On Monday, April 4th, California Governor Jerry Brown signed into law a gradual increase in the minimum wage so that by the year 2022, it will be $15 an hour. On the one hand, given the pervasiveness of progressive thinking in this state, it’s not suprising that such a law has been passed. On the other hand, Governor Brown made clear that he understands the costs of the law, yet signed it anyways. At the signing ceremony, Brown said:
Economically, minimum wages may not make sense, but morally, and socially and politically, they make every sense because it binds the community together and makes sure that parents can take care of their kids in a much more satisfactory way.
For the lucky parents who are able to keep their jobs after all of the increases have been implemented, this may be true. That will not be true, however, for those workers who currently work for less than $15 an hour and will need to find a job after their employers have decided that the minimum wage exceeds the value they provide.
The case against a minimum wage is so simple, it can be drawn on a napkin. Unfortunately, I didn’t have a napkin handy, so a small notepad had to do:
A minimum wage law creates a gap between those who are willing to work at that wage, and those are willing to hire at that wage. Further, the number of people working at that wage will be fewer than at the prevailing, lower wage. Clearly, raising the minimum wage impedes the very goal Brown is supposedly trying to acheive, which is to bind the community together and make sure that parents can take of their kids.
The case against the minimum wage can also be demonstrated empirically. Professor Hanke of Johns Hopkins University points to a recent study that shows that a 10 percent increase in the minimum wage in a developed country would cause teenage employment to fall by 2 to 4 percent.
What’s ironic about the current progressive claim that minimum wage laws help the working poor is that their predecessors implemented such laws over 100 years ago to keep that very group out of the work force. According to Professor Leonard of Princeton:
Labor reformers then believed that a legal minimum would hand a raise to deserving white Anglo-Saxon men, and a pink slip to their undeserving competitors: “racially undesirable” immigrants, the mentally and physically disabled, and women. The original progressives hailed minimum-wage-caused job losses among these groups as a positive benefit to the U.S. economy and to Anglo-Saxon racial integrity.
In other words, those who pushed for a minimum wage back then knew exactly how it worked, and used it to acheive goals, however distasteful, that were consistent with it. Today, there are progressives like Brown who understand the economic impact of such a law, yet somehow believe that people will magically benefit from it because the Pharoah has decreed it so. Such foolish thinking will harm the very people they seek to help.