
Although it's difficult to precisely predict how many people will quit smoking by raising the per pack price of cigarettes to $13, a collection of studies shows that, on average, a price increase of 10 percent per pack decreases demand of cigarettes by 4 percent. Since New York began raising the price of cigarettes to the highest levels in the nation, smoking among New Yorkers has declined significantly.
This result fits squarely within the standard economic model. As prices rise, consumers generally purchase less of a product. Even though almost 60 percent of cigarettes are bought and sold on the black market in New York City, it's unlikely that prices don't influence consumption. It is this effect de Blasio is counting on to decrease smoking.
Unfortunately, de Blasio ignores this same principle when it comes to working — advocating for a $15 per hour minimum wage, which would have destructive effects on those who can least afford it.
Minimum prices for goods and services, like cigarettes or labor, are known as "price floors." Economists have long known, and real world examples have repeatedly demonstrated, that government-mandated price floors reduce consumption.
In other words, increase the minimum price of cigarettes to $13 and people will smoke less. Likewise, increase the minimum wage a business must pay workers, and businesses will purchase less labor — i.e. hire fewer workers or cut their hours and move to automation.
While politicians might view reducing smoking as a positive outcome, putting their constituents out of work is probably less popular.
So why do politicians like de Blasio continue to support a $15-dollar minimum wage? Assuming they are not completely economically illiterate, they are probably just too eager to ignore economic reality when reality gets in the way of their preferred narrative — and de Blasio is no exception.
Other cities are already seeing the economic consequences of raising the minimum wage. Both Washington, D.C., and Seattle have seen job loss in their restaurant sectors following recent minimum wage increases, even as surrounding areas experienced net job growth in their restaurant industries.
These negative repercussions have prompted others to reconsider. Last month, Baltimore Mayor Catherine Pugh vetoed a bill that would have raised the minimum wage to $15 an hour by 2022. Asked why she vetoed the measure, Pugh said, "I want people to earn better wages, but I also want my city to survive."
Unfortunately for New Yorkers, de Blasio has chosen not to heed these warning signs and seems perfectly willing to ignore the laws of economics in order to advance the narrative that everything he does is for the little guy.
Even putting aside the fact that cigarette taxes are paid mostly by those on the lower end of the socioeconomic ladder — a reality that clearly conflicts with his preferred narrative — the mental gymnastics required to believe that increasing the price of cigarettes will curb smoking but a higher minimum wage won't cause workers to lose their jobs is simply astounding.
But maybe asking a politician like de Blasio to be intellectually consistent is just a step too far.
Eric Peterson (@IllinoisEric89) is a contributor to the Washington Examiner's Beltway Confidential blog. He is a policy analyst at Americans for Prosperity.
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