Billionaire Tom Steyer is (barely) relevant to the Democratic presidential race and is so only because he has spent tens of millions of dollars spamming the airwaves with his advertisements. Given that he earned all that money, an observer would think the businessman-turned-presidential-aspirant would perhaps know a thing or two about how business and basic economics work. But Steyer’s latest comments on the minimum wage prove he doesn’t understand this stuff at all.
During a campaign stop in a small town in South Carolina this week, Steyer promised not just to raise the federal minimum wage to $15 as many of his competitors have but actually vowed to raise it to a whopping $22 an hour if elected. The left-wing candidate was speaking to a crowd in Winnsboro, a small town that has struggled with some of the highest rates of unemployment in the state. As a successful businessman, Steyer should know the iniquity of his false promises and that his proposal for such an obscene hike in the minimum wage would actually only worsen the unemployment struggles gripping towns like Winnsboro.
2020 Democrat @TomSteyer would triple the federal minimum wage.
Most activists are currently calling for the minimum wage to be raised to $15/hour.https://t.co/ppG70fBL8M
— Washington Examiner (@dcexaminer) February 10, 2020
Tripling the federal minimum wage would have disastrous economic results. Anyone with even a minimal understanding of basic economic theory knows as much.
“Unfortunately, the real minimum wage is always zero, regardless of the laws, and that is the wage that many workers receive in the wake of the creation of escalation of a government-mandated minimum wage, because they either lose their jobs or fail to find jobs when they enter the labor force,” famed free-market economist Thomas Sowell writes in Basic Economics. “Countries which drive up labor costs with either high minimum wage laws or generous employee benefits imposed on employers by law, or both, tend to have longer-lasting unemployment, as well as higher rates of unemployment.”
But you don’t need to have an advanced economics degree to understand this phenomenon.
Imagine if a mom-and-pop retail store in Winnsboro suddenly faced tripling its labor costs. It might go out of business, and even if it did stay open, it would no doubt have to slash hours and lay some employees off. Still, it’s not just workers for small businesses who get hurt — just look at how even though Target raised its minimum wage to $15, many employees actually ended up earning less because their hours were cut.
Copious research shows the destructive effects artificially high minimum wages can have on employment. And the Congressional Budget Office found that a $15 national minimum wage would destroy 1.3 to 3.7 million jobs. Those figures would surely only spike even higher if Steyer’s proposed $22 minimum wage hike were analyzed.
“The fight for $15 is nothing more than a Band-Aid over generations of our education system’s failure.”
Fight for $15 and kill up to 3.7 million jobs in the process https://t.co/OdtZhAltTS via @TianaTheFirst:
— Brad Polumbo (@brad_polumbo) July 9, 2019
One particularly interesting element of Steyer’s proposal is that his only real shot at success in South Carolina comes from his somewhat strong support among black voters. He’s in second place with 18% of the vote in the heavily diverse state, according to RealClearPolitics polling averages.
But the job-killing minimum wage increase Steyer is pushing would actually hurt black and other minority workers the most. Unfortunately, black people remain statistically more likely to work minimum wage jobs than white people. This means that any policy change, such as a $22 minimum wage, that reduces the number of these jobs available disproportionately hurts the black community.
Because Steyer has constructed a billion-dollar business, it’s hard to believe he truly doesn’t understand these basic economic realities. That’s what makes the fiction he’s selling South Carolina voters not just uninformed but cruel.
