Animal’s Daily News

Bear MinimumHere they go again:  $15 Minimum Wage Follies in California and New York.  Excerpt:

Both California and New York have just adopted measures to raise their minimum wages to $15 an hour over the next few years. Los Angeles Mayor Eric Garcetti hailed the increase, declaring, “Today California leads the nation once again, passing a historic minimum wage increase that will help lift millions of hardworking men and women out of poverty.” New York Gov. Andrew Cuomo was pleased too: Not long before signing the legislation, he had been saying, “If you work full time, you shouldn’t have to live in poverty—which is why it’s time for New York to lead the way and pass a $15 minimum wage.” Like many supporters of the increases, both politicians evidently believe that it is an effective anti-poverty policy.

On the face of it, it seems like a no-brainer: Boost a worker’s income enough, the thinking goes, and you’ll push him or her over the poverty line. Working full-time for the current federal minimum of $7.75 per hour, a single mother would earn only about $14,500 per year. That is well under the $19,000-a-year poverty line for a family with a single working adult and two children. Boost her pay to $15, and she’ll be well over it. 

But does this really lift poor people out of poverty? The economic literature strongly suggests not. 

Of course it doesn’t; increasing minimum wages actually serves to increase wages across the board, but also increases unemployment among low-skill workers, raises costs, and ends up bootstrapping prices along with wages – net result in usable income increase, effectively zero.

Fishing Trip BearBut that’s not the big flaw in the “minimum wage” argument.  Jobs don’t exist because employees need a certain standard of living.  Jobs exist because a business owner needs work done, and will (and should) only pay for the value returned for that work.  If it’s low-skill work of the type done by minimum-wage workers, artificially raising the cost of that work will make business owners change plans – they will automate, do more work themselves, or just close their doors.

Meanwhile labor force participation continues to drop, and dependency on the Imperial government grows (bug or feature?)

But those on the political Left – and some on the Right – will never let economic reality get in the way of some good feelz.