At least California Governor Jerry Brown tried to tell the truth when he signed a bill this week to raise the state’s minimum wage to $15 an hour by 2022:
“Economically, minimum wages may not make sense. But morally, socially, and politically they make every sense because it binds the community together to make sure parents can take care of their kids in a much more satisfactory way.”
Brown’s first point is correct, an admission that he understands what is obvious to most economists. A minimum wage is not sound economic policy. When an employer is forced to pay an individual more than that person would otherwise earn in a free economy, then several things can and will happen: (1) the employer will absorb the cost and pass it along to the customers, (2) the employer will hire fewer workers, (3) the employer will automate more so that humans become expendable, or (4) the employer will cut other benefits to make up the difference. The best option depends on a host of factors, from the cost of training to the competitiveness of the industry. Most employers choose a combination of the four. Whatever the choice, an increased minimum wage means fewer jobs and higher prices.
Why have a minimum wage in the first place? Brown gives us an answer; it’s good ethically, socially, and politically. He’s definitely right in terms of politics. Most voters subscribe to the Marxist rhetoric of workers and consumers as powerless, and demand that politicians force them to play fair. In this sense, raising the minimum wage is good politically.
Brown’s social claim is elusive. The concept of social justice—also rooted in Marxist thought—is ill-defined and typically refers to making things right where the market fails. If your labor is worth the $10 an hour you get in your present job, then the market is not failing. You need to work your way up or build your track record so you can get another job.
But Brown’s notion that a $15 minimum wage is ethical (moral) is the kicker. He claims that parents can raise their kids more effectively when the minimum wage is higher. Of course, few minimum wage earners are actually full-time workers heading households. I guess parents earning the minimum wage who don’t lose their jobs after a mandated increase will be better off, but what about everyone else? How is the minimum wage better for consumers who must pay higher prices, teenagers who can’t convince an employer to pay them $15 an hour, or those without skills who need a place to start at any wage? What kind of incentives does it create for young workers deciding if high school or job training is worth the effort? And what about the employers whose businesses are at risk?
No, raising the minimum wage is not moral. If it were, then why not be “more moral” and raise it to $50 an hour? Employers can’t afford $50, you might say, so that would be a bad idea. Then why do you assume they can always afford $15?
It’s really simple. Raising the minimum wage is bad economics, so it’s not the moral thing to do.
I just heard Dr. Parnell on Wilkow on the debt. Awesome.
Gov Brown confessed. He only signed the bill because of politics.
I heard Dr. Parnell regarding the debt on Wilkow today, as well. I hate to say it, but my husband I are looking into immigrating to Switzerland. We can’t stand to see this country fail, we’d rather not be here when it does.
Agree-nothing to add.
Hey Lisa, don’t give up too soon!
Why Lisa???? The republican party is finally having to deal with its incompetence! Let’s see what happens!
Like Latin, the national debt is a dead language. When is the last time you’ve heard a Democrat mention it? Tightening our belts doesn’t get votes. The millennials don’t care about it. And the 45% who pay no income tax sure don’t. Why would they? Not their money. Think it’s bad now, wait till the Fed stops manipulating the interest rates.
if we raise the minimum wage to $15, then can’t we get rid of government programs for anyone who has a job?
Hillary and Bernie are fighting to see who can raise the minimum wage the most, but they are not talking about the lost jobs.